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Why do companies need an expenses policy in place?

The basic answer is that it can save a company money and improve efficiency and compliance. How? Well by implementing an expenses policy, all of the company’s employees know where they stand, what they can and can’t claim for and to what limit. This reduces the number of conflicts that can occur when an employee has an expense that isn’t approved, it reduces the time spent checking the expense and having it authorized by a Manager or accounts team and it also minimizes the potential for low morale and poor attitudes that can occur as the result of conflicts.

By having these rules in place, your employees claiming expenses will comply with not just your own policy, but with HMRC legislation as well.

Financially an expenses policy cuts the cost base of doing business by providing a robust expenses control function. It also throws out the era of ‘guesstimates’ loopholes and fiddles that may have occurred in the past. The grey areas are gone and there is a clear mark between acceptable and unacceptable. Also think about an employee conducting business travel where they are required to stay overnight – the employee may have previously booked into a high standard of accommodation when an equally good business orientated accommodation chain provides the same service at a substantially different price. With a limitation placed on the expense, the employee will need to change their habits to become in line with policy.

Our top tips:

When all of this information is gathered together you will find that the majority of the work is already done. All that’s left to do is write the policy and enforce it. So to get you started, we’ve put together a few tips:

Be fair with your expenses policy

Employees will respect a difference in the amount a director can claim for an expense item to what an employee can, but they will be less happy if the amount is significantly lower than what they have previously claimed without due justification.

Ditch the jargon!

Keep the policy basic and easy to understand. There is ample opportunity in the future to amend and change it. The simpler it is to read, digest and understand a policy, the more successful it will be.

Consider the rules and locations

Hotel prices and meal prices will differ in different locations and regions. There are also endless scenarios where meetings or travel might be booked late or in an emergency.

Ensure the policy is easy to find for employees

Use an intranet and/or have a hard copy in the staff room.

Keep it up-to-date

An effective expenses policy should be a work in progress, regularly updated and adapted to match the changes in your organization or legislation.

See how you can drive down costs and maintain consistent compliance with our easy-to-use expenses system, Assure Expenses.


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