We at TravelPlex are often asked for assistance in either creating a company’s travel policy, or at the very least, updating it. This is one of the many services TravelPlex offers our travel partners. Recently, we have been asked about how to dovetail a travel policy into an expense policy, and what that might look like as a finished product.
While we don’t want to take the space (nor bore you) with more talk about an effective travel policy, we thought we would offer some tips on creating an effective expense policy. Now, keep in mind this is basic and, as we say, a “30,000-foot view”, but we hope it will include some ideas for those of you tackling the daunting – but needed - task of creating an expense policy from scratch.
Consider this; almost 20% of all travel expenses fall outside of a stated policy. This alone makes it worthwhile to invest the time and effort into forming a culturally conducive expense strategy. The following are some basic guidelines of creating a comprehensive and impactful - yet employee friendly - expense policy.
1.Make It Easy To Understand
Write the policy to cover the basics and don’t be afraid to revise it later. It probably won’t be perfect on the first attempt, so remind people to use common sense. Also, be sure to edit your policy for simplicity before it’s published. Ensure that it’s easy to read and not clouded with cloudy verbiage. The easier a policy is to understand, the easier it is for your employees to obey.
2.Make It Reasonable
No one should have to pay out of pocket if they spend sensibly. Unless there is a very good reason to have different rules for different people, create a policy that applies to all employees across the company. Keep it fair and simple. All-encompassing policies are also easier to implement, gain buy-in, manage and control.
3.Invite Contribution And Input
Get buy-in from your staff before you implement the policy. Ask team members to participate in the process. If they help develop the expense policy, they’ll see why such a policy is needed and will be more apt to stick to the guidelines and encourage others to do the same. The main goal here is adoption of the policy.
4.Be Culturally Sensitive
Sometimes a one-size-fits-all policy won’t work across an entire company. Write your policy to adjust behavior, but be flexible enough to change to local requirements— such as higher hotel costs in more expensive cities. You could include a list of acceptable regional rates, or use a system that identifies out-of-policy spend at the point of sale. This can help avoid surprises later in the expense-claim process.
5.Make It Easy To Find
Even the most reasonable policy won’t be followed unless people are aware of it. Make sure yours is easy to locate within your company. Email it to employees, put it on your noticeboards or intranet, even go so far as to print a copy for every employee submitting expense reports. To reduce any confusion, many companies have employees acknowledge their understanding of the expense policy.
6.Emphasize The Benefits
Implementing a new policy will require a period of adjustment for employees. You may want to hold a training (or three) class to explain the rationale for implementing (or changing) the policy so that everyone understands its benefits and desired purpose. Again, the easier your policy is to understand, the better the chances are that it will be utilized.
7.Allow Management To Enforce The Policy
Since roughly 20% of all submitted expense claims contain out-of-policy spend, it’s practical to focus on reducing that area of policy infractions. Managers who approve expenses are your first line of defense in the expense-claim process, so it’s good to get them on your side. Establishing management goals for policy compliance can drive down the number of out-of-policy claims. Familiarizing managers with the content, the importance of compliance, and the reasons for implementing the policy can help them confidently enforce the rules.
8.Remember - It’s Emotional
When creating the expense policy, remember the emotional side of expense claims. Often employees are spending their own money when they pay for expenses, so they will want the money returned as soon as possible. A smart decision may be to implement a corporate credit card to reduce out of pocket expenses. This will also lead to stronger policy traction. A fine tuned system makes it easy for employees to submit their expenses and receive status updates; it also speeds the payment process.
9.Consider Expense Software Tools
Implementing an expense policy is a first step, but it shouldn’t end there. Once you have a great policy, you may want to consider using time-saving tools to manage the entire expense-claim process.
Turning your paper-based expense process into an automated one will soon provide real cost savings. You can take advantage of free trials to test various software tools before you commit to buying. Most providers will be able to demonstrate a rapid return on investment. Implementing an automated solution will save time and employee labor, and allow you to focus on your core business.
10.Leverage Existing Technology
Since everyone now has a smartphone, you’ve probably already invested in mobile hardware. If this is true, make sure you choose a solution that is compatible with your existing mobile devices and allows for the submission of digital and photographed receipts. Most newer cellular phones can take pictures and e-mail them to an expense report. This is a huge win for the traveler and decreases the responsibility of keeping up with pieces of paper. This can be referenced back to #6 – Emphasize the Benefits.
An expense policy template can take on a look like the following:
In its most simplistic form, an expense policy should cover the following basic categories:
1.Statement of purpose
2.Company expectations and policy compliance
3.Areas of uncertainty
4.Subject areas:
a.travel
b.travel-related expenses
c.accommodation
d.food & entertainment
e.other expense types
If you have any questions, please let TravelPlex know. A partner of TravelPlex, Concur, can also help identify expense opportunities, as well as provide your company with a return on investment analysis. Both of us can assist you as you navigate through the expense policy process.
