3 Signs Your Travel Expense Policy Needs an Upgrade
Expense management is risky business. Every business has to establish and enforce their unique expense policy, or employees may either over- or under-step the amount you reimburse. This leads to confusion and resentment. Every business starts with a basic spending guideline, but it must be updated as business trips became frequent.
The problem with most companies is that they stop thinking about the policies as soon as they create them. As your company evolves, so do your employees and their spending nature. Why should your expense policies remain the same?
According to a Certify study, one in five companies did not have a T&E policy in place and 31 percent of the businesses did not have control over their employee spending. While expense management is a top priority, it’s equally important to focus on travel and expense policies as well.
What is a travel expense policy?
A travel expense policy offers a spending guideline and defines how organizations reimburse employees for reasonable expenses they incur on behalf of them. It ensures that all employee expenses are under check, and that employees understand what qualifies as a business expense.
How do you know if your current expense policy isn’t working?
They are a few tell-tale signs that will help you know when your organization needs an immediate update to its travel and expense policies:
1. Unclear rules
While you don’t want to end up with a 100-page booklet that no one ever reads, you also want to make sure that the most common scenarios are covered. Unexpected expenses like additional baggage fees can cause a lot of confusion to the traveling employee as well as the finance team that’s reviewing the expense.
If your expense policy isn’t comprehensive enough and leads to a lot of back and forth, then it’s time to give your expense policies a makeover.
2. Unhappy employees
Out-of-date expense policies can lead to disgruntled employees. Imagine paying for an expensive meal for a client on behalf of the company and claiming expense reimbursement, only for your claim to be rejected because food expenses are capped at $30. You need a policy that’s flexible enough to accommodate special cases like this.
An expense policy that’s not fair to employees is no good. It’s better to consult the frequent travelers while updating the policy. This can give you a new perspective, helping you have better and more efficient ideas to implement a fool-proof policy.
3. Fraudulent claims
On the flip side, you need to make sure that employees don’t go on a spending spree or inflate their spending when they submit expense reports. This survey reveals that 85 percent of employees think it’s okay to stretch the truth with expense claims. If your accounting team is often plagued with unqualified expenses, then it’s time to pull the plug on your old policies.
Creating the perfect expense policy
There’s no one-size-fits-all expense policy. Every business is unique, and requires a bespoke travel and expense policy. While there’s no mantra to creating the perfect set of guidelines, there are a few best practices that can make your policy work for you.
Be up to date
A lot can change in very little time. It’s important to keep your policies tuned to current trends, prices, and government regulations.
Review the most common expenses your employees are likely to incur. As you gather more and more data, your policies will get more exhaustive. That makes “I didn’t know” an invalid excuse when it comes to expense claims.
Involve your employees
Consulting the frequent travelers in your organization is a great idea because they’re the ones who are going to complain when it’s not working. Involving them in the beginning of the process eliminates a bunch of confusion that may come later on.
Enforce your policies
Emailing your new set of expensing rules is not going to cut it. What good is an expense policy if no one follows it? That’s where expense automation can help. Options like Kissflow Finance & Ops Cloud can automatically validate expenses and identify the ones that don’t comply with your policies.
Keep updating your expense policies
Creating and enforcing an effective expense policy is critical for the success of any business. Somewhere between minimizing costs and keeping employees happy is the sweet spot–a policy that works. It’s important to strike a balance between the two.
Don’t be afraid to go back to it once in a while and give it a makeover. Like a wise man once said, “You’re never done making an expense policy”.