Putting in place an expense policy could improve cost control. Here’s how to do it, and how expense cards can help.
If you have expense cards, or are thinking about getting them, it’s important that you have got the right expense policy in place too. Hand in hand, they can not only control your business costs but help your business to grow too.
Here’s how to do it:
1 Define your objectives
There’s no one-size-fits-all expense policy that suits every business. For some firms, it might be about controlling every cost as much as possible. Others might be less worried about overall spend, but it’s just a case of ensuring all employees are treated fairly. Another area of focus might be compliance and transparency: is what employees are spending within the guidelines?
Then, there may be different types of expense policies for different employees in the business. After all, the expenses of a Sales Director travelling the world are going to look very different from an Office Manager buying stationary and supplies.
Identify what you want to achieve with your expense policy, and how much weight to apply to each of these factors - cost control, transparency, compliance, and fairness – for each role and level.
2 Determine expense categories
It’s worth categorising the type of expenses your business is likely to incur into different groups, such as travel, meals, fuel, accommodation, office supplies, and so on.
This helps clarify what types of expenses are covered and makes it easier for employees to understand when they come to assign them. Create a clear guide for this.
3 Set spending limits
Almost every business will want to set spending limits for most employees. Now you have levels of employee and expense categories, you can combine the two and set these.
For example, you may set a daily limit for evening meals at hotels and restaurants for workers away on jobs, a maximum amount for rooms abroad, or the type of tickets employees can buy for flights. This might be that there’s no business class for flights under a certain time, for example.
This ensures that expenses stay within the budget, but also establish clear lines of communication and review regularly. There’s no point employees spending hours of their working day trying to find a hotel within limit when none exist. Allow them to flag up when they’re struggling, and limits might need to be adjusted for various reasons – either as a one-off or for longer periods.
4 Establish an approval process
Define clearly who needs to approve each expense and the steps involved in the approval process. This could include managers, finance personnel, or designated approvers. And when should they approve expenses too.
A routine is important – you don’t want employees holding onto expenses for months, only for you to be hit with unplanned costs, but at the same time, approvals should take the prescribed time as well. Employees may become disgruntled if they see a pile of expenses sitting untouched on a manager’s desk for weeks.
5 Document and share the policy
If you want employees to stick to the policy, you need to be sure they can access it easily. Clearly articulate the policy in a document that can be easily found, and include details such as eligible expenses, reimbursement procedures, submission deadlines, and any supporting documentation required.
Share the policy with your employees and ensure they understand its content and purpose. Consider organising training sessions or creating a FAQ document to address any potential questions.
6 Monitor and enforce compliance
Regularly review expense reports to ensure compliance with the policy. Use expense management software or tools to streamline the process and flag any irregularities.
Remember, the expense policy should be flexible enough to accommodate unforeseen circumstances, while also providing clear guidelines to prevent misuse. It's also important to periodically review and update the policy to reflect any changes in the costs (such as inflation) or company needs.
7 Expense cards make creating and running an expense policy easier
Business credit cards can help to make the policy work, and even take over some of the manual processes and enforcement of limits. With Allstar’s Business credit cards* you can tailor limits and categories for each individual card, so you can vary spend by employee.
You can set spending limits by day, week and month, and control access to where each card is used, while keeping it secure with anti-fraud controls.
Monitoring business expenditure and getting detailed insights on costs with our online account management tool, Allstar Online, means you can review and adjust your policy regularly.
Streamlining travel expenses is easy by combining an Allstar business credit card with a Roomex** account to streamline hotel bookings and other travel expenses.
ExpenseIn***, partnered with Allstar, is an automated expense management solution which means expenses are uploaded and approved in seconds via an app. The process of submitting expenses is so much easier because employees can record expenses and receipts from anywhere and approval decisions are sped up, allowing you to be more aware of your business’s costs.
* Subject to status and a full credit check.
** Allstar Business Solutions provide the Allstar Plus and Allstar Expense card. Roomex provide the Roomex account and any applications or queries will be managed with them directly.
*** ExpenseIn is a separate product that can be added to support your Allstar Plus or Expense account. Applications are made directly with ExpenseIn and are subject to status.
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