Policing expenses: the do's and don'ts

In this post, we’re looking at some things you need to remember when enforcing your expenses policy and in particular the human side of the job.

How to enforce your expenses policy:

• Do have a simple, plain English expenses policy
• Do make sure you communicate
• Do make it easy for people to comply
• Do make your expense limits reasonable
• Do have an expenses exceptions policy
• Don’t make any exceptions
• Don’t keep changing your expenses policy
• Don’t ignore repeat offenders
• Don’t imagine you’ve got it 100% right all the time!
• Do remember your company culture

✔ Do have a simple, plain English expense policy

Having a clear and understandable expenses document has to be the start of the whole process of enforcing an effective expenses policy. In our opinion, it is absolutely vital to build your process on a foundation of an easy to understand policy that is accessible to everyone.

Leave out the corporate buzzwords, Three Letter Acronyms (TLAs) and tech-speak and make sure that your rules and recommendations are clear. Imagine reading it as a new employee, with little or no experience in your business. Would it make sense to them? Also ensure that rules don’t contradict one another. Read through your policy as a ‘devil’s advocate’ looking only for inconsistencies and loopholes.

⦸ Don’t forget to communicate

Once you have written the best expenses policy you possibly could you need to make sure you communicate it. One of the most frustrating things is when you tackle someone who has spent way over your limits only for them to say that they didn’t know what the policy was or where to find a copy!

Make sure that you communicate the policy to all your staff and lodge an up to date copy in an accessible place such as a central drive or dropbox. Don’t forget new joiners and make sure that an introduction to expenses is included in their inductions process.

It’s also important that you communicate any changes you make along the way and we’d strongly suggest taking feedback from the users before you tweak your policy in any review that you have. When people feel that their feedback has been listened to you’ll find that compliance goes up as a result.

It may also be worth asking your IT team to include a bookmark to the policy in any company installed browsers, and send out regular links to it in any finance communications.

✔ Do make your expense limits reasonable

Nothing destroys the credibility of your expenses policy quicker than unrealistic limits. Telling people that they need to make sure their hotel room price is less than £30 in central London or they can’t pay more than £100 for a last-minute flight will seem ridiculous and is bound to reduce compliance.

You also need to make sure that your limits are set at a level that doesn’t hinder operational effectiveness. Financial responsibility is very important, but if it makes your organisation less efficient as a result, then you are shooting yourself in the foot!

⦸ Don’t make it hard for people to comply

Complying with your company expenses policy should be as easy as ABC and the harder you make it the less that people will be able to stay within the lines.

Cloud-based expense management software such as Access Expense can actively help people stay within policy, flagging up any items that are outside the limits and making it a simple matter to submit a correctly completed claim.

✔ Do have an expense exceptions policy

Rules are important but as we said before, if they make your organisation less efficient as a result then they are pretty pointless. That’s why it is important to put in place a method of handling exceptions.

For example, imagine someone being asked to fly to the US to sign a contract with a new customer only to tell them that they couldn’t because a last-minute transatlantic flight was against company policy! Circumstances like this are why you need to have a method of allowing people to expense things that in ordinary circumstances would be against the rules.

You can’t predict everything that might happen so having a fairly simple to understand and manage exceptions policy like pre-authorisation by a line manager will add in the flexibility your business needs.

⦸ Don’t make any exceptions

This might seem contradictory after the last tip but bear with us because it is important to make sure you are consistent with your decision making.

Yes, you need to have an exception policy for things that are outside the normal run of business but you also need to make sure that when you are asked to make rulings about whether things are allowable or not you apply a consistent decision-making framework.

It’s important that certain people don’t get favourable treatment as that will increase resentment towards the policy (and you!), and it may be advisable to have a word with senior management and ask them in advance for their support.

An easy way to reduce the credibility of your policy is to allow directors and senior management to adopt a “do as I say, not as I do” approach and so you need to impress upon them how important it is for them to stand firmly behind the rules.

In short, apply the rules firmly but fairly.

⦸ Don’t keep changing your expenses policy

Consistency is the key here and we’d suggest that you need to keep your policy up to date to cope with changing circumstances but you can overdo it. It’s important not to keep changing the rules as this is an easy way to confuse people and almost force them to break the rules.

A good idea is to adopt a review schedule that looks at the policy once a year and makes any changes necessary and then leave it alone the rest of the time. That’s not to say that you shouldn’t respond rapidly to changing circumstances (think COVID), so you can make emergency changes, but more routine tweaks should be left to the annual review. And of course, make sure you communicate that you have updated the policy once it is signed off. 

⦸ Don’t ignore repeat offenders

Most people dislike conflict and expenses is certainly an area that can stir up strong emotions. With this in mind, it is easy to see why you may want to ignore repeat offenders and hope that their behaviour improves but this would be a mistake. Habitual rule breakers will happily carry on until challenged and so it is important to point out the error of their ways early and firmly.

Bear in mind the point in our ‘no exceptions’ tip. If staff see someone getting away with flouting the rules then your expenses policy will lose credibility and so it’s important to make sure you deal with the situation right from the start.

A good way to deal with this is to set out your response to infractions and then get management to sign it off. When someone breaks the rules then it is a simple matter to deal with them according to your previously agreed policy.

⦸ Don’t imagine you’ve got it 100% right all the time!

You wouldn’t be human if you didn’t make mistakes and with staff expenses being a complex subject it is a fair bet that you’ll most likely drop the ball occasionally. In fact, we’d suggest that you wouldn’t be human if you didn’t make the odd error here and there. The important thing here is to make sure you understand what went wrong and make a change to put it right. 

Many people think that if they take feedback it shows weakness but in our experience people really value the fact that you are willing to listen to their opinion so we’d suggest canvassing opinion and when you make a change to the way you work to go back to people and thank them for their input.

✔ Do remember your company culture

Our final tip is to make sure you are mindful of your company culture because there’s no ‘one-size-fits-all’ company expenses policy and every company is different.

For example, a manufacturing company may take a dim view of managers taking their customers out to lunch but the media company next door might take a dim view if they didn’t! The message here has to be that you should tailor your policy to your company culture. By doing this you make it much more likely that it will, in effect, police itself.

If managers and staff can see the point in rules, they match what they expect from a culture point of view and they make their operational life easier then you’ll actually find that you have to spend very little time explaining or enforcing your expenses policy at all.

Company expenses - make it easy on yourself.

We hope you have enjoyed our tips and that you have got some helpful techniques to use in your business. Managing company expenses doesn’t have to be difficult, time-consuming or emotionally fraught at all. In fact, if you have an excellent company expenses policy that you have communicated properly and that fits in with your company culture then you are halfway there.

And of course making sure you have a best-in-class expenses system such as Access Expense can make managing, policing and enforcing your expense policy a far easier and less time-consuming process.

Access Expense, making your expenses life easier

Access Expense, our leading cloud-based expense management software can automate your expense process, and make enforcing your expense policy pain-free. Book a free demo and see how it can work for you.