Why you should review your expense policy annually | 4 min read
As the old adage goes, change is inevitable, and it has never been truer. Many business are only prompted to give facelifts to their expense policies as a knee-jerk reaction to obvious factors; changes in the HMRC guidance, a surge in costs and complaints of increased managerial and administrative burden. Though employee expenses may not have a direct impact on the core operations of an organisation, expense claims can add-up to hurt the bottom-line nonetheless. Therefore, businesses should be aiming to stay ahead of the game and addressing predictable issues proactively.
With technology continuing to advance exponentially, businesses cannot afford to live in the past. For instance, an expense policy formulated a decade ago and updated with only regulatory changes would fail to address the nuances of today’s world. The sheer volume of options that employees hold in their hands in the shape of smartphone apps with nearly instant real-life impacts is astounding.
A yearly review, at the very least, of your expense policy could aid in keeping abreast of the latest technological changes, but technology is far from the only factor. As with any business decision, an analysis of past data from within and outside of the organisation can provide a framework for the way forward.
At the launch of the review, the foremost question should be: Is our expense policy still fit for purpose?
Any loopholes in the policy could be prone to exploitation as well as cause genuine confusion. In either case, grey areas could affect profitability and frustrate employees. Consequently, the Finance Department could find their workload increased trying to iron out issues.
Simplicity, in wording, formatting and processes alike, is the key. Having a clear, unambiguous policy can be very advantageous. With employees having more control over their overnight travel arrangements through online booking, for instance, clearly setting down reasonable cost limitations and conditions of allowable expenses would be a necessity. Adding a list of examples and simple dos and don’ts would minimise the room for out-of-policy claims and their burden on the Finance and HR Departments. However, the policy still needs to be flexible enough to acknowledge exceptions, such as the hotel cost policy limit for the rest of the UK would most likely not cover a hotel room in London.
Moreover, the expense categories which encompass the bulk of the claims need to be prioritised in the review. In this case, technology could work in the business’ advantage – if hotel costs were the top claim type, for instance, then encouraging teleconferencing over face-to-face internal meetings would reduce costs for the business whilst sparing employees the stress of travelling. Last but not least, inclusion of a wide range of stakeholders rather than just the CFO and the Finance Department could bring new perspectives into light. Having the input from other departments would also make the policy a document that is more widely understood and more likely to be implemented closely.
A clear, up-to-date expense policy, in conclusion, can contribute towards saving time, money and effort across the organisation, and keeping (almost) everyone happy!
If you’re interested in updating your expenses policy, visit our free Expense Policy Toolkit for guides, best practice advice and even a policy template.
