Why every business needs an up-to-date expenses policy
When expense policies are not regularly updated and communicated, employees can easily be left confused by what they can and cannot claim, causing them to switch off from the process entirely.
A new starter might, for instance, hear from a colleague that they can claim 45p per mile if they use their own vehicle, or be given vague instructions about ‘subsistence’ when working overnight, without reading the policy themselves. And even if they have, what if these rules no longer reflect the changing demands of the job and the rising cost of fuel and food?
Like any HR or company policy for that matter, managing expenses is not a box-ticking exercise, amounting to little more than uploading a document to the intranet. We should think of it as a go-to resource for staff to access quickly and easily every time they want the latest guidance. At the very least, I would urge firms to review it at least annually and be ready to make changes if necessary.
Given how quickly expense bills can rack up, it is not surprising that some businesses take a draconian approach when employees try to claim back money. They might think it is better to impose blanket rules such as ‘no first-class travel for journeys under 30 minutes’ rather than risk multiple claims for high-cost train tickets.
Yet every expenses policy should be closely aligned with the needs of the business. It might be appropriate for someone working at a big company to fly business class when profits are strong – but not if it faces financial difficulties and is making redundancies.
There still needs to be an element of flexibility in the system, and managers should have the freedom to make a business case for an employee making claims outside the rules. Someone could, for example, get more work done by travelling first-class even for a short journey, or win a high-value new client yet incur a high entertainment bill.
It is a good idea to reflect changes in HMRC’s Advisory Fuel Rates (which rose from 40p to 45p for cars and vans in 2011/12) in your policy, otherwise people are likely to feel short-changed. With fuel costs continually rising, they may feel resentful every time they have to jump in the car for a meeting.
Another incentive for updating your expenses policy is that it could reduce the amount you spend on suppliers. Take any updates as an opportunity to stipulate which companies should be used and see if you can negotiate a deal for regular custom. Furthermore, if your expenses data shows that workers are also accruing high parking or travel costs, why not see whether you can get a season ticket?
With the right expense management software in place, employees are presented with an up-to-date policy that is easy to adhere to. The whole process should be as seamless and user-friendly as possible – especially when you think that businesses rely on the goodwill of their staff to effectively ‘loan’ them the cost of travel, absorbing any fuel and fare increases, until the end of the month.
As long as the rules are reinforced in a way that engages employees, rather than feels unnecessarily strict, chances are they will only make claims for reasonable costs.
You’ll find more advice on creating an expenses policy in our free Expense Policy Toolkit.
