Why you need an Expense Spending Policy in your Company
Every company needs an expense policy that is understood by all and sundry in the organization. Everyone from the most junior to the most senior employee needs to learn the policy by heart so as to avoid cases of accidental spending or cases where an employee expects to be reimbursed money spent against the company rules.
Having an expense spending policy enhances a sense of responsibility for company spend among everyone.
At the same time, it helps cut down some over-ambitious expectations that new employees might have. You do not want your greenhorns going overboard with their financial demands or spending too much than the company can afford, do you?
At the same time, you do not want your work to stall simply because your new employees feared spending on something that they thought would not be covered by the company finance, right?
As a c-suite executive, you also do not want your company going under after it was bankrupted by some wasteful employees who were spending the company money on exorbitant products or services.
What is an expense spending policy?
According to Spend Desk, an expense spending policy is a set of rules that define what the employees of a company can do with their employer’s money. They’re often laid out in a document that workers are asked to comply with when they sign their contract.
Needless to say, financial responsibility and taking up austerity measures are key from day one of the organization. Everyone needs to know how much is too much so that they do not go overboard.
Manage Employee Expectations
An expense spending policy helps manage the expectations of your employees since they know from day one, what to ask for and what not to think of. Their expectations, therefore, are well managed from the start of their work at your company.
Remove Squabbles among Employees
Having a clear financial expense spending policy also helps remove squabbles among your employees. Battles between the finance and the operations teams are as old as history.
While the operations team wants money to spend, the finance department has been tainted as a bottle-necker that is always hell-bent on stopping the operations team from getting funds to continue their operations. This creates bad blood between the two teams.
With an expense policy clearly set out though, you will not have any of this. The operations team knows well what to spend money on and so will not approach the finance department with a budget whose items are way out of their reach.
A good way to ensure that your expense policies are adhered to is by using spend control platforms such as boya. Boya is a platform that is able to manage your company spending while tracking every expense made and recording it in real-time so that your finance department is notified every time an employee uses the company money.
Boya makes it easy for everyone in the company to do the right thing seamlessly. With Boya, the accountants will not have to worry about spending long hours reconciling the expenses at the end of every month since boya will have solved a huge chunk of this.
ow to create an expense policy
It might sound like a daunting task, but creating your first expense policy doesn’t have to be hard. Get started with these six tips:
Define expenses, budgets, & categories
Because we’re developing a financial policy, it should be based on your company’s financial situation. In order to set appropriate budgets, it’s a good idea to talk to your CFO — if you don’t have one yet, consider getting professional advice.
The same goes for setting the various expense categories you allow employees to claim. Consider what they need to excel at their job, but also think about what they shouldn’t be able to buy.
When enforcing your new policy, it’s vital to be fair to your team. Treat employees equally and avoid making exceptions — this helps make everyone feel more valued.
Also, keep a close eye on the time it takes to process employee reimbursements. You wouldn’t ask your friends or family for an interest-free six-week loan, so you probably shouldn’t ask your staff either.
The result of showing this respect to team members is a highly functioning workplace.
Keep it simple
A great expense policy should be easy on the eyes. Pay attention to the language you’re using — is it clear enough for anyone to understand? Don’t go into too much detail when it’s not needed — you don’t want to end up with a 40-page document that no one will read.
While you’re at it, your expense report processes should be user-friendly too. Take a look at our free expense report template, and see what you think.