Even if you’re only a tiny business, drafting an expense policy can save you a lot of time and grief in the future. Depending on your business, your employees might have to pay for things out of their pocket, such as transport or travel expenses, food, office spaces, supplies — all things that help them work more efficiently. As an employer and business owner, it’s your job to be aware of these employee expenses that help keep your company running and reimburse your employees when the time calls for it.
That’s why you need an expense policy. It sets boundaries for your employees so they know what counts as business expenses kee, keep their spending in check, and keep tabs on your company funds so you know where the money is going and how much you have left.
If you’re unsure how to create your expense policy, here are a few ways to start.
Determine your budget
The first step is, of course, to check your budget and take note of how much you can relegate to employee expenses. After all, you don’t want to waste too much of your budget. Be aware of how much you can spend at a given time and how much you should keep to other company expenses to keep your business running.
There’s no shame if you can’t afford to reimburse your employees as long as you’re transparent about it. Especially for a small business, you might not have the funds to create your expense policy immediately. But it’s important to know that your employees should still be compensated appropriately for their expenses for the company’s benefit.
Make a list of all expense categories.
In your written expense policy, it’s essential that you clearly state what expenses count as every possible cost into categories to track them and define how much should be spent on each. Examples of a few expense categories are travel and hotel expenses, transport expenses employees use to commute to work every day, subscriptions to productivity tools and apps regularly used in the office such as MS Office, and internet or data plan allowances.and what don’t. It helps to group
Ensure that these are all expenses that benefit the company and help your employees work better. Personal expenses should be left out of this.
For example, suppose an employee needs to travel to a seminar or meeting with a client, plane tickets to and back. In that case, hotel accommodations for all the days they’re there and allowances for food and fares should be counted as reimbursable funds. If your employee decides to spend money on shopping and souvenirs for their benefit, then the company isn’t obligated to reimburse them for that.
Keep track of all expenses.
This should come as a no-brainer, but you should keep track of your employees’ company spending the moment you’ve implemented your expense policy. As much as possible, you want to avoid way to do this.when an employee claims to have spent more money than they did in their regular expense reports. Setting clear boundaries on reimbursable funds is one
Another is to ensure that all payments made in the company’s name are made with a separate credit card or payment account for online payments than your employee’s bills. Your can provide specially made business credit cards for employees to use on business expenses. It’s also a quick way to access the company’s shared funds and keep tabs on how much your employees spend on certain things.
Automate your expense policy operations.
Companies would file expense reports by hand using pen and paper in the long past. Automating all your business operations, including expense reports, should be done as soon as possible. Not only is it more secure this way, but it’s more efficient and relatively easier to use and access.
Nowadays, plenty of accounting and office management software and programs are specifically designed to help businesses streamline their operations. Consider doing the same to yours to maximize productivity and efficiency.
The most important thing when it comes to business expenses is always honesty. Above all, be transparent with your employees and make good promises. Not only will it benefit your business in the long run, but it can improve your employees’ trust in you and your company, and in turn, they’ll be honest with you.