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Expense management: how to get it right in your business
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Recording and submitting expenses isn’t a task anyone enjoys much. And without a clear expense management process in place, all sorts of headaches can occur; an employee might wait all year to reclaim their expenses, or a dispute might arise over what can or can’t be reclaimed.

A clear, straightforward policy on expense management – coupled with expense management software to help you implement it – will keep all things expense-related running smoothly and fairly within your business.

But first:

What is expense management?

Expense management is the processes a business has in place for the submission, approval and reporting of employee expenses such as business-related travel or accommodation costs.

Expense management includes the policy governing the process and the systems involved in processing all the relevant data.

Expense management best practice

Before going into more depth, here are the key points to bear in mind when managing expenses in your business:

  1. Create a clear, easy to follow expenses policy that details what types of expense will be reimbursed, how expenses should be submitted and how they’ll be reimbursed.
  2. Make it as easy as possible for staff to submit expenses.
  3. Approve expenses promptly.
  4. Reimburse expenses in line with your policy.
  5. If an expense isn’t approved, ensure staff are informed as to why.
  6. Use software to make the submission, approval and reporting of expenses as straight forward for your employees, managers and yourself as possible.

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Employee Expense Management Policy: What to include

Here’s what you need to consider including in your employee expenses policy:

What you’ll reimburse

You need to be clear about the type of expenses that staff are entitled to claim, and any limits on amounts.

The most common expenses tend to be: travel, accommodation, overnight expenses and client entertaining.

For travel expenses, you’ll want to think about any restrictions on the type of travel that will be covered. For example, will you cover first-class train travel? Or pay for a taxi when the journey could quite easily have been made using public transport?

For accommodation and overnight expenses, it can help to set a limit on the cost of a room, and the amount that will be covered for meals and drinks.

If employees will be taking clients or potential customers out for lunch or a coffee, for example, you’ll need to specify whether these activities need to be approved prior to taking place, and get any budgets agreed in advance.

It’s a good idea to specify that if staff are ever unsure whether they’ll be able to claim an expense, to always seek authorisation prior to making a payment.

What you won’t reimburse

A list of the expenses staff will be unable to claim also helps to avoid confusion. You might want to include things like:

  • alcohol
  • travel between the employee’s home and place of work
  • fines incurred in the process of travelling for work, ie. parking fines or driving offences.

How expenses should be submitted

To keep your expense management process running smoothly, you should provide staff with clear guidelines on how they should submit their expenses and by when.

You’ll need to let them know what information you require them to submit, such as the amount, date of purchase and reason for purchase.

If you’re reimbursing car travel, you’ll need your employee to provide the number of miles travelled for work-related purposes.

The easier you make it for employees to submit this information, the more success you’ll have with accurate and timely expense filing and reports.

When expenses should be submitted

You might want to specify any deadlines by which expenses need to be submitted after they’ve been incurred.

28 days is a good time limit to set to ensure staff don’t build up too many expenses before they submit them.

What prior authorisation might be needed

Use your policy to make clear to staff any circumstances where they must seek approval before incurring costs.

How expenses will be reimbursed

Your policy should document your commitment to reimbursing staff, including how they will be reimbursed and how quickly.

How fraudulent claims will be dealt with

It’s good practice to also include details of the action that will be taken should employees make fraudulent claims.

How expense management software can help

Expense management software is the easiest way to help you and your employees comply with your expenses policy.

For one, it makes submitting expenses so much easier, cutting out some of the hassle for your employees. It also helps to ensure they submit all the information you need every time, so there’s no back and forth trying to get hold of missing information.

Most solutions enable staff to submit a digital copy of their receipt – a photo will usually do, reducing the need to hold on to paper receipts.

By making expense submission easier for your employees, and enabling them to submit their expenses anytime, anywhere, from their mobile phone, the better the chances they’ll file them on time.

Expense management software also makes the whole approval process easy and instant, minimising delays. And notification messages can alert authorising managers that expenses are outstanding, meaning that no expense submission gets overlooked amongst a cluttered inbox or messy desk!

It’s also essential that you keep records of all your employee expenses and report these to HMRC for tax purposes.

Software makes it incredibly easy to compile reports for sending to payroll and HMRC, minimising the risk of errors that can occur when re-entering data manually.

Manage expenses with HR Software

Our HR software streamlines all kinds of HR admin processes, including expense management and reporting, saving you and your employees huge amounts of time.

Get in touch on info@citrushr.com or give us a call on 0333 444 0165 to find out more about our easy to use HR Software.

Or start your free trial today.

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