An effective expense policy can be the difference between financial control and financial chaos. 

Research shows that more than half of UK employees (55%) hesitate before submitting an expense claim – even when it’s legitimate – because they’re unsure of what’s within policy.  

That confusion leads to hidden costs, missed opportunities, growing frustration, and dwindling morale. 

Expense policies can change that. An effective policy protects company budgets, simplifies approvals, and reduces disputes. No more delayed reimbursements, inconsistent spending, or tax compliance issues.  

But not all expense policies are created equal. As leaders in the spend management space, we’ve seen businesses do it well. And we’ve seen businesses struggle. Which is why we know what it takes to make expense policies practical and scalable. 

Ready to put unclear guidelines, delayed reimbursements, inconsistent spending, and tax compliance issues behind you? Read on. 

What an expense policy is:

An expense policy outlines three things: 

  • Who can spend 
  • What expenses can be claimed for 
  • How much company money can be spent 

You can use an expense policy to manage employee spending so that it’s always controlled, transparent, and in line with company budgets. 

When businesses need to report for tax or audit requirements, expense policies help ensure compliance and provide audit-ready documentation.  

Expense policies create accountability. Because keeping track of how cash moves within a business isn’t just useful for finance teams. It’s what helps you see where your money drives the most impact. 

Why every business needs an expense policy:

Every business needs an expense policy because it can help setting clear spending boundaries and approval structures.  

Even small startups with informal spending that may not require a formal written policy yet can benefit from having clear guidelines early prevents chaos later. 

An expense policy can help your business transition through: 

  • Company growth or reorganisation: Consistent employee expense policies help avoid confusion and maintain fairness as headcounts increase.  
  • Moving from startup informality to formal governance: Business expense policies signal maturity and accountability to investors, auditors, and employees. 
  • Incidents of misuse or noncompliance: Revised policies rebuild trust and set expectations. 
  • Introducing travel or remote work allowances: Travel and expense policies define what’s covered, from daily meal limits to coworking space costs, ensuring fairness across hybrid teams. 
  • Managing client entertainment budgets: Expense reimbursements policies make outline appropriate limits and documentation requirements for hospitality expenses are clearly defined. 
  • Opening new offices across regions: Geographically specific policies across different locations, currencies, and regulatory environments help keep budgets consistent even through change. 

How to write an expense policy in 4 steps:

Now that you know what an expense policy is and how your business can benefit from one, let’s look at how to write one that’s clear, effective, and built to last. 

First: Understand your current expense processes  

Do you know how expenses are tracked, approved, and reimbursed today?  

If not, it’s helpful to split this study into three phases: pre-spend, spend, and post-spend. 

  • Pre spend: Do employees know what company funds are available to them and what’s off-limits? 
  • Spend: When they have a legitimate need for company funds, are they able to access or request them through approved and auditable channels? 
  • Post-spend, do you know where company funds are spent? Are they making the impact you intended? Which departments, teams, or business units are responsible for approvals, compliance, and reporting? 

Knowing where your processes stand today can help you build an expense policy that’s realistic, relevant, and ready to scale. 

Second: Identify problem areas.  

For some businesses, it’s overspending — too many unauthorised transactions slipping through. 

For others, it’s duplicate claims or late reports that delay reimbursements and slow down month-end close. 

Starting from where you face your biggest bottlenecks helps you design a policy that solves real issues, not just theoretical ones. 

You don’t always need to start from scratch. Often, refining or reworking parts of your existing policy can make a huge difference. We’ll share practical ways to do that in the next section. 

That said, starting fresh can be the right move if your current policy no longer reflects how your teams work. For example, if it was written before remote work, new expense categories, or updated compliance requirements. In those cases, building a new policy from the ground up ensures you’re aligning with today’s realities instead of patching over outdated rules. 

Third: Speak to stakeholders across the business. 

Finance will give you clarity on where to set budget limits and which categories to cap or approve.  

HR will gauge your policy for fairness and employee wellbeing.  

Operations will help you practically enforce processes so that spending stays consistent across teams.  

Legal will help you account for tax and compliance requirements so that you’re always audit-ready and compliant. 

Bringing these perspectives together ensures your expense policy is balanced, realistic, and widely supported. When they collaborate, you create a policy that not only protects the business but also works seamlessly in practice, earning buy-in from every team that touches company spend. 

Four: Write. 

With all your insights now in mind, it’s time to write.  

Here’s a short checklist for writing an expense policy that people will actually read — and follow: 

  • Keep the tone clear, human, and approachable. When employees understand what good spending looks like, they make better decisions. 
  • Avoid language that feels overly technical, formal, or punitive. Your goal is to shape behaviour through clarity and trust, not through fear of getting it wrong. Statements like “violations will result in disciplinary action” creates anxiety and resistance. 
  • Group related rules together, and use headings, examples, or quick summaries where they help clarity. Instead of listing dozens of rules in one long block of text, policies become easily scannable in clear, digestible sections titled “Travel Expenses,” “Software Subscriptions”, and “Client Entertainment”. 
  • Offer brief context where it matters most. For rules that might seem restrictive, connect to legal or tax requirements, or reflect your company’s values, a short note about why a guideline exists can go a long way toward building trust and understanding. Example: “Travel upgrades are not reimbursable to ensure fairness and consistent cost control across teams.” 
  • Test your draft. Share it with a small group of employees across departments and levels to make sure it’s practical, fair, and easy to follow. Their feedback will highlight blind spots and ensure your policy translates across teams and regions. 

  
When you’ve taken the time to understand your processes, identify real issues, involve the right people, and write with clarity, you’re not just creating an expense policy — you’re building a framework that supports smarter spending across your entire business. 

How to adapt an effective expense policy:

Adapting your expense policy isn’t about rewriting from scratch. It’s about making it clearer, fairer, and more practical. By addressing these common pitfalls and embedding your policy into daily workflows, you’ll turn compliance into second nature. 

Start by identifying which expense policy your business uses.  

Ambiguous expense policies 

The problem: Vague language leaves employees uncertain about what’s acceptable, leading to inconsistent spending decisions and potential misuse. 

How to fix it: 

  • Replace general statements (“reasonable expenses”) with specific examples and limits. 
  • Include a “what’s covered / what’s not” list for common categories like travel, meals, software, and client entertainment. 
  • Add context for grey areas. For example, how to handle subscription renewals or mixed personal/business use. 
  • Make your tone clear and approachable; employees should feel confident they can interpret the policy correctly. 

Overly rigid expense policies

The problem: Strict or unrealistic rules make it hard for employees to do their jobs especially in fast-moving or remote environments. 

How to fix it: 

  • Build in flexibility for edge cases, such as emergency purchases or travel disruptions. 
  • Introduce approval exceptions where employees can seek quick clearance for out-of-policy expenses. 
  • Use technology to automate approvals and limits, rather than relying on manual oversight. 
  • Regularly gather employee feedback to understand where the policy is creating friction. 

Outdated expense policies

The problem: A static policy written years ago doesn’t reflect modern work realities like SaaS subscriptions, home-office equipment, or hybrid travel needs. 

How to fix it: 

  • Review and update your policy at least annually to align with new tools, spending patterns, and compliance standards. 
  • Incorporate digital-first categories such as software, cloud storage, and remote work expenses. 
  • Adjust for regional or hybrid differences, ensuring fair treatment for on-site and remote employees alike. 
  • Integrate your policy into an expense management system so updates flow directly into everyday processes. 

Varied or inconsistent expense policies

The problem: When teams, departments, or regions apply different rules, employees lose trust in the fairness and reliability of the policy. 

How to fix it: 

  • Create a single source of truth for your policy, accessible company wide. 
  • Standardise categories, approval hierarchies, and spending thresholds across departments. 
  • Use centralised tools like Soldo to ensure rules are applied uniformly, regardless of team or location. 
  • Train managers and finance teams to interpret and enforce the policy consistently. 

How to implement an expense policy

So, you’ve written an expense policy. It’s clear, fair, and easy to follow. But how do you get people to use it? 

The next step is turning good intentions into action — by embedding your policy directly into how your teams spend every day. 

Soldo offers a modern way to implement your expense policy consistently across the hundreds of expenses the pass through your business every month: 

  • Physical and virtual cards that make spending easy within defined limits and categories. 
  • Apps that automate expense tracking, capture receipts instantly, and enforce your policy in real time. 

By combining clarity, fairness, and automation, your expense policy can transform from a static rulebook into a powerful tool for financial control. 

With the right systems in place, an effective expense policy doesn’t just prevent financial chaos — it empowers your people to spend responsibly, keeps your business compliant, and gives you the control and confidence to grow. 

Ready to create an expense policy that works for your people and your business? Learn how Soldo can help your business. 

Or learn more about spend management and how to bring agility, order, and efficiency to how your business spends.