Making the most of your company expense policy: 5 steps to best practice

Five crucial steps when setting up an employee expense policy


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Expense policy in short

For business expense management, a good expense policy can save considerable cash by avoiding claim-confusion, limit outgoings, promote fairness, and minimise fraud. All benefits to your business. Start with the expenditure that’s relevant to your company now, and you can always alter the policy later.

Once you have a policy in place, make sure the procedures are clear and easily explained. For example, it’s good to ensure that employees keep receipts so that reconciliation and HMRC-compliance are straightforward. Soldo’s expense management software allows for digital receipt capture on the go. Just take a photo of the receipt and it’s stored for good. Simple!

Soldo isn’t just useful when it comes to receipts; our platform offers a spending solution that will revolutionise the way you manage expenses. With a prepaid system that connects to great expense software, Soldo eliminates the likelihood for error. You decide who gets a card, how much is on it, and what it can be spent on. That way every expense must follow your rules, and you can view them in real-time from the Soldo dashboard.

Reinforce your expense policy with a Soldo plan that lets you set customisable rules and limits. Get started now.

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Implementing expense policy best practices in your business

Step 1: Understand why you’re creating an employee expense policy

Before you jump into action and apply your company expense policy, think about why you need one. There are a number of reasons to create a watertight T&E policy, among them:

  • Limit costs and outgoings: you should make it clear what is expected of your employees, and what they can use company cash for.
  • Foster a culture of fairness: you’re keen on making members of your team feel adequately compensated for business costs, which should prevent them from submitting exaggerated claims.
  • Prevent fraud: you can use your policy as a concrete document to protect yourself if you feel employees have overstepped the mark.

Understanding exactly why a business expense policy will give you hints of what you should include in it. Start with the spending that’s most likely to arise in the short term.

You don’t have to think of everything when you first write your expense policy and procedure – it isn’t set in stone. You can always add more later, so you can account for business and employee changes.

Step 2: Clearly explained steps and processes will save time and reduce disputes.

For instance, in your business expense policy process, consider setting rules that receipts or documentation is required for all expenses above £20. Consistency will improve morale and reduce debate.

Keeping receipts is vital. No matter how trustworthy an employee is, it’s not wise to just take their word for expenses. Besides, your accounting practices will require receipts for all expenditure above a specified amount. You’ll need evidence of each employee expense, with receipts submitted to the finance team.

Our expense management solution reduces the time required to manage receipts. Employees can just snap a photo of a receipt on the Soldo app and submit them to the finance team. It’s the end of lost receipts!

Clearly explained steps and processes will save time and reduce disputes.

For instance, consider setting rules that receipts or documentation is required for all expenses above £20. Consistency will improve morale and reduce debate.

Keeping receipts is vital. No matter how trustworthy an employee is, it’s not wise to just take their word for expenses. Besides, your accounting practices will require receipts for all expenditure above a specified amount. You’ll need evidence of each employee expense, with receipts submitted to the finance team.

Our expense management solution reduces the time required to manage receipts. Employees can just snap a photo of a receipt on the Soldo app and submit them to the finance team. It’s the end of lost receipts!

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Step 3: Educate employees on your T & E expense policy and expense claims

Equip your employees with a copy of your business expense policy and procedure, ensuring that this is included in induction training, and provide adequate training on expense reporting.

Emphasise that every expense submitted is a direct cost for your company and that people should spend only as and where necessary. Big client lunches equal large bills – charges like this will haunt you.

The same goes for your expense claims: employees will be more inclined to follow the right procedure if it’s simple. Use drop-drown choices on most options for expense forms and offer clear explanations for fields that may require them. This is best practice

If you want to save time on verifying and managing expenses, Soldo automates employee reports and our web console gives finance teams real-time access to spending information, together with extensive reporting and analysis.

Step 4: Put your business expense policy rules to use with prepaid business cards

Prepaid business cards such as Soldo help put your spending rules into practice, automatically limiting spending to what’s permitted in your employee expense policy.

With Soldo prepaid cards, you get total control over spending. You can create daily, weekly or monthly limits – plus specific budgets for travel, accommodation, food and more.

Anyone in your business can have a card, and you can see activity on each account in real time, which reduces misuse and increases security.

Your finance team can enforce the guidelines you set in your company expense policy, and they’re able to refine spending criteria on the spot.

You’ll get instant full visibility – you can choose to get notified whenever a transaction looks out of place, and even block cards in a flash if you notice anything suspicious or if a card gets lost.

Related reading: Learn more about managing employee expenses

Step 5: Target expense reporting accuracy within your expense policy and procedure

When completing an expense report, employees must ensure that all data required is clear and complete. They should add notes and details to their reports, such as the purpose of business meals, and any other entertainment expenses. This should be clear in your T & E expense policy.

A Soldo prepaid card, along with the admin dashboard and mobile app, eradicates hours of manual reporting for employees and checking for your finance teams. Once an employee makes a payment and uploads a photo of their receipt, the Soldo app will automatically scan the important information for your reporting.

So, you get real-time expense reports, with total accuracy, giving you data that you can transform into valuable and actionable insight. Nice.

Plus, our web console integrates with your accounting system to automate processes and create in-depth reports, to help you spot patterns in people’s spending and address habits as they arise.

You can even share the data with your accountants, so they can help you shape your business expense policy as you grow.

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Why is it important to have an expense policy?

Tracking expenses is key to keeping your business’ finances healthy, and a solid expense policy can help with that. If you have an established expense policy that covers the breadth of your business spending and is understood by managers and employees, then this should limit overspending. Otherwise, employees may make purchases that aren’t allowable, or there can be misunderstandings around monthly budgets.

However, a good expense policy on its own isn’t enough to combat overspending, as limits can still be breached and there’s always room for human error. But with a technological backing, like Soldo’s expense management software, your policy can be bolstered by physical limits.

Our smart prepaid system allows you to assign cards, set budgets, and establish spend rules and categories. This way, you always know how much money is being spent and what it will be spent on.

What should an expense policy include?

A good expense policy should cover as many transaction scenarios as possible. For example, if your employees have to travel often, it should include guidelines regarding meals out, accommodation, and fuel.

However, whilst covering a lot of ground, any policy should also be accessible and easy to understand. If employees have to sift through reams of rules before they can pay for something, there’s a good chance they might not bother.

So what’s the best way to combine detail with brevity? A technological boost could be the answer. Soldo’s prepaid cards, for example, come with customisable rules that let you dictate how much can be spent and what it can be spent on. You can do this for every card and for as many cards as you like.

Switch to smarter spending with Soldo and enjoy financial peace of mind.

How can I improve my T&E policy?

You may need to make changes to your travel and expense policy as your business grows. These changes should reflect the shifting needs of your employees and the ways in which your business spending has evolved.

With a platform like Soldo, you can make these decisions based on detailed data. Our expense management software allows for automated spend tracking and granular analysis of expenditure. This means you can see where your company is spending the most, and alter your policy to limit these costs.

A watertight expense policy combined with a smart system like Soldo will give you financial peace of mind.

What is an expense reimbursement policy?

Aside from a standard expense policy, some businesses may also utilise a reimbursement system, wherein employees pay out of pocket for company expenses with the promise of future reimbursement. A reimbursement policy will stipulate the terms of this arrangement.

However, a system like this is rife with issues. Reimbursements can take time to process, leaving employees in the dark and potentially in financial difficulty. So instead of tedious reimbursements, why not upgrade to prepaid cards?

Soldo’s prepaid system lets you assign cards to as many people as you deem necessary, and each card can be allocated a particular budget and particular spending rules. This means that you still stay in control of company cash, but employees can spend more freely without dipping into their personal funds.

Do I need receipts for business expenses?

The short answer is yes. Many expenses are allowable, meaning you can deduct them from your business’ earnings before tax. However, HMRC may ask to check that your allowable expenses are correct, and to do this they require receipts to be kept for six years from the end of the financial year it relates to.

That may sound like a lot of paperwork, but luckily, it doesn’t need to be physical. With expense management software like Soldo, receipts can be captured and stored digitally. All an employee needs to do is snap a photo of their receipt at the point of purchase and Soldo creates reports from there.

With a system like this, you never have to worry about losing receipts again, and you’ll always know who’s spending what.

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