Whether an SME or large enterprise, your business needs defined expense policies to help manage spend. But how do you build an expense policy that empowers your people without losing control of spend?
Expenses are essential for businesses. And while in the movies, bad 'business expenses' might look like yachts and diamond watches, you know first-hand that in the real world they're often much smaller and occur because of a lack of structure around policies.
For your non-finance colleagues, chances are checking the expense policies is low on their list. But as a company, you need policies to ensure everyone follows the rules and sticks within your painstakingly planned budgets. So, how do you create easy-to-follow business expense policies for your employees and teams?
From reducing overspending to boosting compliance, you should design each spend policy to help the business make the most from its resources. And use intuitive tech to remove the barriers that make compliance hard for your colleagues.
Although every enterprise has unique expense policy requirements, there are lots that they have in common, including determining what kind of expense type, reimbursement eligibility, and spend limits should be factored into the policy.
No matter the shape or size of your business, your policies should also include some kind of approval chain, too, so that the team managers and finance team can have a good overview of spend, and nothing strange can slip through the cracks. But what should an approval chain look like? In the old world, if one of your non-finance colleagues needed to spend money on a particular item or software subscription, they'd likely first submit a request to access funds or follow a procurement process.
Now with a solution like Payhawk, featuring cards and expense management software, you and your finance colleagues can ensure each card has the right associated budget, and when the card user needs to request more funds, they can do so via the app in a couple of clicks.
The number of approvers you choose to feature in the workflow is up to you and will depend on your own business structure. According to our customers, two levels or more is the most popular option, with 37.84% choosing to include two approvers in their workflow. (Data taken from customers using Payhawk corporate Visa cards between 1st January and 30th September).
At Payhawk, you can build your expense policies into the software with features like the workflows mentioned above, meaning that only approved expenses make it into your accounting system (and you can be as strict or as flexible as you wish).
In addition to the workflows, every company should consider adding specific categories or subcategories to expenses that are unique to its industry or role. These categories will help with accounting, data collection, and budgeting.
Traditionally, these policies include long itemised lists detailing what employees can and can't pay for using their company cards which creates unnecessary rigidity between them and management. And can even cause dissatisfaction and low productivity for team members who feel stifled by strict rules and regs.
For example, suppose you have business expense policies that include lunch and coffee as an expense type. Employees should be free to go through super simple procedures when they meet up for lunch with potential clients. From coffees to office rent, whatever the expense, you need tools that seamlessly help you control company spend, such as company cards backed by software with built-in expense policies.
Expense reports can get complicated in some companies because they often require more information from both parties; the employee and the manager.
In general, many businesses have policies that are too long and detailed, which causes problems when employees are expected to read and understand them. The best way to avoid your policies gathering dust is by having a spend management solution in place. The employee can make a fund request or spend via their company card, which is connected to smart expense management software. The software already has the expense policies built-in, so the employee doesn't have to search and make sure they're being compliant. And what's more, the finance team and / or manager can see and approve the expense instantly as they're using the same solution and not waiting for different tools to sync.
Using our solution, team leaders and finance teams get automated reminders to check and approve requests as soon as they're raised. And they can approve them in seconds via the app without losing any spend visibility and control.
Worried that approval processes will be too lengthy? At Payhawk, 75% of our customers approve requests within just one hour. (Data taken from customers using Payhawk corporate cards between 1st January and 30th September).
Businesses must set rules around expenses and leverage tech like corporate card controls in order to manage spend. By creating expense policies, companies can manage their spending, ensure compliance, and provide data to make better business decisions.
At Payhawk, we offer a unique approach to your company spend management that includes several key features:
In-built guidance: You can use spend policies to create rules that explain which type of expenses and /or vendors are allowed.
Set up recurring spend limits: Set limits on the amount an employee is allowed to spend on certain types of expenses as a percentage of their total budget.
Set per diem rates: You can set custom rates for per diems and reimburse employees in a couple of clicks from the portal.
Spend policies and approval flows: Create approval flows so managers can approve or deny requests for funds or reimbursement based on company policy. This gives managers more control over spending at the department level, if required, rather than having someone outside the department handle all approvals manually (which can lead to errors).
When creating smart business expense policies with Payhawk, you can create, submit and approve expense reports from anywhere. You can also track expenses as they happen to get a complete and real-time view of spend.
With Payhawk, you can create spend policies where you can easily configure built-in approval workflows and spend limits to give your employees the freedom to spend while still staying in control and reducing manual effort.
Book a demo to learn how to set up hassle-free company expense policies using Payhawk's all-in-one spend management solution.
Trish Toovey works across the UK and US markets to craft content at Payhawk. Covering anything from ad copy to video scripting, Trish leans on a super varied background in copy and content creation for the finance, fashion, and travel industries.