Why you need an expense policy
You need an expense policy to keep business expenses within your financial plans. And you need it to be clear and easy to follow so that your employees know where they stand when it comes to making payments for work-related activities. According to The Economist, happy employees are more productive, and your expectations around out-of-pocket expenses and long reimbursement procedures or waiting times have a big impact on team morale.
Here are the seven biggest "Cs" of expense policies and why you need them:
Clarity: An expense policy clarifies what is allowed and isn't allowed when it comes to employee expenses. This clarity helps avoid confusion and misunderstandings about what costs the company covers.
Consistency: An expense policy ensures that employees are all held to the same standards and guidelines, which can help to prevent inconsistencies in how teams handle expenses across the organization.
Control: An expense policy gives the company control over how people spend money, ensuring that funds are used for appropriate business purposes.
Compliance: An expense policy can help ensure that the company complies with legal and regulatory requirements, such as tax laws and accounting standards.
Cost savings: An expense policy can help to prevent unnecessary expenses and reduce costs. By setting clear guidelines for what expenses are allowed, companies can avoid overspending and prevent waste.
Clear accountability: An expense policy can help promote transparency and accountability within the organization, as employees must provide receipts and other documentation to support their expense claims.
Company reputation: An expense policy can help protect the company's reputation by ensuring that employees spend company money responsibly and ethically.
In summary, an expense policy is important because it provides clarity, consistency, control, compliance, cost savings, transparency, and reputation protection. By implementing an effective expense policy, companies can ensure that their employees are spending company money responsibly and ethically while also achieving their business objectives.