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5 Tips to Bulletproof your Travel Expenses Policy

By Mark Snyder

At a previous company that I worked for, the expense report submitted by one of our technicians revealed some surprising and troubling entries such as a receipt for luggage as well as dog boarding costs. Upon further investigation this was an employee who had never traveled for work before and was unfamiliar with our standards. The employee explained that he was traveling the same week as his wife was also away from home, he had to buy an additional set of luggage as they only had one set. Additionally, they needed pet boarding services for their dogs in their absence. As managers we were really to blame as we had done a poor job informing the employee of the expectations and properly documenting our policy.

Here are five guidelines that will help craft a bulletproof employee expense policy:

1. Principle Based 

Ensure that the policy is based on common sense principles such as “Spend the Company’s money as if it was your own” and “All employees are expected to behave in an honest and responsible way in relation to the Company’s expense policy”.  When people understand the over-riding principles, they tend to take the policy more seriously and comply with the guidelines.

2. Provide Examples

Your policy cannot possibly have a listing of every acceptable or unacceptable charge, but you should provide some common examples of allowable items as well as items that are not reimbursed. For example, baggage fees, parking, and hotel internet charges are allowable items, but movies, mini-bar, childcare and pet care will not be reimbursed. Some short lists will go a long way in helping your employees understand the logic regarding what is acceptable and what is not allowed.

3. Timely

Make sure to provide a timeliness expectation for submitting expenses, such as a completed expense report and related receipts should be submitted within 30 days. I can still remember certain employees who would wait all year long without submitting any expenses and then at the end of the year submit an expense report for the entire year that would be in the multiple thousands of dollars. This was always an unwelcome surprise to our year-end earnings as well as the burden on our cash flow and staff to process all these reports.

 

4. Win/Win

Create a policy that benefits the employee as well as the Company. For example, we’ve seen a lot of success with meal per diems. You could provide each employee a $50 per day allowance for meals, that way if they spend less, they get to keep the extra money. This is a great incentive for the employee to be very conscious of what they spend. In addition, it keeps the record keeping burden to a minimum and makes submitting expenses easier for the employee as well as your accounting team. A good place to start to get an idea of acceptable per-diems is the following website — https://www.gsa.gov/travel/plan-book/per-diem-rates

5. Exceptions

Make sure to consider any customer events that may fall outside of the standard guidelines and ensure your employees understand the process to get those exceptions approved and reimbursed.

Overall make sure to communicate your expectations especially when welcoming new employees to your team. Clear communication has a way of heading off issues before they arise.

Mark is a Principal with FocusCFO based out of Cleveland, OH.

855-236-0600