Volopay Blog

A complete guide to Expense Policy in Organisations


Planning to create an expense policy? Haven't heard of one? Not getting anywhere near making one? It's ok to be clueless. That's where we step in.

We believe in formalised written down policy which everyone adheres to which is vital for any business. We are here to help one craft a policy that suits their needs well.

We are here to show what all should go into an effective policy and how to develop one smartly.

What is an Expense Policy?

Expense policy simply means a set of guidelines under which employees are expected to exercise their discretion on spending the business money and how they can seek reimbursements for any out of the pocket expenses

Now this can vary among companies though they will have the below common aspects:

• A list of expense categories under which the employees can claim
• Expense limits for each category per person
• Reimbursement procedures
• Dispute management procedures

What is an Expense Policy?

Expense policy simply means a set of guidelines under which employees are expected to exercise their discretion on spending the business money and how they can seek reimbursements for any out of the pocket expenses

Now this can vary among companies though they will have the below common aspects:

• A list of expense categories under which the employees can claim
• Expense limits for each category per person
• Reimbursement procedures
• Dispute management procedures

Benefits of an Expense Policy

Now that we have taken the pain to create a document, we need to understand its relevance as well. With a well laid out expense policy the following can be achieved: 

• Insights into spending trends 

With proper policy in place, employees can spend only in allowed categories and spending is easier to monitor among the defined categories 

• Decrease in unnecessary spends 

With pre sanctioned categories, spending on unnecessary products or services can longer be done as the policy simply does not allow them 

• Increased Turnaround Time (TAT) of reimbursements 

As employees know what all to submit for their reimbursement, rejections rates are reduced leading to satisfaction of employees 

• Decrease in fraudulent claims 

As expense policy would be clearly covering this segment, any attempt to do so will result in clear penalisation, leading to employees abiding by the document and not attempt anything detrimental to the business 

Expense Policy - A living entity

No business is run to remain stagnant. It's management and employees will always have a vision and the business will keep on evolving. In that process various aspects will change and one of them that will surely change will be the whole basket of expenses. 

With that in hindsight a once-and-for-all expense policy does not make any sense. What was appropriate for a team of ten will not be the same as with a team of 50. 

To account for this, regular milestones have to be kept for reviewing and assessing the expense policy. It is definitely prudent to have a team take a look at the policy and make necessary changes apt for the phase of the organisation. 

When this is being done, it is important to take feedback of all the employees. This helps in the forumation of a holistic document. It also has the added advantaged of boosting employee morale. 

Regular review of expense policy will ensure that the system in place is fit-for-purpose and will contribute to maximum productivity and efficiency 

Before we bid adieu!

Expense policies and systems are an integral part of any growing business. With proper systems staff is empowered to spend on behalf of the company when needed, and the finance team can stay in control and seamlessly track spending. 

With growing business expense management often goes out of control and leads to the creation of ad-hoc systems with no real reason. This leads to inefficiencies and wasted time. 

A fit-for-purpose policy will suit the particular needs and demands of the business, and will give management and is employees certainty and confidence around the treatment of business expenses. 

For seemless control and confidence, consider an advanced expense management platform like Volopay. It ensures spending time and money in the most modern and smartest way so that you and your team can focus on growing your business and serving your customers.