How to create great employee expense policies

Your business is growing, with new hires joining your team and projects moving forward at lightning speed. Your latest product launch was a resounding success, and your customers are raving about your services. However, despite the forward momentum, managing expenses is a drain on resources.

Every time an employee submits an expense report, policies are unclear and approval workflows fragmented, leading to inefficiencies and discrepancies that have to be resolved.

You can address this with a well-crafted employee expense policy that streamlines processes and ensures accuracy. 

In this article, you'll discover: 

• What is an employee expense policy? 
• Why your business needs an expense policy 
• 7 elements to include in your expense policy
• How to create an employee expense policy
• How to automate expense management with Juni

However, even with the most carefully structured and implemented expense policy, you'll still likely experience issues like bottlenecks with the reimbursement process, a lack of visibility into spending, and limited controls over where your resources go.

So, we also discuss how tailored spend management solutions like Juni allow you to skip the reimbursement process altogether and give you full control over your spend.

What is an employee expense policy?

An employee expense policy is a set of guidelines to manage and reimburse expenses incurred by employees while performing their duties. These policies are designed to provide clarity on what types of expenses are permitted, the documentation required for reimbursement and the procedures for submitting expense claims. 

The goal is to make sure that employees are reimbursed fairly and promptly while maintaining control over company finances. 

Why does your business need an expense policy?

By specifying allowable expenses and setting limits, an expense policy helps maintain financial discipline. 

It ensures spending aligns with a predetermined budget, reducing the risk of overspending and financial mismanagement. Additionally, it plays a crucial role in preventing fraud related to expense reports, safeguarding the company’s resources and promoting integrity.

For example, your finance team is in charge of managing the budget for a rapidly growing company. As the business scales, so do the expenses related to travel, client meetings, and office supplies. Without a clear employee expense policy, the finance team starts to notice inconsistencies and excessive spending across departments. 

By implementing a comprehensive employee expense policy, your finance team can establish clear guidelines for all employees. The policy sets limits on travel and accommodation expenses, specifies the documentation required for reimbursement, and outlines the approval process for expense claims. 

What are the limits of an employee expense policy

Despite clear policies, businesses often face challenges with expense claims that push the boundaries—potentially leading to significant financial leakage. For instance, when claims and reimbursements make you lose money to hidden expenses. For example: 

Accommodation upsells: Opting for higher-tier hotel rooms or extending stays without clear business justification.

Incidental expenses: These can range from minibar charges to fast internet charges in hotels, which might not be covered under the policy.

Excessive entertainment expenses: Charges for drinks or entertainment can add up, especially if not strictly necessary for business purposes.

Below, you’ll see what you need to create an employee expense policy, then we look at solutions to gaining custom financial controls so you don’t even need a claims or reimbursement process at all.

7 elements to include in your employee expense policy

A well-crafted expense policy enables all employees to effectively carry out their duties by providing clear guidelines and necessary resources. In essence, this approach involves establishing predefined limits while giving employees the freedom to make decisions within these set boundaries.

While there's no one-size-fits-all expense policy template, here are the key components of a solid employee expense policy: 

Eligible expenses: A list of authorised expenses, such as travel, meals, accommodation, entertainment, subscriptions and office supplies.

Expense limits: Specific limits or caps on certain types of expenses, such as daily meal allowances or maximum hotel rates.

Submission process: The steps employees need to follow to submit an expense claim, including required documentation like receipts and invoices.

Approval process: The workflow for approving expense claims, detailing who is authorised to approve expenses and any required levels of review.

Reimbursement timeline: The timeframe within which employees can expect to receive reimbursement once their claims are approved, if they aren’t using a company card.

Non-reimbursable expenses: A clear outline of expenses that are not covered by the company, such as personal expenses or unauthorised travel upgrades.

Compliance and auditing: Procedures for ensuring compliance with the policy and conducting periodic audits to prevent fraud and abuse.

Creating your employee expense policy in 5 steps

Creating a robust employee expense policy is crucial for maintaining financial control. However, it doesn't guarantee employee compliance or remove process-related bottlenecks. This is where spend management platforms come in: they can help you take back control of your cash flow with real-time visibility and controls. 

By following these five essential steps, and selecting the right financial platform, you can establish a clear and effective policy that benefits your organisation and its employees. Here's how to get started:

1. Create a strong expense management policy structure

Building a solid policy involves understanding your team and company's needs and day-to-day expenses. Effective spend management begins by identifying the most common expenses employees incur and considering industry standards. 

For instance, if your company frequently sends employees on trips, typical business travel expenses might include airfare, hotel accommodations, meals, transportation (such as car rentals or ride-shares) and incidental expenses (like tips and internet access fees).

So, identify allowable expenses and limits. Start by going through expense categories such as travel, meals, accommodation, office supplies, and professional development. Then, clearly define allowable expenses in each category to prevent confusion and set clear expectations. 

You also need to establish specific limits for different types of expenses. For example, set daily meal allowances, maximum hotel rates and mileage rates for personal vehicle use. These limits help control costs and ensure spending stays within the company’s budget.

2. Empower your team with company virtual cards

Depending on company and employee needs, integrating business expense cards can help keep expense management efficient and transparent. 

This is because it allows employees to make allowable purchases without using personal funds, which means there’s no need for reimbursement. You’ll also have a single source of truth for employee and company spend. 

For example, with Juni, you can create as many virtual credit cards as you need in SEK, GBP, EUR, or USD. You can set specific controls to monitor, limit, or block spending at the card level, providing increased visibility and control for both managers and your finance team. 

Additionally, Juni Capital offers fast and flexible financing solutions to help boost your cash flow when needed.*

*Capital for cards is available for companies registered in UK, NL, SE, DE, FR, ES, IT, NO and FI, upon eligibility. Fees and terms and conditions apply.

3. Integrate accounting software

To streamline admin surrounding the business expense policy, your expense management software should integrate with your accounting tool. This can simplify the process of tracking employee spending, reduce manual data entry and minimise errors. 

For example, it lets you save time manually uploading transactions and receipts and provides real-time insights into your financial health, helping you make informed decisions.

Integrating accounting software to your spend management platform directly connects the flow of data between your virtual card controls and financial systems. Now, you can start automating key tasks, as discussed in the next step.

4. Automate expense management 

Automating expense management streamlines your expense tracking and reimbursement process. Automation reduces administrative workload, accelerates the reimbursement process, and can boost compliance with your expense policy.

For example, tools like Juni can automatically capture receipts, match them to invoices and settle them in seconds. This means you don't have to think about paper receipts or manual data entry. Plus, as we already mentioned, employees won't need expense reimbursement at all saving valuable time.

5. Track and report everything

Implementing a robust system to track and report all expenses is crucial for maintaining financial transparency and control. For example, use a financial platform like Juni, your accounting software, or ERP to monitor company spend and the effectiveness of your expense policy. 

This practice helps identify spending patterns, ensure compliance with the expense policy, and make data-driven financial decisions. Regular tracking and reporting also facilitate audits and provide insights into areas where cost-saving measures can be implemented.

Here’s how to automate expense management with Juni

Juni matches your paid invoices to the right transactions, so you don’t have to. You can also automatically import your receipts and invoices with your dedicated Juni inbox for effortless spend management, and match receipts to transactions. 

Let's take a look at some ways Juni makes expense management easy: 

Seamlessly integrate Juni with your existing accounting software: This makes sure all expense data is accurately recorded, reducing errors and simplifying financial reporting. For example, Juni integrates with Fortnox to automatically sync your bank feed. You can also do seamless exports to software like Netsuite or Fortnox. 

Take control of your media spend: Implement specific controls on each Juni virtual card to monitor, limit, or block media spending. This ensures that all expenses are within budget and aligned with company policies. Juni also collects and scans your Google Ads and Facebook Ads invoices automatically and pre-fills all the payment details with our integrations. 

Access fast and flexible financing: If you need to boost your cash flow, Juni Capital offers quick and flexible financing solutions. This ensures you have the necessary funds to keep your business operations running smoothly.

More visibility equals better employee expense policies

More visibility leads to better decision-making and ultimately, a healthier financial environment for your business. 

The same is true when creating and implementing your employee expense policy. The more clarity you have when managing common expenses, the easier it gets to implement reasonable spend limits and controls – and the fewer issues there’ll be with employee compliance. 

By creating a strong policy structure and empowering your team with virtual cards you can create a policy that manages costs effectively. Plus, companies that leverage automation and integrate their accounting software can enhance spend control, reduce administrative burdens, and ensure compliance. 

More than that, you can support your employees in performing their roles efficiently and confidently. 

In addition to Juni’s accounts payable automation features, receipt matching and flexible financing options, Juni can help you achieve transparency and control for a seamless and effective employee expense policy.