How to design employee expense reimbursement policy?

For employees, what comes after the tiresome business trips are reimbursement claim process to get back their out-of-pocket business expenses. Other than spending hours on the laptop choosing categories and spending values, what frustrates them more is collecting the receipts carefully. 

Claiming reimbursement expenses is a painful process for the employee who traveled and teams who are on the processing end. There are instances where the company decides to reject the claim. Another long-haul process that leaves your employee further dissatisfied for wanting to go on a business trip and swiping their personal card.

What are reimbursable expenses?

Some common reimbursable expenses are travel costs either for a business trip or the daily commute mileage, business phone calls, rental cars, hotel reservations, meals, business lunches, or any other work-related expenses incurred by the employees. If the employee has to use any professional tools or equipment or gain work-related knowledge through learning platforms, they can be classified as a reimbursable expense too.


What is company expense policy?

An expense policy is a document that lists down the reimbursable expenses that employees spend out of their pocket for business purposes. It also lists down the rules and regulations for your employees to follow while reporting and claiming reimbursement expenses. Employees have to comply with these regulations once they sign their work contract. By creating an expense policy, you standardize your employee expense management that will be followed for years in the future. 


Why do you need expense policy?

Your company needs an expense policy for two reasons. The first reason is to let your employees know what are reimbursable expenses so that they know what to include when they are claiming reimbursement expenses. Another reason is that you need the expenses proof in order to get a tax deduction or exemptions from your local government. 


What to include in employee expense reimbursement policy?

Now let’s see how you can construct an integral part of your employee expense reimbursement policy. Here is what your expense policy must contain.

Compliant with IRAS regulations

Expense reporting and policies must be in compliance with the regulations imposed by the tax authority of the Singapore government. Any Singapore-registered entity operating within Singapore must adhere to the accounting regulations set by the government.

Expense reporting format

You will collect information from the employees related to the spending. What information to collect and the accepted kind of receipts should be discussed in your expense policy. There are expense form templates available online.

Budgets and limits

Not setting a limit for expense category can be dangerous for your cash flow management. Your expense policy should contain the allotted budget for each category and each person for a specific period of time.

What payment methods to use

Different companies have different payment methodologies for their employees to pay business expenses. Your expense policy should talk about what kind of company-allotted payment methods your employees can use.

Expense advances

For teams and employees who will have regular business expenses, the company sanctions an advance to cover it. If you are considering this, your policy should discuss the limit, eligibility, and what happens when there is an additional requirement of funds.

Spending out of pocket

If you have no other payment modes, employees should work on claiming reimbursement expenses. There must be a reimbursement claim system in place that your employees should know to operate. Find a payment system that works for you..

Reimburse your employee expenses easily with Volopay

Structuring reimbursable expenses with company expense policies

Define expenses categories

You need to know the kind of categories your employees will incur and file under. There can be travel, food, knowledge improvement and upskilling, and business phone bills.

You can have more too or split one main category into two, e.g., lunch with a client and team lunch sponsored by the company. Splitting the main into different categories will help you with tax filing.

List down every allowed expense category you can program into your expense tracking software. Under each category, set the allowed expenses and define them according to your company policy.

Structure department budgets

It’s time to talk about the money. Discuss with your internal teams how much money you can allot to each department or expense category. Estimate the budgets you can assign to each department.

It can be complicated and even unfair if you set budgets for different expenses and categories. Whereas department budgets are more powerful and easy to manage.

Every expense category can be tagged under the departments that it applies. The same expense can fall under two different departments too.

Whenever your employee is claiming reimbursement expenses, it goes under the department they come under.

In general, department budgets are set aside for each department for the operational and administrative costs of a department. That same method works for employee expenses allocation of each team too.

Set approval flows

Each expense comes from a different employee and department. So the approval workflow cannot be the same for all. Structure the approval flow for each expense category, level of employees, and their department.

If applicable, you can set certain expenses to be approval-free too. Involving multiple people and departments can be a waste of time for all. Identify who should have the approving authority and who can take a step back.

The number of approvers for an expense can vary from one to five for a reimbursement claim. You can also set the time limit that needs to be taken within which the request should be approved by an approver/approvers.

There are times when approvers will be on long holidays and unavailable. Your reimbursement claim policy should have space to set delegates who act as temporary approvers. 

Make use of an expense management automation system to set approval workflow features to help bolster policy compliance.

Track employee expenses & claims in a centralized platform with Volopay

Now you have a clear employee expense reimbursement policy and detailed workflow in place. All you need is a tool that can automate every step and connect people and processes together.

To make this happen, Volopay is the solution you have to adopt. A centralized payment platform will be more beneficial to your organization for managing reimbursement claim requests and making other business payments.

Yes. An all-in-one platform that takes care of your entire accounts payable, including paying back employee reimbursable expenses. There is another exciting feature, which can put an end to after-expense reimbursement claims altogether.

Volopay has physical cards and unlimited virtual cards. These cards can be distributed to employees using which they can make business payments and bookings online without even going through approvals.

You can preload the cards with the approved amount that they can use readily; if they need more, they can request it, get it approved, and use it. And you can create as many cards as possible. So, it suits companies of any size.

The best feature of all is that you get a centralized view of all reimbursable expenses made through both cards and the reimbursement platform. It’s easier to adhere to your company expense policy and stay in line with budgets too.

So, no team will exceed budgets on reimbursement claims; even if they do, you can monitor and control it from happening. Employee expense budgets play a significant role in regulating your overall company spending. You get to save money and time by tapping into the potential of reimbursement tools like Volopay.

Volopay draws the shortest and easiest path to claim and control your employee expense reimbursement policy without spending hours with the bills. Other than this, SWIFT, local and international transactions are made possible with Volopay.

Plus, you get access to many advanced finance and accounting tools like budgets, multi-currency wallets, business accounts, integrations, and many more.

Whether you are a small business or an established one, you are obligated to return the expenses of the money spent by employees pertinent to their company. The sooner you start working on your expense policy, the better the expense management and budget control will be.

Looking to get an expense management software for your organization? Check out our article on the best expense management software in Singapore

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