The terms like “Expense Reimbursement Policy” can make business owners flinch, but if you’re growing then you need one to stop the misspent money.
Need for an expense reimbursement policy arises when an organization grows. It is needed for an organization to control the flow of its money and stop its misspending by enforcing an expense policy. It is important for a business owner to stay on top of its business finances. In the competitive business environment, you have to keep a close watch on profit and loss, which is particularly stressful when it’s your money on the line. Which is why one needed to have policies to control the misspending of money in the organization.
So, here are few things to consider for setting up and maintaining an expense reimbursement policy for your small business that will actually benefit.
Define Budgets and Categories clearly
In an expense policy, firstly it is needed to define clearly the all categories of expenses permissible for the reimbursement and how much budget is allocated to each category. Budget allocation to the categories like travel expenses tends to be the largest among the others as they contain hotel stays, flights, rental cars, tolls.
Implement Good System to Process Reimbursements
After defining all the categories and budgets, it is needed to have a good system to process all the requests for reimbursements. It should be done in a fair and faster way so that it will be easy on the employee and also on the HR as no one wants to get into a time-consuming situation.
The policy must abide by the laws
When setting up the Expense Reimbursement Policy, one must keep in mind the tax laws so that they don’t get in an absurd situation while the process. One should be careful while differentiating between employee compensation and business expense. One must keep thorough records to avoid such situations.
Use Cloud-based Automation Systems
Processing an expense reimbursement request and maintaining all the documents and information regarding it could be a time-consuming process especially when it is done manually. So there are many Cloud-based automated software and integrations for this purpose with many exciting features to make all this quick and easier for you. It automates the entire expense reimbursement process from the raising request to approving the request and managing all the related documents.
Keep your Policy Updated
One of the major mistakes made with an expenses policy is to create it and then forget about it. An effective policy should be thought of as a continual work in progress. It needs to be regularly updated and adapts to match changes in your organization. A policy should be reviewed and revised every few months and all the needed changes should be taken into account.
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