Managing how employees spend company money on various expenses can be a challenge for employers. If staff are expected to spend their own money on certain expenses, companies must have a formal procedure so they can be properly reimbursed. To reduce the risk of overspending and false claims, employers should have a clear expense claim policy that plainly tells employees what kind of spending is and is not allowed. A clear policy on claiming expenses helps maintain a positive working relationship and ensures there is no wastage of company funds.
A business expense is any cost incurred by the company while running the business, and these costs can help reduce tax liability for business owners. Specific expenses may vary depending on the industry and type of company but generally include:
Employers have a right to impose limits on staff spending. The purpose of these limits is to reduce overspending, time spent on chasing false claims and to streamline the approval process. Spending limits must be within reason and clearly communicated to employees and those in charge of the approval process.
An employer can impose limits on spending in the following ways:
The purpose of an expense claim policy is to inform employees on what kind of spending is and is not acceptable. It should also outline the process of getting company approval, how the business keeps records of spending, and the kind of limits imposed on employees.
Each industry and organisation is different, and there will always be variations to the expense claim policy. For example, truck drivers may need to manually seek reimbursement for fuel costs, while another company may have company-issued corporate cards for purchasing fuel.
An expense claim policy should also describe how employees are reimbursed for costs they incur while carrying out the business. The reimbursement must only apply to company-approved spending and be within the limits of the policy.
Other information employers should outline in their policy include:
For more information on claiming business expenses in the workplace, contact Employsure on 0800 675 700.