Building an Effective Reimbursement Policy With Expense Reimbursement Software

An effective T & E reimbursements policy acts as a systematic guide for the reporting and reimbursements of any travel-related or other business expenses incurred in the course of furthering the business interests of an organization. It lists out the stakeholders in the process and details every step and activity that has to be endeaken by the concerned stakeholders. It also has details about the approval flows, kind of reporting and its frequency, and the different types of expenses that are reimbursed by the organization. Without an effective policy, organizations will find it hard to complete the process in a systematic way and give scope for inefficiencies and fraud to creep in.

In this article, we'll look at the important tasks involved in clearing and building an effective travel and expense reimbursment policy and how expense reimbursements software helps with policy enforcement.

Approval and approval flow: This is an important task that has to be clearly defined. The policy must clearly tell the employee who he must get approvals from. It could have been the direct supervisor, the head of the business unit, or the CEO of the company. It should also state whether the approvals and authorizations should be taken pre-trip or post-trip.

The next step is the approval flow. It has to be clearly stated if the organization follows a single, double, or multi-approval policy. If that is the case, the approval flow, whether one after the other or simultaneous, has to be defined.

Limits and thresholds: Some companies impose limits on the amount that can be sent by the employee. Some others have a particular threshold after which multiple approvals have to be thought. All these have to be laid out clearly in the policy.

Reimbursed and non-reimbursed expenses: This is the most important task in the exercise. The policy has to clearly and exhaustively list down the expenses that are considered legitimate business expenses and since reimbursed and those that are personal and hence non-reimbursed. This list includes transportation, boarding, lodging, gifts, training fees, entertainment fees, etc …

If there is any ambiguity in this list, the whole purpose of the policy will be defeated.

Documentation and reporting: The policy also has to mention the kind of documentation and reports that employees have to submit along with their expense claims. It should also define the period and frequency of reporting, if necessary. Also included will be details of those to which this report is to be submitted.

Timelines: The policy should state the deadline within which the reports are to be filed. It should also convey to the employees the time it generally takes to reimburse them.

Online expense reimbursements software gives organizations a platform to manage their expenses and reimbursements. The limits and thresholds can be configured within the software so that there is no scope for the employee to go across the limit. The same way, as only the reimbursed expenses are listed, employees can only fill in legitimate expense line items.