How to write an expense policy your employees will actually follow
Control spend before it happens.
Introduction
American businesses are drowning in expense receipts. The expense management process takes up countless hours of employee time and forces finance departments to spend resources on paperwork instead of strategic planning. Despite being a universal business practice, the process remains surprisingly inefficient.
The current approach hasn't changed much since the days of paper files and carbon copies. Workers still collect paper receipts, type expenses into spreadsheets, and wait for multiple managers to approve their reports. Employees often put off filing their expenses for months, which creates cash flow problems and prevents companies from tracking their spending in real time.
Finance teams end up hunting for missing receipts and discovering policy violations weeks after employees have already spent the money. Poor documentation can trigger tax audits and penalties worth millions of dollars. The IRS expects accurate record-keeping, especially as it increases its review of corporate tax returns.
This article examines how companies can create expense policies that reduce hassles while maintaining financial controls. It explores the key parts of working policies, how to write rules that fit your company's needs, and ways to get employees to follow them. The recommendations come from companies that have successfully updated their expense reporting processes.
Companies need more than just efficient processes. They need expense policies that employees will actually follow and finance teams can rely on. The following analysis offers specific suggestions for spending categories, dollar limits, and approval processes based on what works at today's corporations.
What is an expense policy?
An expense policy is a formal document that tells employees how to handle business spending, from travel and client meals to office supplies and software subscriptions. It establishes clear rules about which expenses the company will reimburse and which ones it won't. Without this framework, both companies and employees operate in a gray area that invites problems.
These policies spell out the specifics that matter: spending limits for different categories, what receipts and documentation to keep, and who needs to approve purchases. A sales manager might have authority to approve client dinners up to $500, while anything above that amount requires a director's signature. The policy removes guesswork from everyday business decisions.
A well-written expense policy protects everyone involved. Companies avoid unauthorized spending and stay compliant with tax regulations. Employees know exactly what they can expense and how to get reimbursed quickly, eliminating the awkward conversations and delayed payments that plague companies without clear rules.
The three pillars of a winning company expense policy
A successful business expense policy rests on three pillars: clarity, trust, and efficiency.
Your policy should be crystal clear
Skip the legal language and complex terms. Use plain English that everyone in the company can understand, from veteran salespeople to new hires. Imagine explaining the policy to someone on their first day of work.
Define exactly what employees can expense and set clear spending limits for each category. Don't leave room for confusion about what counts as a business expense. That coffee before the client meeting might seem like an obvious business expense, but your policy needs to spell it out.
Your policy should foster trust, not fear
Focus on what employees can expense, not just what they can't. Workers appreciate knowing exactly what the company will cover and how to get reimbursed. Frame the policy as something that helps employees rather than restricts them.
A good policy lets employees make smart spending decisions without worrying about breaking rules they didn't know existed. Clear guidelines prevent those awkward conversations about rejected expense reports. When employees understand the rules, they're more likely to follow them.
Your policy should promote efficiency
Paper receipts and manual data entry will bog down your expense process. Modern expense management software like Brex can automatically generate receipts for every corporate card transaction. With expense management automation like this, employees no longer need to keep track of paper receipts or type expenses into spreadsheets.
This automation saves time for both employees and finance teams. Companies like Superhuman report saving over 500 hours monthly on expense reports after switching to automation. The right technology turns a painful process into something employees barely think about.
How to create your company expense policy in 3 steps
Now that you understand the core components of an expense policy, here's how to create one for your company. These three steps will help you build a policy that actually works for your employees and finance team.
Step 1: Identify stakeholders and gather information
Start by figuring out who will use this policy. This includes everyone who spends money on behalf of the company, from sales teams traveling to meet clients to marketing teams hosting events. Each department has different spending needs that your policy must address.
Look at your company's past expense reports to identify common expense categories and spending patterns. You might find that your sales team spends heavily on client dinners while your finance team spends mainly on expense management tools. Consider sending out a survey to ask employees what frustrates them about the current expense process and what would make their lives easier.
Step 2: Outline expense categories and limits
Use what you learned about spending patterns to create clear rules for each expense category. Here are the main areas to cover:
- Meals: Set daily per diem allowances for meals based on location, since a meal in New York costs more than one in Kansas City. Clarify the difference between business meals with clients and personal meals during travel. Include specific dollar amounts so employees know exactly what they can spend.
- Travel: Specify when employees can fly economy versus business class, such as business class for flights over six hours. List which hotel chains or price ranges are acceptable. Include mileage rates for employees who drive their own cars and whether weekend trips have different limits than weeklong conferences.
- Office supplies and equipment: Define what the company will buy versus what employees can expense. Set a dollar limit for individual purchases, like $100 for basic supplies but requiring approval for anything over $500. Clarify whether employees can expense home office equipment if they work remotely.
- Business entertainment: Set clear rules for taking clients out, including spending limits and which types of events are appropriate. You might allow $150 per person for client dinners but require director approval for sports tickets or other expensive entertainment.
Brex's auto-generated receipts make this easier by automatically tracking and categorizing most corporate card purchases. Employees don't need to save paper receipts or manually sort their expenses.
Step 3: Set up the approval process
Decide who approves expense reports at each level. A simple two-tier approach works well for most companies. Managers approve routine expenses that fall within policy limits, while finance handles anything unusual or over the set thresholds.
Create a clear way for employees to ask questions about expenses, whether through email, Slack, or an internal help desk. Make sure employees know who to contact when they're unsure if something is reimbursable.
Brex can automatically approve any expense that follows your policy rules, so managers only review exceptions. Companies like Medicinal Genomics save 10 hours weekly by using Brex's automated approval workflows instead of manually reviewing every expense.
How to promote policy compliance effectively
Creating a clear policy is just the first step. You need employees to actually follow it. These strategies will help your team understand and embrace your expense policy rather than work around it.
Communicate effectively
Share the policy through multiple channels where employees will actually see it, from company Slack channels to email announcements. Keep the document short and visually clean so people will actually read it. A dense, 50-page policy manual will end up ignored in someone's inbox.
Run training sessions for new hires and refreshers for existing staff. Use real examples from your company to show how the policy works in practice. Dedicate 10 minutes during a company meeting to review the policy and highlight any recent changes.
When you set expense policies within Brex, the rules automatically apply to all corporate card transactions, expense reimbursements, and travel expenses. This prevents out-of-policy spending before it happens rather than catching violations weeks later.
Emphasize the benefits
Show employees how the policy helps them get reimbursed faster and avoid the back-and-forth of rejected expense reports. When employees know exactly what's pre-approved, they can make spending decisions confidently without worrying about getting stuck with the bill. Frame the policy as a tool that makes their work life easier, not a set of restrictions.
Raise awareness around non-compliance
Focus on education rather than punishment when employees make mistakes. Most policy violations happen because someone didn't understand the rules, not because they tried to cheat the company. Start with reminders and training resources before moving to formal warnings.
Progressive discipline works better than immediate penalties. When someone submits an out-of-policy expense, first explain what went wrong and point them to resources like training guides. Save formal consequences for repeated violations after you've given employees a chance to learn the rules.
Advice for maintaining and updating your policy
Think of your expense policy as a roadmap for effective spend management. It needs to be updated regularly to ensure employees stay the course as business needs evolve.
Regular reviews and updates
Schedule regular reviews, ideally once or twice a year. This keeps it in tune with the ever-changing business landscape. Think of it like spring cleaning for your expense policy — a chance to declutter and ensure it reflects current regulations, industry best practices, and your company's evolving needs. Maybe your company has grown into new geographies with different costs of living, or perhaps a new department has emerged with unique spending habits. By proactively reviewing the policy, you ensure it remains a valuable resource for both employees and the finance team.
Continuous improvement and employee feedback
The people who use the expense policy every day — your employees — have valuable insights to offer. Encourage your employees to share their feedback to ensure your expense policy is crystal clear and helpful. You can do this through surveys, suggestion boxes, or even casual conversations. Ask questions like:
- Are there sections that are confusing and need clarification?
- Are there missing expense categories, or ones that could be adjusted?
- Are any parts of the policy too restrictive?
By actively listening to your team's feedback and incorporating their suggestions, you will create an easy-to-understand policy that reflects the real needs of your employees.
Make your expense policy easy to follow
“Most people want to make the right decision for the company,” says Alexandr Wang, founder and CEO of Scale AI. “Most people aren’t trying to go out of policy or do bad things.”
An expense policy built on clarity, trust, and efficiency will empower your employees to make the right decisions, foster a culture of transparency, and streamline financial processes.
Brex is here to help you every step of the way. Innovative features like auto-generated receipts and memos, automated approvals, fast reimbursements, and popular accounting integrations eliminate manual workflows and accelerate expense management processes.
Remember, a well-written expense policy is a win-win for everyone:
- Your employees will appreciate the ease and efficiency of expense reporting.
- Your finance team will revel in the reduced administrative burden.
- Your company will benefit from responsible spending and improved financial controls.
So ditch the outdated, cumbersome expense processes and embrace a new era of expense reporting with Brex.
Expense management automation that makes your workday easier
See what Brex can do for you.
Learn how our spend platform can increase the strategic impact of your finance team and future-proof your company.
See what Brex can do for you.
Learn how our spend platform can increase the strategic impact of your finance team and future-proof your company.