How to write an expense policy your employees will actually follow

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.

Now that you understand the core components of an expense policy, here's how to create one for your company. These seven 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.

Knowing your company's actual spending patterns gives you the foundation to build a policy that makes sense for everyone.

Step 2: Define purpose and scope

This is your policy's introduction and foundation. It answers the fundamental question: Why does this policy exist?

Start by defining your business goals. Are you trying to cut costs, stay compliant with tax rules, speed up reimbursements, or build trust with your team? Most policies tackle multiple goals at once. Be clear about which ones matter most to your company.

Then, specify who the policy applies to. Does it cover all employees equally, or do different departments have different rules? Do contractors and remote workers follow the same guidelines as office-based staff? The clearer you are, the fewer questions you'll get. Employees who understand the "why" are more likely to follow the rules. They see the policy as fair and purposeful, not arbitrary.

Step 3: 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.
• Software subscriptions: Define who can approve subscription requests and at what price point. Does your finance team pre-approve all software purchases, or can individual managers request tools under a certain dollar threshold? Clarify whether subscriptions require VP or director approval or just manager approval.
• Remote and home office allowances: Remote work is now standard for many companies, which means you need clear guidance on home office expenses. Decide whether you offer a monthly stipend for equipment like desks, chairs, monitors, and keyboards. If you do, set a dollar amount. Some companies offer $100 per month up to a lifetime cap of $1,200. Others use a one-time $500 allowance. Be specific so people know what to expect.

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 4: 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.

Step 5: Establish documentation requirements

The IRS expects detailed records. Your documentation policy protects the company and sets clear expectations.

Within your expense policy, specify what kind of documentation you accept as proof of a legitimate business purchase. Most businesses require itemized receipts, but invoices or credit card statements might suffice in certain scenarios. If you plan on writing off your business expenses, it's especially important that your documentation policy reflects the most recent IRS requirements.

When you automate receipt capture, compliance skyrockets. The Director of Finance at Sports Basement, Will Oldehoff, saw employee compliance hit 99% thanks to built-in expense policies and automated reporting. Will shared how it transformed their process: "For online purchases, employees can just forward their email receipt straight to the receipts inbox. For any paper receipts, the notifications are huge — text, push notifications, email — I don't have to do the outreach myself. It's all automated."

Step 6: List non-reimbursable expenses

Your expense policy also details the expenses you won't reimburse. This section should include an exhaustive list so that there's no room for misinterpretation. Clearly define each expense and provide examples wherever possible.

Here are some common non-reimbursable expenses to specify:

• Personal expenses
• Meals with no clear business purpose
• Over-the-limit expenses
• Late submissions
• Expenses without supporting documentation
• Personal penalties or fines
• Purchases from unauthorized suppliers or vendors

Step 7: Clarify the reimbursement process and timeline

How employees get paid back matters as much as what they can expense. Define your processing timeline, payment method, and frequency upfront. If you have international employees, specify how you handle multi-currency expenses and currency conversion fees. Include a clear dispute resolution process so employees can appeal rejections. Fast reimbursement builds trust and motivates timely submissions. Slow reimbursement damages morale even if your policy is otherwise solid.

At Family and Children's Place, automating their reimbursement process transformed their operation. Employee compliance hit 97%, and their accounting team went from spending three to four days on month-end close to completing it in just a few hours using Brex's NetSuite integration. One team member shared, "Reconciling expenses used to be a 3 or 4 day process. With Brex's NetSuite integration, we're down to a few hours spread over the entire month." Speed matters because it closes the loop between purchase and payment. When employees see reimbursement hit their account quickly, they trust the system and submit expenses on time.

Employee expenses can eat up about 10% of most corporate budgets. Without proper guidelines, companies can easily lose another 5% to fraud and policy violations each year. These aren't small numbers. They represent real money that could fund growth initiatives or improve margins.

A well-designed expense policy does more than prevent losses. It creates clarity for employees, speeds up reimbursements, and ensures tax compliance. The trick is crafting rules that protect company interests without frustrating the people who follow them. Here are five practices that work.

1. Write rules people will actually read

Nobody reads dense policy documents full of legal language. If you want employees to follow expense guidelines, make them easy to understand. Skip the jargon. Use short sentences. Break complex rules into bullet points.

Instead of writing a paragraph about meal reimbursements, create a simple list: State what's covered, include the limits, and you're done. When employees can quickly find and understand the rules, they make fewer mistakes. They submit cleaner expense reports. Your finance team spends less time sending things back for corrections.

Structure matters, too. Organize your policy by expense type or workflow. Put travel expenses in one section, office supplies in another. Add a table of contents if the document runs long. The goal is helping employees find answers fast, not impressing them with your writing skills.

2. Spell out what's covered and what isn't

Vague expense policies create problems. Employees guess at what's allowed. Finance teams waste time debating edge cases. Everyone gets frustrated. The solution? Specificity.

List every reimbursable expense category. Set clear dollar limits for each one. For travel, specify economy airfare, standard hotel rooms, and meal per diems. State the exact daily limits. If you cover client dinners but not employee-only drinks, say so explicitly.

Don't forget the "not covered" list: personal entertainment, first-class upgrades, minibar charges, gym fees while traveling. Whatever you won't reimburse, write it down. Employees can't read your mind. They need explicit boundaries to work within.

This level of detail might seem excessive, but it prevents most reimbursement disputes before they start. Employees know the rules upfront. Finance teams have clear standards to enforce. The whole process runs more smoothly when everyone understands the boundaries.

3. Make sure everyone knows the rules

A perfect policy buried on page 47 of the employee handbook helps nobody. Your expense guidelines need visibility and regular reinforcement to actually work.

Start by making the policy easy to find. Post it on your intranet homepage. Build it into your expense software so employees see the rules while submitting reports. Include a quick-reference guide that fits on one page for the most common expenses.

Training matters more than most companies realize. Walk new hires through the policy during onboarding. Show them how to submit expenses correctly the first time. Run refresher sessions when you make updates. Frame these sessions positively. You're helping employees get reimbursed quickly, not policing their spending.

Leadership sets the tone here. When executives follow the same rules as everyone else, it sends a powerful message. No special exemptions. No looking the other way for senior staff. This consistency builds trust and makes compliance feel fair rather than punitive.

4. Let technology do the heavy lifting

Manual expense reviews waste everyone's time. Finance teams shouldn't spend hours checking receipts against policy rules. Employees shouldn't wait weeks for reimbursements. Modern expense software solves both problems.

Good platforms automatically flag out-of-policy expenses the moment employees try to submit them. Dinner bill exceeds the limit? The system catches it immediately. Missing receipt for that hotel stay? The software won't let the report through. These real-time controls prevent violations rather than catching them after the fact.

Corporate cards can enforce policies before money even gets spent. Set category limits directly on the cards. Block certain merchant types entirely. Require pre-approval for purchases above specific thresholds. When the rules are built into the payment method itself, compliance becomes automatic.

The best part? Speed. Automated workflows route clean expense reports for approval within minutes. Reimbursements that used to take weeks now happen in days. Employees get paid faster. Finance teams handle exceptions rather than routine reviews. Everyone wins when technology handles repetitive work.

5. Keep your policy fresh and relevant

Business conditions change. Tax laws get updated. New expense categories emerge. Remote work creates different reimbursement needs than office-based roles. Your expense policy needs to keep pace with these shifts.

Schedule policy reviews at least once a year. Check whether your limits still make sense. Hotel rates in major cities might have jumped 30% since you last looked. That $150 daily cap might now force employees into substandard accommodations. Review tax regulations, too. What qualified as deductible last year might not qualify today.

Ask employees and managers what's working and what isn't. They deal with the policy daily and spot problems you might miss. Maybe your mileage reimbursement process takes too long. Perhaps the home office stipend doesn't cover actual costs anymore. These frontline insights help you fix real problems rather than guessing at improvements.

When you make changes, communicate them clearly. Explain why you're adjusting limits or adding categories. Show how the updates benefit both the company and employees. People accept new rules more readily when they understand the reasoning behind them. Plus, involving staff in policy updates increases their commitment to following the revised guidelines.

A successful business expense policy rests on three pillars: clarity, trust, and efficiency.

Your policy should be crystal clear

The most effective policies prevent violations before they occur. This stage is about creating clear guardrails that guide employee decisions before the purchase happens.

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.

How to set clarity in your policy before spending happens:

• Embed policy rules directly into corporate card spend limits
• Set merchant category restrictions
• Require pre-approval thresholds for high-risk categories
• Communicate clear boundaries to all employees

When employees see real-time alerts before they complete a purchase, compliance becomes natural. They're not breaking rules they didn't know existed. They're making informed decisions within clear boundaries.

Your policy should foster trust, not fear

Trust builds when employees feel supported, not policed. 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.

The moment of purchase is where automation can show its real value.

How trust is fostered when spending happens:

• Transactions are monitored in real time
• Receipts are captured automatically via SMS, email, app
• Out-of-policy attempts trigger instant feedback
• Employees understand exactly why something was flagged

Employees know issues will be caught immediately and they'll have a chance to explain or correct them. This is fundamentally different from discovering problems at month-end review.

Scentbird employees find the Brex platform easy to use, and the company is averaging a 97% employee expense policy compliance rate. One team member shared, "The Brex platform is much easier. Everybody is very comfortable using Brex — they love it."

Your policy should promote efficiency

The final stage is about speed and continuous improvement. How quickly you close the loop determines whether your expense process is a bottleneck or a smooth operation.

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 you know your policy is efficiently enforced after spending happens:

• Compliant expenses are automatically approved with zero manual review
• Out-of-policy expenses are routed for targeted review and not blanket checking
• Reimbursements happen in days, not weeks
• You gather data on spending patterns to continuously improve

When finance teams spend less time on routine reviews, they can focus on strategic analysis. When employees get reimbursed quickly, they trust the system. Efficiency builds culture.

At Heirloom, easier expense reporting has increased policy compliance to 96%. One finance leader shared, "I personally love how easy it is to close out expenses by Slack or text. We've seen the employee compliance rate skyrocket to 96% with Brex."

Companies should review their expense policy at least annually to ensure it remains relevant and compliant. Tax laws change, regulations shift, and business needs evolve. An outdated policy creates confusion and may not reflect current legal requirements or company priorities.

Fast-growing companies need more frequent reviews. A startup that doubles in size every six months will outgrow its original expense policy quickly. What works for 20 employees breaks down at 100. New roles, departments, and spending categories emerge that the original policy never contemplated. Quarterly reviews make sense during rapid scaling periods.

Specific triggers should prompt immediate policy updates regardless of schedule. New expense categories like remote work stipends or home office equipment require clear guidelines. Repeated questions about the same topic signal that the policy needs clarification. Changes in tax treatment for certain expenses demand quick updates to maintain compliance.

At Brex, we see companies benefit from treating their expense policy as a living document. Regular updates prevent the policy from becoming a dusty PDF that no one follows. Small, frequent adjustments are easier to communicate and implement than massive annual overhauls. This approach keeps the policy aligned with how the business actually operates, making it more likely that employees will follow the guidelines and finance teams can efficiently manage expenses.

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.

Expenses that fall outside company policy typically get rejected during the review process. The employee receives notification that their expense doesn't qualify for reimbursement and must either provide additional justification or cover the cost personally. Finance teams flag these violations and work with the employee to understand what went wrong.

Most policy violations happen by accident rather than intent. An employee might not realize that premium economy flights require pre-approval or that alcohol isn't reimbursable at client dinners. The first response should be education. Finance or HR can explain the policy, clarify any confusion, and help the employee avoid future mistakes.

Repeated or deliberate violations require stronger action. After multiple warnings, companies may escalate to formal disciplinary procedures. This might include written warnings in the employee's file, required expense training, or removal of corporate card privileges. Some organizations implement spending freezes where violators must get pre-approval for all expenses for a certain period.

Clear consequences encourage compliance across the organization. When employees know that violations will be caught and addressed, they're more likely to follow the rules from the start. At Brex, automated policy enforcement prevents many violations before they happen by blocking out-of-policy purchases at the point of sale. This approach reduces conflicts and ensures everyone follows the same rules, making expense management smoother for both employees and finance teams.

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.

“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 enforced at the moment of spend works differently than documentation alone. Most expense policies are documents that nobody reads. Brex makes them real. Your policies automatically govern every card transaction, reimbursement, bill pay request, and travel booking. With Brex, employees see what's allowed before they spend anything. Out-of-policy purchases get blocked instead of sneaking through and needing exceptions. Your approvals route to the right person, and your receipt requirements get enforced without manual follow-up. Plus, accounting integrations sync everything to your books, accelerating your expense management from transaction to close.

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.