A good expenses policy can vastly simplify expense management. Yet few companies take the time to create one. Here is an expenses policy template to get you started. For tips on how to approach the design of the policy, check out our previous article: expenses policy – best practises.
There are different sections that you can include in your expenses policy. Here is a list of sections and an example of the wording you can use. These are guidelines that you can adapt to your case depending on your company size, industry and prior history.
Expenses policy template – Section 1: Purpose and Scope
In this section you need to specify:
- The objectives of the policy
- Who the policy applies to
The objective of the policy is to set out the company rules relating to business travel and to clarify which expenses can and cannot be reimbursed. The policy is intended to provide claimants and managers with the necessary guidance to help them prepare and submit valid expense reports and claims.
The policy applies to all company employees and contractors who incur reasonable and authorized expenses on behalf of the company.
Expenses policy template – Section 2: Company expectations
In this section you should explain:
- What is expected from employees in order to get reimbursed
- What would happened when an expense is out-of-policy
- What procedures and tools claimants should use
Claimants must ensure expenses are economical, efficient and effective to avoid the company incurring unnecessary expenses.
Managers (pre-approvers) are required to be diligent in their review.
Expenses are subject to regular internal and external audit. Therefore compliance with the rules is essential. Failure to do so may result in reimbursement being delayed or even declined.
The company will consider submitting false claims as a serious offence and a breach of ethical standards.
Expenses must be submitted within 4 weeks of being incurred, though you are encouraged to submit them as soon as possible.
Expenses should be checked against the policy and all supporting documents, typically a receipt that identifies the expense and proves payment, should be provided. A credit card statement is not an acceptable proof of purchase.
Claimants should properly document the business purpose of each expense. For instance, “travel to client XYZ site to present product ABC.”
Finance will pay claims within 2 weeks of receipt of an expense report, if everything is in order.
Expenses policy template – Section 3: Travel related expenses
This section covers basics such as:
- What represents a business travel
- What means of transport are acceptable: for instance when to use a train, a taxi, or a personal car
- What mileage rate to apply
- How does the company deals with travel insurance and whether or not they are required
- How tips and parking charges are dealt with
You can also give examples of the types of expenses that wouldn’t be reimbursed:
- Parking fines
- DVD and movies rental charge
- Tourist attractions and bar bills
Travel should be by the most economical means of transport.
Journeys between an employee’s home and work are not considered business travel and therefore cannot be claimed.
The company expects air travel will be at the lowest available fare, normally economy/standard class. If the business traveler elects to fly in business, he will be reimbursed an amount equivalent to an economy airfare.
The current mileage allowance rate is 45p per mile for the first 10,000 miles and 25p thereafter. Mileage should reflect the actual mileage driven using the most direct route.
Mileage reimbursement covers fuel, insurance, maintenance and repairs. Therefore, those won’t be reimbursed separately.
Details of the journey, including reason for the journey, date, starting point and destination, should added to the claim.
It’s the responsibility of the claimant to use a vehicle that is roadworthy and sufficiently insured.
The company will reimburse parking expenses when a supporting receipt is submitted, however, parking fines or other fines won’t be reimbursed.
Car hire is allowed if it is more cost-effective than taking public transport. In this case GPS hire will also be reimbursed.
Expenses policy template – Section 4: Accommodations
This section gives guidance on:
- The type of hotel to book
- When to book and who is responsible for reclaiming reimbursement when there is a cancelation
- The price range for what is acceptable. A rate of $150 per night should be OK, but $450 is probably not
- Whether the company reimburses internet fees and the use of personal phone for job related calls
When traveling, it is expected that the claimant should arrange accommodation in a reasonable quality hotel. A 3 to 4 stars hotel is considered reasonable.
Items such as alcoholic mini-bar drinks, private telephone calls or movie hire will not be reimbursed.
Claimants may claim internet costs when in hotels if it is necessary for work.
It’s mandatory that employees inform in advance their direct manager of any overnight stay and also share a detailed itinerary with them.
Expenses policy template – Section 5: Food and entertainment
This section explains how meals will be reimbursed:
- What is the allowed limit for breakfast, lunch and dinner
- What is the procedure to follow if the claimant has to entertain the client? Normally in this situation the cost will be higher
- What are the rules with regards to alcoholic drinks
Employees are entitled to claim the cost of meals taken while on business trip. The maximum amount allowed is $30 per meal (could be more detailed based on time, distance, location).
Tips will be reimbursed if they are reasonable (10-20%).
On some occasions, for legitimate business reasons, employees may need to entertain a client or supplier. In these occasions the allowed amount is higher (give a limit, for instance $50-$75 per guest). A description of the purpose of the expense should be provided as well as the names and roles of the guests.
The company will not reimburse the cost of alcoholic drinks or alcoholic drinks will only be reimbursed if consumed with a meal.
Expenses policy template – Section 6: Miscellaneous expenses
This section can be updated regularly as you come across cases that need a written guidance.
- When the company can advance the cash. This can be necessary if the cost of the trip is expected to be high, in the thousands
- How foreign currency exchange fees and charges are dealt with
You can apply for a cash advance if a significant out-of-pocket expense will be incurred.
When expenses have been incurred in a foreign currency, you can claim any fees and charges applied by your bank.
The following miscellaneous expenses are acceptable:
- Professional membership fees when relevant to the claimants job and agreed with direct manager
Visas and postage fees incurred in relation to business travel