Expense policy
The written rules that say what employees can spend company money on, how much, and what proof they must provide.
In short
- A good policy is short, specific and enforced consistently.
- It sets limits, approvals and documentation, not just a list of banned items.
- Rules that software can check automatically are enforced far more evenly than rules left to approvers.
An expense policy sets out the rules for spending on behalf of the business. It tells employees what is covered, what is not, the limits that apply, who approves what, and the documentation needed to be reimbursed or to clear a card charge.
What it usually covers
- Travel: class of airfare, hotel rate caps, car rental and mileage rates.
- Meals: per diem amounts or per-meal limits, alcohol rules and client entertainment.
- Receipts: when an itemized receipt is required and the deadline for submitting it.
- Approvals: thresholds that trigger a second approver or finance review.
- Non-reimbursable items: personal items, fines, upgrades and similar.
Making it work
Policies fail in two ways: they are too vague to apply ("reasonable meal costs") or too long for anyone to read. The most effective ones give clear numbers and are enforced the same way for everyone. When rules are built into the expense system. An over-limit hotel or a missing receipt is flagged the moment the expense is submitted, employees learn the policy from the feedback rather than from a document they skimmed once.
Worked example
Three rules, stated clearly
"Hotels: up to $250 a night in Toronto, Montréal and Vancouver, $180 elsewhere. Dinner: up to $60 per person, alcohol not reimbursed. Itemized receipts required for every expense over $30, submitted within 30 days." Each rule has a number. Each can be checked automatically.