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Does your expense policy need a new year shake-up?

When was the last time your business reviewed its expense policy?

Typically, an expense policy is one of those ‘to do’ tasks that don’t often get done.

For many companies, a review of the reimbursement rules will only take place when there’s a problem or a weakness reveals itself - by which time, it’s too late.

And a misfiring expense policy can prove to be extremely costly. It exposes a company to the significant financial risks that are posed by workplace fraud and compliance breaches.

An effective policy acts as the foundation for an effective expense management operation. It clearly sets out which out-of-office costs can be reimbursed and the process for making a claim.

So the start of the new year provides an ideal time to make sure that your expense policy is fit and ready for the challenges of 2018. Here’s a look at how:

Revise your expense policy limits and allowances

With travel costs and currency values constantly changing, it’s important for matching changes to be made to any expense spending limits or allowances.

A failure to do this can cause resentment with employees using outdated reimbursements as a justification for falsifying and exaggerating their costs. Ideally, expense policy adjustments should be made on a quarterly basis.

Switch to an automated management system

It doesn’t matter how equitable and up-to-date your policy is if you don’t have the ability to properly manage or monitor it. Expense management systems, such as Webexpenses, provide a powerful set of tools with which to maintain internal and external policy compliance.

With real-time processes, policy checks are automatically carried out each time a reimbursement report is submitted. On-screen policy notes and reminders can also be delivered to ensure employees are always aware of the rules.

Get feedback from your employees

If any aspects of an expense policy are causing frustration among employees then it pays to know about them. A failure to tackle these workplace complaints is what fuels expense fraud.

While certain aspects of a policy are never likely to be popular, they should be perceived as being fair. Giving employees an opportunity to provide feedback, whether through meetings or online surveys, provides a way to identify issues and prevent them from turning into costly problems.

Make sure your policy is simple and accessible

It’s always worth looking at ways to improve the accessibility of your policy - to make sure it’s easy to understand and absorb. An effective way of achieving this is by stripping back any information that’s not absolutely necessary.

The use of acronyms and confusing terminology should also be avoided wherever possible. The format can also make a difference - a smartly designed PDF or webpage is likely to be easier to absorb than a plain text document.

Review policy risks and rewards

A policy needs to clearly establish the consequences facing any employee that knowingly breaches the rules. A lack of perceived risk is one of the most common reasons given for fraudulent behavior.

Conversely, it’s worth looking at ways to incentivize employees to stay within spending limits and to minimize their costs. One way of doing this is to give employees more control over travel arrangements and allow them to benefit from savings made.

So giving your expense policy a quick January shake-up can make sure your business keeps a grip on costs and stays focused on making the most out of 2019.

Webexpenses provides a smarter and safer way to manage expense reimbursements. Find out more by requesting a free demo.