A well-defined and communicated policy leads to lower fraud rate and overall reduced spend. The goal of defining the objective of the policy is not just to define the rules for T&E expenses but to also ensure that employees clearly understand how to behave responsibly while spending company money. You can find guidelines on the IRS website.Ĭ) Ensure that employees and their managers understand their duties and responsibilities regarding expenses. Companies who explain the need for policies have a better compliance rate as compared to companies who just implement policies without first explaining the need. The process includes how to report expense, what to include and how employees are reimbursed for expenses.ī) Ensure that employees understand the legal requirements from IRS regarding expenses, for example, the need for a business reason to incur an expense. Some of the key objectives of the T&E policy are as followsĪ) Define an expense reimbursement process for both employees and non-employees. It is important to have a well-defined T&E expense policy but equally important is to clearly articulate the objective of the policy both for the management as well as employees. There should be a single individual within a department who is responsible for the adoption of the policy, reviewing what is working and what is not working and collaborating the changes required on an ongoing basis.īefore we get into specific details on each of these best practices, let’s first look at why you need a T&E policy, to begin with. Before you go about implementing a travel and expense policy, you should identify clear ownership of the policy. These include ensuring that you have senior management buy-in on the policies you are about to implement, keeping the policy simple and focus on adoption then enforcement. There are many best practices for ensuring successful implementation of travel and expense policy. Let’s look at some of the key components of the T&E policy Travel And Expense Policy Best Practices This will not just lead to process efficiencies but also leads to a friction-free T&E expense reimbursement process. However, the policy generally comes after implementing the tool and that causes a lot of headaches for employees as well accounts payables who is processing those expense reports.įollowing Travel and expense policy best practices, companies should first define and implement a policy, ensure that employee feedback is incorporated in the policy and then look at implementing a tool to automate the expense management process. T&E expense as a percentage of total spend may vary from company to company, but this is always a top of the mind issue for most CFO’s because well-controlled T&E expenses can not only save company money but also prevents any fraud by employees and misuse of company assets.Īs per research by Aberdeen group, 43% of best in class companies consider T&E expense management as critical strategy and 48% of best in class companies cite “need to reduce expense processing costs” as a top pressure.Ĭompanies whether large or small realize the potential benefits of well managed T&E spend and invest in tools and technologies to better manage the process. It is also an area where you have a high chance of employee fraud. This includes defining a Travel & Expense (T&E) policy, processing receipts, ensuring that receipts match the expense, auditing, reimbursing employees for out of pocket expenses. I think that you would agree with me that although Travel and expense (T&E) spend is not a major contributor to the total spend, it still needs a lot of attention and resources to process the expense reports for employees. Why Talk About Travel And Expense Policy Best Practices?
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