Payments » Expenses » Why a good expenses policy starts with a people-centric mindset

Claiming expenses is supposed to be a straightforward process of employees claiming back what they are owed, although the reality is often very different.

Where rules are overly-draconian, and poorly-communicated, people sometimes find themselves out-of-pocket and disenfranchised with the process. Small resentments can easily escalate, leaving them to wonder why they should get behind the wheel, or give up their own time for an overnight stay, if their claim is only going to be questioned. Worse still, if the rules are ambiguous, it leaves room for the more unscrupulous to bend them.

Such an approach clearly does little to engage workers with the expenses system, or even the company. Rather than putting people at the heart of it, too many firms see expenses as a cost-saving mechanism – which, ironically, could end up costing them more in the long-run, in terms of lower productivity, staff retention and bogus claims.

While finance teams, quite rightly, focus on the bottom line, businesses must not lose sight of the fact that they rely on their workforce to effectively ‘loan’ them the cost of travel, subsistence and any supplies. Credit, in any other situation, is provided on the lender’s terms, so companies are duty-bound to make claims as painless as possible. The vast majority of people act honestly and fairly, so why create a hostile environment?

At the very least, expense policies should be clear, transparent and continually updated, according to the needs of the business and HMRC guidance.

But rather than simply laying down the law, I believe in framing the rules in positive terms – a move that can promote engagement without costing more. Instead of stipulating that employees can claim ‘no more than £15’ for subsistence when working away, for example, tell them they are ‘entitled to up to £15’. It’s a way of reassuring people that management is on their side and that, crucially, they won’t suffer financial hardship for carrying out company work.

Collaborative process

Moving towards a people-centric expenses policy, not surprisingly, demands a more collaborative process involving finance, HR and internal communications teams.

Just as important is empowering line managers to make decisions about whether a claim is reasonable or not. A company might not permit first-class train travel for certain journeys, for instance, yet a sales director could make a strong business case for a member of his or her team to arrive refreshed and ready to go. It is not purely about driving down cost but ensuring expenses incurred offer a good ROI.

There is no doubt HR and internal communications teams are well-placed to develop and reinforce the expenses system, including any changes in company policy and national guidelines. It is also an opportunity to remind staff why they cannot claim for travel to the office without being taxed on it, or the importance of collecting a VAT receipt, in a way that will resonate with them.

Taking VAT receipts as an example, they might use the staff newsletter to tell people how much the company could save if it claimed back 20% on all purchases. Taken together, it could be enough to pay for additional resources, the Christmas party or, in a challenging climate, even help safeguard the business’ finances.

Or, to put it another way, employees who submit a VAT receipt for a hotel stay costing £100 per night could upgrade to an £120-per night one, while those who don’t must stay in one costing £80.

Informing people that they are eligible for an extra 5p per mile for taking passengers when on business-related travel is another good way to support them financially, while encouraging more environmentally-responsible car-sharing.

Expenses management technology can take much of the pain out of processing claims for finance departments, particularly in bigger companies where they could receive hundreds of submissions on deadline day.

It makes sense for employees, particularly those in field-based roles, to take pictures of their receipts and upload them onto the system, instead of keeping them in their wallet or car. If a claim is called into question, finance can go back to the employee to find out more without holding up other payments. A continuous cycle like this also means people could be paid weekly not monthly by purchase ledger rather than payroll. For a new-starter, incurring expenses from their first day, this can be a real boost as they wait for their first paycheque.

Expenses are not about racking up enormous restaurant bills entertaining clients, nor trying to rival the outlandish claims of MPs embroiled in the 2009 expenses scandal. Most people act with integrity, so the least firms can do is recognise this in their policy and ensure an easy process with prompt payment.

An effective system is based on cross-departmental collaboration and takes a nuanced approach, using technology to process straightforward claims quickly and the expertise of different management teams for more complex ones.