Expense policy: what to reimburse and how to say so clearly

An expense policy states what the company pays for when an employee spends their own money, what it does not, and how someone gets that money back. It exists because the alternative is deciding case by case — which is slower, feels arbitrary, and produces the two worst outcomes at once: people claiming things they should not, and people quietly absorbing costs they should have claimed.

It should fit on a page. Policies that run to eight pages are written to survive an argument rather than to be read, and nobody consults them at the moment of spending, which is the only moment that matters.

What an expense policy has to state

• Scope: who it applies to — employees, contractors, directors — since the rules often differ.
• What is reimbursable, with the common cases named outright: travel, accommodation, client meals, tools and subscriptions under a stated amount.
• What is not, equally plainly. Ambiguity here produces claims that must be refused, which is worse than a rule nobody liked.
• Limits as numbers — nightly accommodation, meal caps, the threshold above which pre-approval is needed. "Reasonable" is not a limit.
• Mileage: the rate per kilometre or mile you pay, and whether it follows the statutory rate where you operate.
• Receipts: what counts as one, and the stated rule for when a receipt is genuinely lost.
• The submission deadline, so claims do not arrive after the accounting period closes.
• Who approves, and the payment cycle — the date people are actually paid.
• An owner and a review date, because rates and thresholds go stale.

Say what happens without a receipt before it happens. A stated rule — a modest limit with a written explanation, nothing above it — is fairer and faster than deciding each case, and it prevents the quiet outcome where people stop claiming small amounts altogether because asking feels like a favour.

Writing it

1. Start from the last six months of actual claims. The policy should describe the spending you have, not the spending you imagine.
2. Write the reimbursable list first, in the words people would use — "taxi to a client", not "local ground transportation".
3. Set limits as numbers, and check them against what things currently cost rather than what they cost when the policy was drafted.
4. State the pre-approval threshold and who gives it. Without a number, everything either needs approval or nothing does.
5. Confirm the mileage rate and tax treatment with your accountant — this is the part most often wrong, and the tax consequences fall on the company.
6. Name the payment cycle explicitly. Predictability matters more to people than speed.
7. Publish it where expenses are claimed, not in a folder. A policy one click from the claim form gets read.
8. Review annually, and whenever a statutory rate changes.

The parts with tax consequences

Some of this is not a matter of preference. In most jurisdictions, reimbursements of genuine business expenses against evidence are treated differently from allowances paid regardless of spending; mileage above a statutory rate can become taxable pay; entertainment and some vehicle costs may be non-deductible or non-reclaimable for VAT. Which of these apply, and at what rates, depends entirely on where you operate — so write the policy with your accountant, and check the numbers annually rather than inheriting them from a template you found.

In Ettex, the policy itself lives in Ettex Docs — version history so you can show what the rule was when a claim was made, threaded comments when someone proposes a change, and share links so it sits next to the claim form rather than in a folder. Claims come in through Ettex Forms with the fields the policy requires and a file-upload question for the receipt, landing timestamped in one searchable inbox. The accounting side is Ettex Books: a chart of accounts structured the way accountants expect, categories and auto-categorisation rules, and attachments on any entry so the receipt stays with the transaction.

Plainly: Ettex has no expense module. There is no card feed, no receipt scanning or OCR, no mileage calculation, no approval routing by amount, and no reimbursement payment run. It holds the policy, collects claims through a form, and keeps the accounting records. That covers a small company; card-heavy expense management at volume wants dedicated software.

Where expense policies fail

• Written as principles rather than numbers, so every claim is a judgement call.
• Limits set years ago and never revisited, which makes the policy quietly unreasonable.
• No stated rule for lost receipts, so the awkward conversation happens every time.
• Pre-approval expected but no threshold given, so nobody knows when to ask.
• No payment cycle, which turns every claim into a chase and damages goodwill out of proportion to the amounts.
• Mileage rates copied from another country's template, which creates a tax problem rather than a policy.
• Stored where nobody claiming an expense would look.

An expense policy is one page of numbers and one published payment date. Say what you pay for, cap it in figures, state the receipt rule, and put it where the claim is made.