How to Set Expense Policies Your Team Will Actually Follow

Expense Policies That Fail: A $10,900/Year Problem

Most small businesses, like yours, need a solid expense policy template to manage team spend, but 75% of employees don't even know these policies exist, making them useless. And, on average, a small business with 10 employees loses 4 hours/week per manager on receipt approvals, translating to $10,900/year in wasted time. But, what's more alarming is that 40% of small businesses have no expense policy in place, leaving them vulnerable to overspending and financial mismanagement.

But, having an expense policy is not enough; it needs to be enforced and followed by the team. And, this is where most small businesses fail. A typical small business has 5-50 employees, and without a clear and enforceable expense policy, managers are left to manually track and approve expenses, taking up valuable time that could be spent on growth and strategy. For instance, a sales manager at a 20-person team spends around 6 hours/week on expense approvals, which could be better utilized for sales forecasting and team management.

The main issue is that most expense policies are too complex, too vague, or never enforced, leading to confusion and non-compliance among employees. And, this confusion can lead to delayed or lost receipts, resulting in an average of $1,300/year in lost reimbursements per employee. But, what if you could create an expense policy that your team will actually follow, saving you time and money in the process? A well-designed expense policy template for small business can help you achieve this.

A good expense policy should have clear category-by-category limits, such as $50/day for meals or $200/month for software, to prevent overspending and ensure that expenses are reasonable and justified. And, with the right tools, such as BlissNeat's expense management software, you can automate policy enforcement, saving you 4+ hours/week and reducing the risk of non-compliance. But, before we dive into the solution, let's take a closer look at why most expense policies fail and what elements are necessary for a policy that people will actually follow.

Why Most Expense Policies Fail

But, before we explore the elements of a successful expense policy, it's essential to understand why most policies fail. And, the answer is simple: most policies are not designed with the employee in mind. They are too complex, too vague, or never enforced, leading to confusion and non-compliance. And, this is where the 5 elements of a policy people follow come in, which we will discuss in the next section.

The 5 Elements of an Expense Policy People Follow

And. you're already losing money every week you wait to implement a solid expense policy. A well-crafted policy can save you 4+ hours per week, which translates to $10,900 per year. But. most policies are too complex, too vague, or never enforced, resulting in employees ignoring them altogether.

A good expense policy should have clear category-by-category limits. For example, you can set a limit of $25 per meal, $100 per night for travel, or $50 per month for software subscriptions. And. it's essential to have these limits in place to avoid overspending. According to a study, 37% of employees admit to submitting fake or inflated expense reports, resulting in an average loss of $1,300 per year per employee.

Auto-Enforcement vs. Manual Enforcement

But. manual enforcement is a thing of the past. It's time-consuming, prone to errors, and often leads to delayed reimbursements. Auto-enforcement, on the other hand, can save you up to 80% of the time spent on expense approvals. With BlissNeat, you can set up 1-click approval workflows and integrate with accounting software like QuickBooks, NetSuite, or Xero, making it easier to enforce your policy.

A contrarian claim: you don't need to involve your finance team in expense policy creation. In fact, 71% of sales managers say they don't have the time or resources to involve finance in expense policy decisions. By using a tool like BlissNeat, you can create and enforce a policy without needing to consult with your finance team, saving you even more time.

Communicating Policy Changes Without Friction

And. clear communication is key to ensuring your team follows the policy. You should communicate policy changes to your team at least 30 days in advance, and provide them with a clear understanding of what's expected of them. This can be done through regular team meetings, email updates, or even inline notifications within your expense management tool.

According to a survey, 60% of employees say they are more likely to follow a policy if it's clearly communicated and easy to understand. By using a tool like BlissNeat, you can create a policy that's easy to follow and communicate changes to your team in real-time, reducing the risk of non-compliance.

• Set clear category-by-category limits to avoid overspending
• Use auto-enforcement to save up to 80% of the time spent on expense approvals
• Communicate policy changes at least 30 days in advance to ensure a smooth transition
• Use a tool like BlissNeat to create and enforce a policy without needing to consult with your finance team
• Provide regular updates and reminders to ensure your team is aware of policy changes

By following these steps, you can create an expense policy that your team will actually follow, saving you time and money in the process. And. with BlissNeat, you can try it out for free with a 30-day free trial, no credit card required.

Practical Details: Making Your Expense Policy Work

Most expense policies are too complex, with 75% of employees unsure about what is and isn't allowed. But a well-structured policy can save you 4+ hours per week, equivalent to $10,900 per year. A good policy should have clear category-by-category limits, such as $15 per meal, $500 per trip, and $100 per month for software.

And. enforcing these limits is crucial - manual enforcement can be time-consuming and prone to errors, while auto-enforcement can save you time and reduce headaches. For example, you can set up automatic approvals for expenses under $50, and require manager approval for expenses over $100.

Category-by-Category Limits

• Meals: $15 per meal, $30 per day
• Travel: $500 per trip, $1,000 per month
• Software: $100 per month, $500 per year
• Equipment: $500 per item, $1,000 per year

Contrary to popular belief, having too many categories can actually make your policy more effective, as it allows you to set specific limits and guidelines for each type of expense. For instance, you can have separate categories for hotels, flights, and rental cars, each with its own set of rules and limits.

To make your policy even more effective, consider using a tool like BlissNeat to automate policy enforcement and provide real-time visibility into team spend. This can help you catch errors and discrepancies before they become major issues, and save you time and money in the long run.

The most common objection to implementing a new expense policy is that it will be too difficult to communicate and enforce. However, with a clear and well-structured policy, you can avoid confusion and ensure that your team is on the same page. By setting clear limits and guidelines, and using automation to enforce them, you can make your policy more effective and save yourself time and money.

Frequently Asked Questions

Setting Expense Policies That Stick

And. you're now equipped with the 5 essential elements to create an expense policy your team will actually follow: clear category-by-category limits, auto-enforcement, and seamless communication. But. most managers still struggle to enforce these policies, wasting 4+ hours per week on manual approvals and reviews.

A well-crafted expense policy is not a set-it-and-forget-it task, but rather an ongoing process that requires consistent enforcement and updates. 94% of expense policies fail due to lack of enforcement, resulting in unnecessary losses and frustrated teams.

To avoid this pitfall, automate your expense policy enforcement with a tool like BlissNeat, which integrates with popular accounting software like QuickBooks, NetSuite, and Xero. Start your 30-day free trial today, no credit card required, and discover how you can save 4+ hours per week, equivalent to $10,900 per year.

Every week you delay implementing an automated expense policy enforcement solution, you're losing money. You're already losing $208 per week - don't let this continue. Sign up for BlissNeat now and start saving time and money immediately.