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How to Create Policies for Expense Reimbursement and Company Credit Cards



Every business needs sound accounting policies and procedures. While accounting firms often help clients identify the guidelines they need to have in place to protect themselves, prevent fraud and operate efficiently, firms sometimes neglect their internal operations.


Two critical internal policies and procedures every firm needs to address are expense reimbursement and company credit card usage. These policies can help your firm establish rules that promote financial accountability among employees and avoid misuse—whether accidental or deliberate.

Analyze your current business needs and create policies tailored to those needs

Understanding who typically has reimbursable expenses and how employees use company credit cards in your firm can help you create tailored policies that align with your existing business practices, anticipate potential pitfalls and address them proactively.

Some questions to consider include:

  • Does everyone in your firm need a company credit card? Or only certain levels or roles?

  • Should there be a waiting period before a new employee receives a credit card?

  • What expenses do people typically have reimbursed or charge to a company card?

  • Are any expenses charged back to clients?

  • Are there any expenses partners or employees are regularly charging to a personal card and getting reimbursed?

Establish rules for when employees can use company credit cards and what types of expense reimbursements are allowed

Set clear rules and provide examples of acceptable and unacceptable expense reimbursements and company credit card charges. Being transparent about expectations promotes consistency and minimizes confusion among employees.


For example, your policy could explicitly state that employees can only use company credit cards for business-related expenses, such as travel, client meals, and office supplies. You might also include a clear list of non-reimbursable costs, including personal expenses, fines and penalties or non-approved upgrades on business travel. By providing examples, you make it easier for employees to understand and apply the policy correctly in their day-to-day work.


Also, you might consider limiting expenses employees can charge without pre-approval.

Some credit card issuers allow you to create custom rules for different cardholders with monthly caps, frequency limits, or restrictions on individual expenses. But you can also have informal rules, such as requiring pre-approval for charges over a certain amount.


Clear policies and spending rules encourage fiscal responsibility and provide a safety net against extravagant or unauthorized spending.


Set clear guidelines for reporting expenses and submitting receipts

Instilling habits for submitting expense reports on time is critical for maintaining your firm's financial health and stability. Early expense reporting helps you accurately track and manage expenses. Your firm's cash flow can be negatively impacted if employees delay submitting expenses for months and then submit a large amount of expense reports.


At Boomer Consulting, we require employees to submit their expense reports with receipts attached and a description within 10 days after prior month end to timely reconcile expenses.


Identify the person or team responsible for authorizing expenses and approving reimbursements

A review process for expense reports helps ensure all expenditures align with your company's policies, guidelines and creates a culture of financial integrity and responsibility. It also prevents potential fraud and misuse of company funds, as you can catch and address irregularities during the review process.


Consider whether you will require a review of all expense reports or just those over a certain dollar amount. There may be a threshold where you may want to include their supervisor to final approve an expense report.


For example, at Boomer Consulting, any expense reports greater than $1,000 are sent to Jim Boomer, our CEO, for review so he is aware of larger expenditures and can expect more cash out. I also forward him on reports that are questionable what chart of account or budget the expense should fall under. This works for our company, but in a large firm with hundreds of employees submitting expense reports, you might want to have a manager sign off on the expense reports of their direct reports before reimbursement.


Providing training on expense management software

If you use expense management software, train all employees on using these tools.


At Boomer Consulting, we use Expensify for expense management. It uses machine learning to scan and categorize receipts and record the date and amount. However, we also provide a cheat sheet with categories for different expenses to help employees organize them. This makes it easier to determine which category various common expenses fall under if Expensify doesn't recognize it.


We've also trained people to review Expensify's entries because technology isn't infallible. It occasionally misses the tip on the receipt, inputs the wrong date or misses a decimal point if the receipt is not lucid enough.


Having clearly defined policies on expense reimbursement and company credit cards can help you create a culture that encourages employees to use company resources responsibly and helps protect the firm from potential misuse of resources.


By taking the time to consider the various ways employees use company funds, you can create policies that work for your firm.

 

Do you want to connect with other Operational Leaders in the accounting profession to become a more confident leader?


The Boomer Operations Circle is a peer group of Operational Leaders from successful and growing firms who work together to develop the best business strategies, plans and procedures. Apply now to start building valuable long-term relationships with others who are navigating the same challenges in shaping their firms for the future.

 

As Financial Operations for Boomer Consulting, Inc., Jenna is passionate about the administrative side of business –both internally and externally. Her primary focus is on the company’s payroll, human resources, and accounting.

Before joining Boomer Consulting, Inc.as a Solutions Advisor in 2018, Jenna owned a home health agency for three and a half years.

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