In situations like office supplies runs and client meetings, an employee sometimes ends up using his/her own personal cash and credit accounts to cover the costs generated as a result of business activities being the representative of the company.
These types of payments made by employees are considered eligible for expense reimbursements. Monetary returns are repaid back to employees to compensate for expenses they made, while doing their job on behalf of their employer, and that is not included in the calculation of their regular pay.
The end goal of the expense reimbursement process is to ensure good employer and employee relationships regarding work-associated transactions are monitored and settled with accuracy, efficiency, and accountability.
Below are the tips for an effective employee expense reimbursements process for business-related costs.
- Define and communicate a policy for the expense reimbursement process
Find out an easy-to-follow and clearly explained expense reimbursement policy to distribute and communicate internally to your employees. The important details that should be addressed and defined include the guidelines for how claims should be submitted, expenses eligible for reimbursement and the timeframe for the issuing of payments.
In case if employees need to take pre-approval on purchases inventory on behalf of the organization beforehand, mention explicitly. It’s better to define the policy as detailed as possible in the best interest. Both parties avoid situations where an employee has to decide what an allowable expense on his own is and denying the reimbursement claims because it is not covered within the scope of the company policy. Provide a point of contact for the employees whenever they have any questions or concerns.
- Decide what expenses employees can claim
Form rules to clearly define what purchases qualify as valid expense claims. Generally eligible reimbursements include cellular phone charges, office supplies, travel and accommodation, and costs for entertaining clients. Employee perks such as fitness memberships and transit passes, may be given to employees as company benefits; in cases it is advisable to communicate how much is covered by the employer from a partial subsidy to a complete reimbursement.
- Create a process for collecting expense claims
Expense reimbursement claim reports must be filed and submitted by the employee to the HR department for approval after the costs have incurred. As per organizations reimbursement policy guidelines, communicate what information is needed when submitting expense claims and reports. Information they need to provide include the date of the purchase, the total amount of the purchase, the name of the seller/supplier, and a description of the goods and services bought.
Additionally, it’s important for employees to provide proof for their records, supporting the claim to the company for review and approval. Records that are permissible include invoices, ticket stubs, receipts, credit card statements, and vehicle logs. To keep things organized, it needs to build a centralized system to submit expenses, including the processes for uploading and sending in their proof of payment, whether in physical form or scanned copy of their bills.
Keep the process of submitting a reimbursement as simple, streamlined, and digitized as possible to decrease the amount of time your employees spend on sending in their expense claims.
- Verify the authenticity of expenses
Impose deadlines for expense report submissions like submitting claims at least before a week of the forthcoming pay date, so the employee can receive approval for their claims and get the reimbursement in that pay cycle itself. Manager/HR needs to take enough time to review the expense reports and ensure that they comply with the policy guidelines. In this way, you can consult with the employee if in case there is incomplete documentation, missing values, expenses outside of the policy, and other discrepancies.
- Pay reimbursements within a specified timeframe
Keep employees informed when they will release the payment from the company. Instruct a clear and transparent process for expense reimbursement. Communicate the expected schedule and mode of payment— whether it may be cheque or bank deposit — when they can view recorded confirmation of the payment made (such as a statement on their paycheque) for their reference. Online payroll solutions will be easy to assist you with completing this process.
Transparency in the process is important when it comes to paying employees, to keep things at ease. Reliably and timely reimbursements processing can avoid frustration caused by late payments and ill feelings towards your company especially when employees are paying out of their own pockets. Positive employee experience is created by on time repayments and they will also feel that you are a respectable and considerate employer who cares about their people.