A well-enforced expense policy can help your business protect its margins from unnecessary expenditures and instill a culture of responsible spending. However, creating and enforcing expense policies can be an administrative challenge. Here are a few steps you can take to solve this problem.

How to Build an Expense Policy

No two company expense policies are identical because every business has unique needs, employees and operations. However, several tried-and-true steps can help you build an expense policy that keeps spending in check:

1. Engage key stakeholders: Talk to your finance, HR, sales and marketing department heads, and clearly outline everyone’s perspective and business needs that may impact company spending.
2. Define your expense categories: Identify the categories likely to arise, including travel, entertainment, client vs. non-client spending, meals, and other relevant expense types.
3. Set your budgets: Establish reasonable budgets with each department per category using historical data and stakeholder input.
4. Define expense amount and reimbursement rules: Clearly outline the process for filing expense reports and set reimbursement timelines so your employees know what to expect.
5. Outline policy compliance procedures: Define expectations for receipt management, reporting and consequences of policy violation.

It’s important to note that an expense policy must be flexible and adaptive. Annual reassessment, as well as during significant company or industry changes, helps align it with evolving business needs and ensures its effectiveness.

How to Enforce an Expense Policy

The following procedures are often used to help manage enforcement:

• Ask employees to submit receipts for all expenses.
• Require specific approvals from key stakeholders for expenses that go above certain amounts.
• Only extend corporate cards to a few select employees at the company.

However, where these steps fall short is that they create a massive administrative load on your finance team (if you have one). Common pain points your finance team may have experienced include late receipt submissions, long hours spent entering data to close the books, and inability to restrict non-compliant corporate card spend before it happens.

Our biggest advice: Invest the time and resources in an expense management and corporate credit card solution that can unlock several capabilities, such as:

• Creating spend controls that limit non-compliant spending before cards are swiped.
• Automated workflows that handle approval submissions.
• Easier means for employees to submit expense receipts via mobile app.

The right expense management solution can help you digitize and enforce your expense policy. It will save your team hours of time that they can then invest in higher priority, strategic work — all while keeping your margins in check.

Today, Rho is proud to offer NAHB members a wide variety of other financial tools all under one roof: Corporate cards with built-in expense management, customizable controls, and meaningful cashback to help you run your business better. NAHB members can exclusively earn a $750 cash rewards bonus after spending $10,000 within 90 days after account opening.

Learn more at rho.co/partners/nahb.