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How to Maintain an Affordable Expense Reimbursement Policy

Employees often incur extra expenses when performing their required duties, most often when they travel for business purposes. In many cases, employers reimburse these expenses, since they are part of the employee’s job. However, expense reimbursement can become expensive, especially if employees are tempted to take advantage of the opportunity to spend money. Below are some tips to help you create and maintain a fair and affordable expense reimbursement policy for your company.

1. Make your policy as detailed as possible.
   When developing your expense reimbursement policy, include as many details in the policy as possible. The more details you include, the easier it will be for your employees to understand the policy. A more detailed policy will also help you to avoid loopholes and disputes.
2. Restrict the number of days in employee trips.
   One way to reduce the amount of expenses you pay for employees is to put limits on the number of days you will cover in an employee trip. For example, some employees may be tempted to remain on a trip longer than required in order to get some time away from the office. Make it clear that the company will not cover these expenses.
3. Negotiate special rates if possible.
   You may be able to reduce employee reimbursement expenses even further by negotiating special business rates with specific hotel chains in destinations your employees frequent. Negotiate these rates if possible and then require employees to stay in these hotels whenever possible.
4. Put a cap on per diem spending.
   Most employers cover the cost of employees’ food and other expenses incurred in addition to lodging. However, it is common for employees to take advantage of this benefit by choosing the most expensive restaurants, ordering more drinks than usual or otherwise finding ways to spend extra money. Putting a cap on per diem spending ensures that employees’ extra expenses won’t exceed an appropriate amount.
5. Hold employees to the policy.
   After you have created an employee expense reimbursement policy, make sure you hold your employees to the terms of the policy at all times. Making occasional exceptions to the policy will not only raise the total cost of your expense reimbursement efforts, but it will also create a cycle in which other employees expect the same treatment and/or become resentful of the employee receiving special treatment.

Employee expense reimbursement is necessary for most companies that ask employees to work outside the office. Having a clear, well implemented employee expense reimbursement policy in place minimizes the expenses associated with reimbursement while also ensuring that all employees are treated fairly.