How to Improve Your Employee Expense Reimbursement

Nearly every organisation needs to reimburse their employees routinely for expenses incurred while performing work duties.

When your employees incur costs while working, those are, by extension, your business's expenses.

Some examples include fuel expenses, business travel, accommodation, food, medical costs, and entertainment.

The way you reimburse employee expenses speaks volumes about your efficiency as an organisation and an employer.

In this article, we share tips on employee expense success that will help you delight and retain your staff and run your business better.

What is employee expense reimbursement? 

Employee reimbursement is the process by which a staff member is repaid the expenses they have incurred in order to perform their work duties.

Typically, an employer refunds the personal funds an employee has spent on business-related expenses.

There are various types of business expense reimbursements:

• You may already be familiar with expenses like fuel, travel, education, supplies, tools, and other related costs.
• Entertainment is another category that includes gifts for clients or business lunches.
• The company can also reimburse employee relocation fees, transportation, and lodgings. Employees can also be reimbursed for tuition for advanced academic degrees and childcare for their children.
• Car mileage and travel reimbursements are significant categories. Their type has specific characteristics that set them apart from others.
• Standard mileage rates allow employers to reimburse their employees for fuel and vehicle wear and tear. Employers can also offer a per diem allowance for lodging, meals, and travel expenses.
• Medical expense reimbursement plans allow employers to reimburse employees for their medical expenses.
• Another reimbursement type is employee stipends. Stipends are a flexible way to offer additional benefits and perks to your organisation to attract and retain top talent. Stipends allow you to set a monthly employee allowance and customise your benefit to fit your organisation's unique needs.

Employees submit requests for reimbursement for approval of their expenses. 
Some of the most popular stipends allow you to reimburse employees for health, wellness, education, transportation and other expenses.

The employee reimbursement process

The approval process is the end-to-end journey an expense claim form takes in your business. It starts when a staff member submits a reimbursement form which then goes to a manager for approval.

Depending on the nature of the request, the process may also involve a second round of approvals with the finance department.

Expenses can be much easier with a unified platform where repetitive, time-consuming and error-prone tasks are eliminated.

How to create an expense reimbursement policy

No matter how you decide to reimburse your employees, you will want to create a robust expense reimbursement policy.

That way, your employees are informed and understand what their budget is and to track and manage their expenses. They also know how and when to expect a refund.

There are five main steps to create an expense reimbursement policy for your company: 

1. Create expense categories: Unless you have clearly identifiable expense categories the potential for confusion and error increases. 
2. Get employee buy-in: Canvas the opinion of employees on what constitutes a fair reimbursement policy.
3. Set clear rules: Unless they can easily understand the rules, limits and process employees are less likely to conform.
4. Have an effective approval process: Ensure that approval is timely, accurate and not too onerous on the employee. 
5. Communicate the policy widely: Make sure employees understand the policy and can reference it easily, keep it front of mind.

The problem with manual expense management

It becomes far harder for businesses to run efficiently if they don't know where their money is being spent.

Nonetheless, there are still a lot of companies that don't maintain effective policies and procedures to report on their expenses.

Taking expense fraud, for example - the UK fraud prevention service Cifas, found that cases of fraudulent conduct increased by almost 40% in 2023.

So, whether it be issues with fraud, human error, duplicate expense claims or tracking receipts, ineffective expense management processes can undermine the smooth running of a business.

Another area where organisations struggle to control their spending is in terms of increased travel costs, paying too much for travel.

Without policies and procedures that help employees make better decisions, these costs are difficult to manage.

Improving the employee experience

With so much sensitive personal and financial information within the expense management process, companies can no longer afford to have an unsecured system with disconnected processes.

With data from a variety of different systems being used by outdated, legacy expense management approaches, it leads to a lot of issues.

Some of these are cost leakages, poor visibility into who's spending, what they are buying and why they're doing those certain things.

Crucially, it also provides a broken experience. In many organisations, for example, employees input expenses in one application but get reimbursed from another. It can be a very fragmented process.

Finally, manual reporting can lead to human error, out-of-date data and the underreporting of business time and money.

If, like many organisations, you’re doing hundreds of expense reports per day, there is a significant cost. In fact, the Global Business Travel Association, estimates that on average it takes 20 minutes and costs $58 to manually process a single expense report.

What is automated expense management?

Automated Expense Management refers to the use of software to manage the entire expense process, from claim to authorisation to audit and reimbursement.  

Mobile apps that make reimbursement quick and easy are a great solution for companies that fill in hefty expense reports.

Why automate expense management?

It’s clear to see that automated systems that replace manual entry forms can significantly reduce expense processing time.

The benefits of solutions like Mobilexpense include: 

• The ability to automate and integrate your entire expense. management process from end to end.
• Gives you the full picture of what department expenses are coming from and why.
• You no longer rely on manual processes or inputs and can easily track expenses.
• Employees obtain faster approvals and get reimbursed on time.

Automated and timely reimbursement helps create a timely and efficient expense management process that keeps employees happy and engaged.

Effective expense reimbursement also helps attract and retain employees.

An efficient process repays employees for out-of-pocket expenses quicker and accurately measures the amount of money you’re investing in business operations.

Expense management software 

At Mobilexpense, we have a range of solutions for companies that want to save time and take control of their expenses.

These range from consulting services that help you make sense of travel expense data, to our mobile app that lets you automatically scan receipts anywhere.

Our expense automation solution simplifies the entire process while allowing you the freedom to set your own rules.

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