The Dos and Don’ts of Employee Expense Reports 

Employee expense reimbursements are a necessary reality of doing business. Staff sometimes need to make immediate purchases to help them do their job. An employee using their own personal credit card for work expenses and getting reimbursed after the fact is standard practice. However, if not monitored thoroughly, this can lead to abuse and exploitation. Lunch with friends written off as a business meeting seems harmless but can cause headaches if the company gets audited.  

For the most part, no one is trying to break the rules intentionally, but these mistakes can be costly. Therefore, it’s important to know how expense fraud can occur and ensure that checks and balances are in place. For example, if two people have the same position, but one person’s expenses are significantly higher than the other, that should be investigated.  

What is considered a reimbursable expense?  

The Canada Revenue Agency defines expenses incurred by employees like other business expenses which must be reasonable and occur for the purpose of earning income. With this definition in mind, a business should set the parameters of their own Expense Policy. For example, can employees book business class flights, or is it economy only? What is their budget when entertaining clients? The more clarity in the policy, the less chances of expense abuse and manipulation.  

Financial burden on employees 

Don’t leave employees having to wait days or weeks to be reimbursed because this can cause a stressful work environment. Requiring out-of-pocket business expenses might make it harder for many employees to make ends meet. No one wants to hold off on a personal purchase or a doctor’s visit because they are waiting to get reimbursed. Finance departments should always take into consideration the impact on the employees when determining their reimbursement procedures.  

Processing problems 

Chasing down expense reports, reviewing all the receipts, and getting reimbursements to the employees in a timely manner can be frustrating to all involved. The easier it is to make a claim, have it reviewed, and get it processed will help avoid headaches. Consider investing in an app-based expense system that employees and the finance department can easily use and manage. This prevents employees submitting claims with missing information and can provide clear expense rules.  

Fostering an ethical work environment 

Establishing a zero-tolerance policy, regardless of position, when it comes to expense fraud should be a key element of corporate culture. If enforcement is predictable and regulations are clear to all, people generally tend to follow the rules. At the end of the day, an expense report demands honesty and transparency from both employees and management.  

Your Business. New Heights. 

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