How to Set an Expense Policy for Your Team

Why Every Business Needs an Expense Policy

Without a written expense policy, your team members are guessing about what they can spend and what they'll be reimbursed for. Some will under-spend and miss legitimate tools or experiences that would benefit the business. Others will over-spend and be surprised when claims are rejected. Either way, you end up having difficult conversations that an expense policy would have prevented entirely. A well-written policy sets clear expectations, speeds up reimbursement by reducing back-and-forth, and protects the business from misuse - while giving your team the clarity they need to make sensible spending decisions in the field.

What an Expense Policy Must Cover

A good expense policy doesn't need to be a lengthy legal document. A single, clearly written page covering the key categories and principles is more effective than a forty-page manual nobody reads. The essentials are:

Scope: Who the policy applies to (all employees, contractors, directors) and which types of expenses it covers
Eligible expense categories: A specific list of what the business will reimburse - travel, accommodation, meals, client entertainment, professional development, software, office supplies
Spending limits: Maximum amounts per category - meal allowances, hotel rate caps, class of travel permitted
Receipt requirements: Documentation required for different expense levels (e.g., receipt required for all expenses over £10)
Submission process: How to submit claims, using which system or form, by when
Approval process: Who approves what levels of expenditure
Reimbursement timeline: How long after approval employees can expect payment
Non-reimbursable items: A clear list of expenses the business will not cover, such as alcohol beyond a reasonable limit, personal items, fines, or first-class travel without pre-approval

Setting Sensible Spending Limits

Spending limits should reflect the reality of costs in the places your team travels and works. A £30 per-person meal allowance might be generous for lunch in a small UK city but inadequate for dinner in London or New York with a client. Research current costs in the relevant markets and set limits that allow your team to do their jobs professionally without requiring special approval for every routine situation.

Be specific. "A reasonable amount for meals" is not a limit - it's an invitation for interpretation. "£35 per person for client lunches, £50 per person for client dinners" is a limit. Related reading: reimbursable vs. non-reimbursable expenses explained.

Getting Team Buy-In

An expense policy that your team doesn't know about or doesn't understand is useless. When you introduce or update a policy, brief your team on it - don't just send a PDF and hope people read it. Explain the rationale behind the key decisions: why there's a hotel cap, why certain items are non-reimbursable, why receipts are required for everything over a threshold. When people understand the reasoning, they're more likely to follow the rules and less likely to feel that the policy is arbitrary or punitive.

Reviewing the Policy Annually

An expense policy written two years ago may no longer reflect current costs, your current team size, or the types of expenses your business now incurs. Review your policy annually - or after any significant change in your business operations. Check whether your spending limits are still appropriate, whether any categories should be added or removed, and whether the submission process is working efficiently. Get feedback from the employees who use the policy most frequently - they often have the clearest view of where friction exists.

How Note.now Makes This Easy

Note.now's expense claims feature lets you set up approval workflows and spending categories that reflect your expense policy. Employees submit claims against the defined categories, with clear feedback if a claim falls outside policy. Managers receive approval notifications and can query or reject claims with a note. See also: how to manage employee expense claims. Explore Note.now's expense management tools, or start free today.