Expense and Approval Policy

An expense policy that employees ignore is worse than no policy — it creates a false sense of control. A good policy is short enough to read, specific enough to apply, and enforced consistently. This skill produces a policy that covers the decisions people actually face.

Policy Structure

A complete expense policy covers five topics: what is reimbursable, spend limits by category, approval authority by amount, documentation requirements, and submission deadlines. Each section should be a table or a short bulleted list — not prose paragraphs. Employees should be able to scan to the answer in under 30 seconds.

Reimbursable Categories and Limits

Define per-transaction limits for the most common categories. Travel: airfare in economy for flights under six hours, reasonable hotel rate with a nightly cap (typically set to the median business hotel rate in that city). Meals: per-person daily cap (a common default is 75 USD per day for domestic travel, 100 USD for international). Client entertainment: separate cap per-person per-event, requires client names documented. Software and tools: anything over a defined threshold (e.g., 500 USD annually) requires manager pre-approval. Equipment: requires pre-approval and becomes company property. Anything not listed is not reimbursable without explicit pre-approval.

Approval Authority Matrix

Define who can approve what by dollar amount. A common structure: up to 1,000 USD — direct manager; 1,000 to 10,000 USD — department head; over 10,000 USD — CFO or equivalent. Purchases above the threshold require pre-approval before the expense is incurred, not after. Emergency exceptions require CFO notification within 24 hours. No one approves their own expense.

Documentation Requirements

Every reimbursable expense requires a receipt showing vendor, date, and amount. Credit card statements do not substitute for receipts. Meal and entertainment expenses require a note on business purpose and attendee names. Lost receipts require a signed attestation — allow no more than one per quarter per employee before flagging for review.

Submission Deadlines and Reimbursement

Expenses must be submitted within 30 days of the transaction date. Expenses submitted after 90 days may be denied. Reimbursements are processed on the standard payroll cycle following submission and approval. This is not a negotiable timeline — late submissions create audit exposure and distort period expenses.

Enforcement and Violations

State the consequences plainly: expenses submitted without receipts will not be reimbursed; policy violations may result in disciplinary action; patterns of late submission or policy avoidance will be escalated to HR. A policy without stated consequences is a suggestion. Audit a random sample of five percent of all expenses each month and report findings to the CFO quarterly.