The first section of your expense policy should clearly state who the policy applies to (all employees, contractors, or specific categories), what types of expenses it covers (travel, meals, entertainment, equipment, subscriptions), and the policy's purpose (to ensure that business expenses are reasonable, properly authorised, accurately recorded, and reimbursed promptly).

Template language: 'This Expense Policy applies to all employees, contractors, and consultants of [Company Name] who incur expenses on behalf of the company. It covers all business expenses including travel, accommodation, meals, entertainment, equipment, and other costs incurred in the course of conducting company business. The purpose of this policy is to ensure that business expenses are incurred only for legitimate business purposes, are properly authorised and documented, and are reimbursed accurately and promptly.'

Every expense claim should require approval from the employee's direct manager before reimbursement is processed. For expenses above a defined threshold — typically $500–$1,000 — a second level of approval from a senior manager or the finance team should be required. Pre-approval requirements for significant expenses (such as international travel or conference attendance) should be clearly stated.

Template language: 'All expense claims must be approved by the employee's direct manager before submission to the finance team. Expenses above $500 require additional approval from [Senior Manager/Finance Director]. International travel and conference attendance must be pre-approved by [Senior Manager] before bookings are made. Expense claims submitted without the required approvals will be returned to the employee for reauthorisation.'

A clear list of eligible and ineligible expenses is the most important section of any expense policy. Eligible expenses should include all categories of spending that the business expects employees to incur in the course of their work. Ineligible expenses should explicitly list categories that will not be reimbursed — this prevents the 'I didn't know it wasn't allowed' defence.

Common ineligible expenses include: personal items (clothing, personal grooming, gym memberships), fines and penalties (parking tickets, speeding fines), alcohol consumed outside of approved client entertainment, first-class travel without prior approval, and expenses incurred by the employee's family members. Being explicit about ineligible expenses reduces disputes and ensures that employees understand the boundaries of the policy.

Spending limits define the maximum amount that can be claimed for each expense category without additional justification. Per diem rates define a fixed daily allowance for meals and incidental expenses when employees are travelling on business, eliminating the need to collect and review individual meal receipts.

Typical spending limits include: meals (domestic) up to $50 per person, meals (international) up to $75 per person, hotel accommodation up to $200 per night (domestic) or $300 per night (international), and taxis/ride-sharing up to $50 per trip. Per diem rates should be reviewed annually and benchmarked against government-published rates (such as the IRS per diem rates in the US or HMRC subsistence rates in the UK) to ensure they remain reasonable.

Receipts are the primary evidence that an expense was incurred for a legitimate business purpose. Your policy should specify which expenses require receipts (typically all expenses above $25), what information a valid receipt must contain (date, vendor name, amount, items purchased), and how receipts should be submitted (digital photos via expense app, or original paper receipts).

For meal and entertainment expenses, the policy should require documentation of the business purpose and the names of the people present. This information is required by tax authorities in most jurisdictions to support the deductibility of entertainment expenses. Template language: 'Receipts are required for all expenses above $25. Receipts must show the date, vendor name, amount, and items purchased. For meal and entertainment expenses, the business purpose and names of all attendees must be recorded on the expense claim.'

Travel expenses are typically the largest category of employee expenses and the area with the greatest potential for overspending. Your travel policy should specify booking requirements (employees must book through the company's preferred travel management company or booking platform), class of travel (economy class for flights under 6 hours, business class permitted for longer flights with prior approval), hotel category (3-star or equivalent, or up to the specified nightly rate limit), and ground transport (taxis or ride-sharing for airport transfers; public transport preferred for city travel).

The policy should also address loyalty programme points: most companies allow employees to retain airline and hotel loyalty points earned on business travel, but some require that points be used for future business travel rather than personal use. Clarifying this point prevents disputes and ensures that employees are not incentivised to choose more expensive options to earn more points.

A clear submission deadline and reimbursement timeline sets expectations for both employees and the finance team. Most companies require expense claims to be submitted within 30 days of the expense being incurred; claims submitted after 60 days may be declined. Reimbursement should be processed within a defined timeframe — typically 5–10 business days of submission — to ensure that employees are not out of pocket for extended periods.

Template language: 'Expense claims must be submitted within 30 days of the expense being incurred. Claims submitted more than 60 days after the expense date may be declined at the discretion of the finance team. Approved expense claims will be reimbursed within 5 business days of approval, via direct bank transfer to the employee's nominated account.'

An expense policy without enforcement is not a policy — it is a suggestion. The final section of your expense policy should clearly state the consequences of non-compliance: expense claims that do not comply with the policy will be returned to the employee for correction, claims that appear fraudulent will be referred to HR for investigation, and repeated non-compliance may result in disciplinary action.

The policy should also state how it will be enforced: the finance team will review all claims for compliance before processing, a sample of claims will be audited in detail each month, and any patterns of non-compliance will be escalated to the employee's manager. Communicating these enforcement mechanisms clearly — and following through consistently — is what makes a policy effective rather than theoretical.