Expense Policies and Spending Limits

#Understanding Expense Policies

An expense policy is a set of rules governing:

• What's eligible: Which expense categories are reimbursable
• How much: Spending limits per category or per transaction
• When: When pre-approval is required
• How: What documentation is required
• Where: Geographic or merchant restrictions

Policies can be:

• Company-wide: Applies to all employees
• Role-based: Different policies for executives, employees, contractors
• Department-based: Sales might have different policies than Engineering
• Location-based: Different limits in different countries

#Creating a Policy

#Step 1: Define Policy Framework

1. Navigate to Settings > Expense Policies

2. Click Create Policy

3. Enter:

   • Policy Name: (e.g., "Standard Employee Policy")
   • Description: Purpose and scope
   • Effective Date: When policy takes effect
   • Applies To: Who it applies (all employees, specific role, etc.)

4. Click Create

#Step 2: Set Category Limits

1. In policy, click Add Category Limit

2. Select Category (Travel, Meals, Office Supplies, etc.)

3. Set Limit Type:

   • Per Transaction: Max per single receipt/purchase
   • Per Day: Max per calendar day
   • Per Month: Max per month
   • Annually: Max per year

4. Enter Amount: Spending limit

5. Set Requires Approval:

   • Over limit: Flag for manager review
   • Always: Always require approval
   • Never: Auto-approve if within limit

6. Click Add

Example:

• Meals: $75 per transaction, $100 per day, $1,500 per month
• Travel - Hotel: $200 per night, $1,200 per month
• Travel - Airfare: $2,000 per transaction, $10,000 per year
• Office Supplies: $200 per transaction, $1,000 per month

#Step 3: Set Ineligible Categories

Specify what cannot be reimbursed:

1. Click Add Ineligible Category

2. Select categories:

   • Alcohol (may be restricted)
   • Personal Care (haircuts, grooming)
   • Entertainment (movies, entertainment other than client-related)
   • Gambling (casinos, betting)
   • Nightclubs
   • Custom: Add other ineligible categories

3. Light blocks submission of ineligible categories

#Step 4: Set Documentation Requirements

Specify what documentation is needed:

1. Click Add Documentation Rule

2. Set Category: What category this applies to

3. Set Requirement:

   • Receipt Required: Receipt image must be provided
   • Explanation Required: Employee must provide business purpose
   • Approval Required: Manager approval before submission
   • Custom Approval: Additional person must approve

4. Example:

   • Meals: Receipt required + explanation
   • Client entertainment: Receipt required + explanation + approver
   • Travel: Receipt required

5. Click Add

#Enforcement and Validation

#Real-Time Policy Enforcement

When employee submits expense:

1. Light validates against policy:

   • Eligible category?: Is category allowed?
   • Within limit?: Does expense exceed limit?
   • Documented?: Receipt provided if required?
   • Explained?: Business purpose provided if required?

2. Light shows validation results:

   • Green checkmark: Expense complies with policy
   • Yellow warning: Exceeds limit but can be submitted
   • Red error: Cannot submit without correction (ineligible category)

#Flagging for Approval

Expenses that exceed limits:

1. Automatically flag for manager review

2. Employee is notified: "This expense exceeds policy limit"

3. Employee can:

   • Cancel: Withdraw and don't submit
   • Request Variance: Submit and ask manager to override policy
   • Resubmit: Correct and resubmit

4. If submitted despite warning:

   • Goes to manager
   • Manager sees flag: "This exceeds policy limit"
   • Manager can approve or reject with reason

#Policy Exceptions and Overrides

#Requesting Exception

Employee requesting policy exception:

1. Submit expense that violates policy

2. In notes/explanation, request exception:

   • "Need approval for this $350 meal (exceeds $75 limit)"
   • "This is for client entertainment with key client"

3. Submit anyway

4. Manager sees exception request and policy violation

5. Manager can Approve Exception with explanation

6. Exception is recorded for audit

#Granting Standing Variance

For predictable exceptions (e.g., employee frequently travels to high-cost areas):

1. Navigate to Policies > Variance Approvals

2. Click Add Variance

3. Set:

   • Employee: Who gets variance
   • Category: What category (e.g., Meals)
   • Limit: New higher limit
   • Duration: How long variance lasts
   • Reason: Why variance is needed

4. Example: Sales VP traveling to APAC needs $150/meal limit (vs. standard $75)

5. Apply variance

6. Employee's expenses automatically allow higher limit

#Policy Compliance Reporting

#Monitoring Policy Violations

1. Navigate to Reports > Policy Compliance

2. View:

   • Total Submissions: Expenses submitted
   • Compliant: Met policy requirements
   • Violations: Exceeded limits or ineligible
   • Violation Rate: % of submissions violating policy

3. Drill down by:

   • Employee: Who violates most
   • Category: Which categories are problematic
   • Type: Exceeds limit, ineligible category, missing documentation

#Trend Analysis

Track policy compliance over time:

1. View compliance by month
2. Is compliance improving or deteriorating?
3. Are specific employees consistently violating?
4. Are specific categories consistently problematic?

Use data to:

• Identify training needs
• Adjust policy limits (if universally too strict)
• Take action on chronic violators

#Policy Communication

#Publishing Policies

Ensure employees understand policies:

1. Navigate to Policies > Published Policies
2. Make policy Public so employees can review
3. Link in onboarding materials
4. Periodically remind employees

#Policy Training

Help employees learn policies:

1. Create Policy Guide: Summary of key limits and rules
2. Include examples: "Here's what's reimbursable and what's not"
3. Distribute to employees
4. Especially important for travel and entertainment categories

#Role-Based Policies

#Creating Different Policies by Role

Different employee types may have different policies:

Executives (higher limits):

• Meals: $150 per transaction, $3,000 per month
• Travel: $500 hotel per night
• Air travel: First/Business class pre-approved

Employees (standard limits):

• Meals: $75 per transaction, $1,500 per month
• Travel: $150 hotel per night
• Air travel: Economy class only

Contractors (limited reimbursement):

• Meals: Not reimbursable except for work events
• Travel: Pre-approval required
• Supplies: Not reimbursable

#Assigning Policies to Employees

1. Navigate to Employees
2. Select employee
3. Assign Policy: Choose policy that applies
4. Click Save

When employee submits, their policy is automatically applied.

#Merchant-Level Restrictions

#Restricting Merchants

Block certain merchants:

1. Click Add Merchant Restriction

2. Select merchant (or merchant category)

3. Action: Block or Allow

4. Examples:

   • Block: Nightclubs, casinos, alcohol retailers
   • Allow: Specific airlines or hotel chains

5. When employee tries to submit receipt from blocked merchant:

   • Light flags or blocks submission
   • Requires manager approval to override

#Pre-Approval Workflows

#Large Expenses Requiring Pre-Approval

For planned expenses that require approval before spending:

1. Configure policy: "Travel expenses over $500 require pre-approval"

2. Employee plans trip: $800 airfare

3. Employee submits Pre-Approval Request:

   • Date of travel
   • Business purpose
   • Estimated cost
   • Approver

4. Manager approves

5. Pre-approval valid for 30 days

6. Employee books flight

7. When expense submitted, pre-approval noted

8. Approval process is streamlined (already approved)

#Policy Exceptions Log

Track all policy exceptions:

1. Navigate to Reports > Exceptions Log

2. View all variances and overrides:

   • Who made exception
   • Why
   • When granted
   • Expiration (if applicable)

3. Use to audit policy enforcement

4. Identify if exceptions are being granted too freely

5. Enforce consistency

#Annual Policy Review

#Updating Policies

Policies should be reviewed annually:

1. Review Policy Performance data:

   • How many exceptions granted?
   • How many violations?
   • Are limits appropriate?

2. Consider changes:

   • Are limits too restrictive (causing friction)?
   • Are limits too generous (not controlling cost)?
   • Are any categories causing trouble?

3. Update policy limits and rules

4. Communicate changes to employees

5. Set effective date (give notice)

#Related Articles

• Expense management overview
• Expense approval workflows
• Expense reports and analytics