If left unorganized, expense management can quickly become a burden on the company. That's why it's important to establish a clear policy for handling expense reports.
Establishing a clear policy for handling expense claims within your company is of paramount importance to ensure that everything runs smoothly. With clearly established rules that are well communicated to all employees, you can avoid management problems, as well as tensions and misunderstandings.
Rule 1: Types of expenses covered
Business expenses include all expenses incurred by an employee in the course of his or her work for the company. Business expenses are reimbursed in full or in part, depending on the nature of the expense. While there are minimum legal requirements for reimbursement, each company is free to offer its employees better benefits. That's why it's important to draw up a list of reimbursed expenses.
Travel expenses
An employee may be reimbursed for business travel:
- Car rental with fuel
- Tolls
- mileage allowances for the use of personal vehicles.
To qualify for reimbursement, the employee's expense claim must include the date and location of the mission, the reason for the trip and the number of kilometers traveled.
As far as mileage expenses are concerned, the employee cannot count the kilometers corresponding to journeys between his home and the company, as they are already covered by the salary allowance on the income tax return.
Meals and accommodation
When an employee travels, accommodation costs must be reimbursed if the distance between the employee's home and the place of work is more than 50km, or if the journey cannot be made in less than one and a half hours by public transport. The cost of food for employees on business trips is also covered. As for business meals with clients, these may be reimbursed if the employee specifies the reason, as well as the name, position and contact details of each person invited by the company.
Teleworking expenses
When an employee telecommutes, it's essential to cover part of his or her expenses. This may be a percentage of the rent, or a portion of the Internet or telephone package. That said, the amount covered cannot exceed 50% of the total cost.
Other expenses
Other expenses may also be borne by employees and reimbursed by the company. These may include :
- Documentation: professional journals, newsletters, etc.
- Clothing: if specific clothing is required by the company, but is not provided by the company.
- Communication: internet connection, telephone or postage costs
- Gifts for customers on business trips, for example.
Rule 2: Reimbursement method: actual or flat-rate
A company can choose to reimburse business expenses in one of two ways: on an actual basis or on a flat-rate basis. Each method has its own advantages and disadvantages that need to be taken into account.
Actual reimbursement
Actual reimbursement means that all expenses are paid in full. Under this system, the employee pays his expenses out of his own pocket and collects all the receipts needed for reimbursement. He or she then fills in an expense claim form and sends it to the company, together with the supporting documents, to obtain reimbursement. This procedure has the advantage of covering all expenses for the employee. However, it takes a long time to process, and the company does not control all the expenses incurred on site.
Flat-rate reimbursement
Flat-rate reimbursement is simpler, since the company reimburses its employee according to a minimum scale determined by URSSAF. The employee must nevertheless provide some justification, such as the reason for the expense, the date and the circumstances, but does not need to provide many receipts. For the company, this is particularly easy to manage, since the amounts are capped and anticipated. However, it can represent a loss of earnings, either for the company when actual expenses are below the scale, or for the employee in the opposite case.
Rule 3: Necessary supporting documents
For each type of expense, the tax authorities require companies to have certain supporting documents before reimbursing the employee. Agreeing to reimburse an employee without the appropriate supporting documents may result in a tax reassessment in the event of a tax audit.
The following documents are required:
- For meal expenses: a receipt from a restaurant, bakery or supermarket showing the date and place.
- For a business meal: a receipt from the restaurant stating the number of covers, plus a complete list of guests, with their names, company and function
- For mileage reimbursements: a copy of the vehicle registration document showing the vehicle's power rating.
- For public transport costs: proof of ticket payment
- For cab or Uber fares: the ticket issued by the driver
- For accommodation costs: a detailed invoice showing the number of nights, all costs and a zero balance.
- For miscellaneous expenses: a receipt showing the name of the service provider, the amount of the purchase, the date, the list of items purchased and the method of payment.
Rule 4: Processing time and reimbursement channel
One last thing to specify in your expense management policy is the timeframe and method of reimbursement. This information will prevent your employees from wondering about the status of their expense claims, and from having to question the finance department on a regular basis. In this way, you can avoid tension within the company, which is detrimental to the quality of your employees' work.
Of course, if this rule is to be respected, it must be reasonable. For example, you can't expect a processing time of one week. A month seems more credible, although it's better that the actual processing time be shorter than longer.
Specifying the reimbursement method in your policy is also of interest to your employees, who will automatically know how they will be reimbursed.
Please note: Paper tickets are a thing of the past!
Before July 1, 2019, you were obliged to keep your expense report invoices. But, as of this date, that's over! In concrete terms, thanks to an order dated May 23, 2019 setting out the conditions, all you need to do now is scan your receipts and then you can throw them away.
Make sure you're well equipped to comply with this new legal requirement.
To sum up
Expense claims processing requires flawless organization. Manual processing takes more time and increases the risk of errors. That's why we strongly advise you to equip yourself with a modern digital solution that makes the task easier. Alternatively, Anytime goes one step further, offering you a complete solution that will enable you to eliminate expense claims altogether, thus lightening your employees' daily workload.
