Expense reimbursement policy — Why you need one and how to create it

A clear business expense reimbursement policy is good for everyone involved. It’s a communication tool — employees know how and what to expense, and finance teams aren’t as inundated with approvals and questions. By setting guidelines upfront, you’ll be able to prevent friction and get people paid back quickly.

We’ll go deeper into why every business needs an expense reimbursement policy, show you how to create one that works, and share best practices that will save your finance team hours of frustration. 

Why do you need a business expense reimbursement policy?

When employees spend their own money on business expenses, they should be paid back. Without a reimbursement policy, employees may be doing things differently, confused about what and how to expense and how long until the money hits their account. 

A comprehensive business expense reimbursement policy sets parameters on allowed spending and takes the stress out of it. These spending limits ensure only legitimate business expenses, within budget, are reimbursed.

It’ll also ensure your business meets tax requirements. Without proper documentation and procedures, you could be at fraud risk. You'll avoid missing deductions, misclassifying income, improper GST accounting, and unexpected Fringe Benefit Tax obligations.

How to create an employee expense reimbursement policy

Building an employee reimbursement policy doesn't have to be complicated. Follow these steps to create guidelines that work for your business and reduce the risk of disputes:

1. Define eligible expenses

Start by clearly outlining which expenses your company will reimburse. The most common categories include client entertainment and meetings, work-related travel, training and education, and work supplies.

For each category, specify exactly what's covered. For example, food and beverage during a client meeting can be expensed, whereas drinks afterwards cannot.

2. Set reimbursement limits

Create spending limits for each expense. Your employee reimbursement policy should include maximum amounts per week/month/year. You should also have an exceptions process for when limits need to be exceeded.

If these limits are likely to be different for each employee, you’ll need to draw up separate agreements with each of them.

3. Establish approval workflows

Figure out who needs to approve expenses and at what threshold additional approvals are required. This might look like direct manager approval for standard expenses or department head approval for bigger expenses. 

Just remember — your employees shouldn’t have to personally pay for anything that could leave them seriously out-of-pocket, even if you reimburse quickly.

4. Outline the submission process

Let your employees know how they should submit their expenses, including documentation like receipts and invoices, submission timeframes, approval workflow, and payment methods and timing.

Some may do this manually, using forms, while others prefer to use a more automated system. Expense management software can significantly streamline this process, where employees capture receipts with their phones and submit claims digitally.

5. Create a compliance process

Behind the scenes, you’ll need guidelines for how expenses will be reviewed. This includes regular audits of expense submissions, consequences for policy violations, a process for handling questionable claims, and a minimum of five years of retention records for ATO compliance.

6. Communicate the policy 

The best employee reimbursement policy is useless if your team doesn't understand it. Plan how you'll share and reinforce the policy by including it in onboarding for new employees, making it easily accessible, creating simple one-page summaries, and providing training for managers who'll be approving expenses.

Employee reimbursement policy example

You don’t need to create a reimbursement policy from scratch. We've built a downloadable Employee Reimbursement Policy [Free Template] you can customise for your business.

It includes:

1. A complete reimbursement policy you can adjust
2. An expense submission form
3. A missing receipt declaration for when receipts go missing

Just download it, add your company info, update the eligibility information, and you're ready to go.

Beyond forms: streamlined reimbursements with Weel

Forms work fine to start with, but they can get clunky as you grow. Weel's reimbursement tool makes things smoother. Employees request money back with a tap in our app, and approvals happen in seconds.

With Weel, you get same-day reimbursements to employee accounts, approval flows that match your company structure, digital storage for all receipts and documentation, and clear visibility of spending patterns.

Employee reimbursement policy best practices

When creating new processes in your business, you have to think beyond just utility. Understanding the basic structure of reimbursement policies is one thing, but writing a good one that’s easy to follow and fair is another.

Here are a few employee reimbursement policy best practices to keep in mind:

Keep it simple and accessible

Your policy should be easy to understand and follow. This means no legal jargon and complicated parts. Use clear, concise language, and break down the process into simple steps.

Consider different employee needs

Not all employees have the same spending patterns or financial situations. Your employee reimbursement policy should account for both ‘small spenders’ who only make occasional low-value purchases and frequent buyers with regular expenses.

For employees who spend frequently, corporate cards may be a better option than reimbursements.

Update regularly and gather feedback

Your business expense reimbursement policy shouldn't be a static document. Plan to review the policy at least once a year after you’ve worked out your pain points. You’ll also need to stay updated on tax regulations and compliance requirements, and benchmark against industry standards.

Frequently Asked Questions (FAQs)

Q: What is the benefit of expense reimbursement?

Expense reimbursement allows employees to make business purchases without having to jump through complicated loops. On the business side, it means fewer corporate cards where not everyone needs one.

Q: How quickly should employees be reimbursed?

The best practice is to reimburse employees as quickly as possible. For most businesses, this shouldn’t be longer than a couple of weeks. Automated expense management systems like Weel can process same-day reimbursements after you’ve approved them.

Q: How do I create an expense reimbursement form?

See our Employee Reimbursement Policy Template or create one from scratch. It should include employee details (name, team, manager), expense date and category, amount and currency, business purpose explanation, receipt attachment options, approval section for managers, missing receipt declaration, and submission timeframe requirements.

That said, tools like Weel's expense management solution include built-in digital forms that simplify the entire process, eliminating the need for manual forms altogether.

Q: What's an expense policy versus a reimbursement policy?

An expense policy is broader, covering all company spending (including corporate cards, reimbursements and direct payments). A reimbursement policy specifically addresses how employees get paid back for business expenses they cover with their own funds. 

Make expense reimbursement painless with Weel

Creating a solid employee reimbursement policy is just the first step. Implementation and enforcement can still be challenging with traditional manual processes that rely on paper forms and spreadsheets.

While our reimbursement form template can help you get started, automating the entire process delivers better results for both your finance team and employees.

Weel’s comprehensive expense management platform ties everything together—giving you full control, real-time visibility, and a smooth experience for everyone.

With Weel, you can:

• Instantly issue virtual corporate cards with spend limits
• Enable mobile receipt capture and fast reimbursement claims
• Route approvals automatically with custom workflows
• Get real-time budget tracking and transaction feeds
• Sync seamlessly with Xero, MYOB and QuickBooks
• Approve and manage expenses on the go via mobile

Ready to make reimbursements effortless?

Start a product tour or Book a demo to see how Weel saves time, reduces admin, and gives your team the tools they need to stay in control.