Updating Spending Policies from Home

Companies across the globe have embraced remote work—a trend likely to continue even after coronavirus-related lockdowns end. To ensure that employees who continue work from home in the long-term have reliable access to tools ranging from office supplies to appropriate internet bandwidth, companies need to take the time to rethink their spending policies.

Decision makers and administrators can start by focusing on three key spending areas: office supplies and equipment, travel and expenses, and social and wellness activities.

Office Supplies and Equipment

Anant Kale, CEO of the San Jose, California-based AppZen, an expense and accounts payable platform powered by artificial intelligence, has seen clients’ expenses skyrocket in February and March. According to Kale, employees have been expensing a great variety of things that weren’t previously allowed, from HDMI cables and monitors to desks and chairs. “Many companies didn’t have a policy that would address something like this,” says Kale.

Even many companies that had a remote workforce typically supplied office supplies through a central purchasing office or portal, and computer equipment through the IT department. But the sudden, large-scale demand has created the need for employees to buy directly from suppliers.

You need to empower managers to make decisions on their own within a certain threshold.

–LJ Suzuki, founder and fractional chief financial officer, CFOshare

“We are seeing guidelines around the monetary value for what you can spend on things like chairs, desks, monitors, mouse, etc.—and in some cases, also recommendations on where to buy from,” Kale says. “Those did not exist in policies earlier but we’re seeing more guidelines, because expenses can be all over the place.”

He recommends that your policy should include not only guidelines on what’s allowed, but also other criteria, such as how often specific items can be reimbursed. For example, it may be reasonable to only reimburse for headphones every one or two years.

Travel and Expenses

Due to travel restrictions and safety concerns, many enterprises have curtailed employees’ business travel during the pandemic. However, as the situation continues to evolve, so should the travel and expense policies.

Suzanne Wolko, a business travel and expense consultant and owner of Philadelphia-based Arden Road Travel, recommends that businesses have a policy in place for changing times.

Wolko has previously written travel and expense policies for financial companies and has also served as controller. She believes employers should review policies and update them for the future, “when we figure out what the future looks like.”

“Travel is going to change in a huge way and so will the expenses around travel, and there's a lot of risk management that needs to be updated in policies,” she says. “Employers have a duty of care, and they need to understand what happens to the employees when they’re traveling.”

Social and Wellness Activities

When working from home while only seeing each other in videoconferencing meetings, employees may feel isolated and burn out faster.

“Managers are really having trouble monitoring the stress levels of their employees and also motivating them because of the physical disconnect,” says LJ Suzuki, founder and fractional chief financial officer with CFOshare, a Denver, Colorado-based company that offers outsourced financial services.

Suzuki says one best practice he’s starting to see more of is managers proactively creating social events over digital platforms. For example, managers would order pizza delivery to individual homes for a team lunch or team pizza party over videoconference.

Since your company may also have employees with dietary restrictions, you could allow employees to expense the lunch of their choice. Another idea is to send them gift cards to local restaurants or online delivery services.

Spend administrators could extend more flexibility to managers so managers have more discretion in making spending decisions.

“You need to empower managers to make decisions on their own within a certain threshold,” Suzuki says.

Similarly, you could allow employees to make small purchases themselves using their corporate cards. Your updated spend policies should reflect the maximum amount employees are allowed to spend.

Maintaining Flexibility While Watching Costs

When you update your policies, review them regularly to make sure they’re still applicable as circumstances and business needs change. If you’re entering unknown territory where events unfold faster, the cadence of the review cycle should be adjusted accordingly.

In the meantime, Wolko says administrators should ensure they’re not stopping something important because of a $50 exception.

“It’s about making sure employees have what they need to be able to continue business and serve the clients,” she says.

To maintain policy compliance, Kale, of AppZen, recommends using rule- and AI-based tools to automate reimbursement approvals while also understanding where the biggest spending categories are.

“Companies want visibility into their spend because this economy is hurting everyone,” he says. “Most companies don't have the manpower to look at all expenses and randomly choose a small number to review. AI tools can automate that, and help you save money in the future.”

Photo: Getty Images