Connect with us

Business

A Detailed Guide To Executing A Robust Reimbursement Process

Published

on

Every company that has a workforce will inevitably encounter the need to address an employee reimbursement claim at some point during its existence. Interestingly, the concept of reimbursements extends beyond ethics and is interlinked with employee productivity. Simply put, employees who are compensated timely for out-of-pocket business expenses are more likely to be satisfied with the work culture at their company and will be more productive than their counterparts who face the opposite situation at their workplace.

However, the reimbursement process is not as easy as it may seem. This guide presents a detailed view of all the steps involved in the reimbursement process, so that you can streamline this process within your company and skyrocket your business’s growth.

1. Request Policy Development:

Every business, regardless of its scale, should have clear reimbursement request policies in place. To achieve this, the authority should conduct several meetings with the financial teams and employees to curate a list of reimbursable expenses. Once this is done, the management should circulate this list across the company and attach it somewhere where it is accessible by everyone, such as on the front page of the respective expense management portal.

It is also advisable that expense clusters should be made so that it’s easier for employees to identify whether their expenses are reimbursable. Additionally, in case an employee is making a business-related expense abroad, they should be compensated in just one standardized currency rather than the currency using which the expense was made.

Some common reimbursable expenses include travel, meals, visas, work permits, accommodation, and business-related subscriptions.

2. Receipt Requirements:

All employees should be required to submit a receipt of the expenses they’ve incurred because a receipt acts as a proof of expense. The reimbursement claim guideline document should clearly outline the receipt requirements for the initiation of the reimbursement process. Common requirements include:

  • Date: The date makes it easier to track when the expense is incurred and if the request is arriving within the prescribed timeframe.
  • Vendor details: Vendor details assure the management that they can verify the expense details in case there are any doubts or discrepancies.
  • Amount including tax: Since the employee also pays tax, the receipt must highlight that. Having the amount improves record keeping.

3. Request Submission and Process:

Once the policies and receipt requirements have been fixed, the authority should work on figuring out how they’re going to accept requests and the timeline for doing the same. They should also work out the timeline of the request submission so that all reimbursement claims arrive timely. This approach not only helps streamline the approval process but also facilitates better financial forecasting for the organization. Some request submission processes that organizations can use include:

  • Automated expense management systems: Businesses can work on developing a subdomain where authorized employees can electronically make reimbursement requests and upload all the necessary documentation. The requests will automatically get recorded in a spreadsheet, making it easier for the finance team to track the status of different requests.
  • Dedicated team for manual request processing: In case the organization is small, it might not be the best decision to invest in expensive expense management systems for requests that arrive infrequently. Rather, the authority can work on setting up a dedicated team that manages the reimbursement process manually. However, one drawback is that the process is prone to errors and duplicate entries.
  1. Request Approval Process: Once a request has been received along with the necessary documentation, the employee who made the request should get timely notifications about the status of their request. Once a request has been approved, an electronic acknowledgment should be emailed to them. Although this process would be done more easily if the company were using an electronic expense management system, this workflow applies to companies with manual processes, too.
  2. Disbursing the Amount: After the request has been approved, the reimbursement guideline should clearly state how the beneficiary is going to receive the amount. This should include the timeline. For instance, it should be clearly outlined if the employee will receive the amount immediately or at the end of the month.

Businesses using an automated system can sync their expense management system with the business account to automate the amount of disbursal process. As stated earlier, timely reimbursement claim settlement directly impacts employee satisfaction.

To conclude, reimbursement management is an intricate process that requires thoughtful planning. Making the reimbursement request guideline document is the first step toward forming a robust reimbursement management system.

Trending