How to improve expense policy compliance without impacting efficiency

Balancing compliance measures with expenses is an ongoing challenge for businesses, as there is always the fear that if your policies are too strict and unclear, you risk slowing workers down with unnecessary shadow work. However, if policies are vague, compliance can drop, leading to out-of-policy spending, inaccurate budgeting, and a paper trail of complex reconciliation at month-end. In turn, this could lead to finance managers spending countless hours chasing receipts, re-inputting data, and reconciling travel spend.

This unnecessary shadow work introduces errors and pulls the team away from more strategic work. It also costs UK businesses £95 billion every year. But thankfully, there are ways to resolve these issues.

This guide will help finance teams to enforce expense reporting rules without creating friction. This will clear the path for employees to focus on their work and allow finance leaders to manage expenses smoothly.  

Why does company expense policy compliance sometimes fail?

Expense report compliance usually drops when the process itself is flawed; it’s rarely due to employees deliberately trying to flout the rules. If a policy isn’t effectively embedded into your organisation, it won’t become part of your team’s regular behaviour.  

Here are some common reasons why expense report compliance might fail:

Your expense policy is too complex

It’s one thing for a finance team to understand an expense policy, but it’s often forgotten that it needs to appeal to the entire company. Essentially, if  it doesn’t make sense, or it’s too long, people won’t read it.

Similarly, if the expense policy isn’t easy to access, this is also a barrier to adoption. If it’s buried deep in your company intranet, how likely is it that your team members will refer to it regularly?   

Marc Beerhorst, Senior Director, Spend Revenue, says: “Rather than burying complex policies in long documents, they should be embedded into the travel booking platform. Travellers need concise, skimmable checklists for easy access when needed to make a booking.”

Your company expense process is too difficult 

If your expense policy involves a lengthy list of administrative tasks like collecting paper receipts, categorising the transactions, and filling out long reports, employees might either ignore the guidelines altogether or delay reporting until the last minute.

"End-of-month stress could be avoided if Marco had access to an intelligent spend management platform. Then he could snap and upload paper receipts on the fly via a mobile app." says Marc Beerhorst.

Your policy relies on reactive auditing

If an employee finds out that an expense was out of policy after they have submitted the claim, this leads to two negative potential outcomes: 

• The business absorbs the cost

• You risk potential conflict by refusing to pay and leaving the worker out-of-pocket.

"Spotting a policy breach at the end of the month is too late." Says Marc Beerhorst, "The proactive guardrails on a modern spend management platform guide employees before they pay, securing instant compliance and avoiding difficult conversations.”

How can I improve expense policy compliance?

Decision-makers often worry that adding compliance measures will slow their teams down. But it needn't be something that intimidates your team or slows them down. It’s all about transparency, clarity, and boundaries.

Combined with automated systems, the guidelines below will help your employees to stay on the right side of your expense policy:

Design the policy to be easily understood

• Remove jargon and ambiguity from your policy. Instead of stating "reasonable dinner expenses will be reimbursed," set a limit and write it in plain language, such as “dinner allowance is £40 per day".

• Consider how accessible your policy is on a practical level. Is it buried in a 500-page employee handbook that no one ever looks at? If you use an expense management platform, make sure the policy is embedded in its workflow and is easily accessible from there. 

Embed control measures to spot issues early

The most efficient way to manage compliance is to catch anomalies before the money is spent, or immediately as it happens, rather than discovering issues later. You can embed a few control measures within your expense reporting process to help minimise this:

• Use smart corporate cards

By using corporate cards, finance managers can set distinct spending rules, based on daily, weekly, or monthly thresholds. You can even restrict cash machine withdrawals, or block specific merchant categories completely. 

Additionally, with Perk, the moment an employee uses their card, a notification prompts them to take a photo of the receipt on their phone. The platform's built-in AI automatically matches the card transaction to the receipt instantly.

• Book work trips through a travel booking platform

By requiring employees to use a travel booking platform to organise their work trips, options that are non-compliant with your expense policy are highlighted early on. For example, a flight booking that goes over budget can be flagged before it's confirmed.

• Embed approval points into your workflows 

For ultimate control, establish a pre-approval process for certain transactions, such as purchases above a certain amount or specific spend categories. If this can be configured within your travel booking platform to be automated, all the better.

Use data to map spending patterns 

If you’re using a spend management system like Perk, you’ll have access to transaction data that can be very useful in helping you map spending patterns and areas of non-compliance. 

Historical non-compliant spending patterns within a certain department, persistent issues within a certain spend category, or regular expense reporting issues with an individual employee can be identified, allowing you to address this head-on.

Make consequences for non-compliance clear

Whether expense reporting issues are from genuine human error or lax behaviour, make sure all staff understand the consequences for non-compliance. This will help shift your company culture towards better tracking habits that help make everything efficient, keep budgets secure, and allow everyone to focus on real work, with real impact.   

To establish a transparent policy, outline concrete steps for out-of-policy submissions: 

• Delayed reimbursements

Communicate that non-compliant or late claims will not be processed until the employee provides complete and valid receipt records.  

• Temporary spend suspension

For workers who persistently submit out-of-policy claims, outline a process where corporate card access or travel booking privileges are temporarily paused.

• Automated manager intervention

Establish workflows that automatically deliver repeat policy exceptions directly to department heads. This means the finance team doesn't have to take the additional administrative step of reporting frequent policy breakers to upper management.

Make it easy to be compliant

If the easiest option is also the correct option, you’re already winning half of the compliance battle. Review your purchasing and expense process from the point of view of a busy employee with a spare five minutes to report their expenses. If there are friction points, prioritise making these simpler.

How automated compliance drives company efficiency

When you replace legacy manual compliance workflows with automation, you eliminate the endless stream of administrative shadow work that drains your workforce.

By making compliance the easiest path, your workforce stops fighting clunky, admin-laden tools and starts moving faster. Employees book travel and track spend in seconds, while finance leaders shift from reactive policing of expense mistakes to proactive planning.

Here is how upgrading your expense reporting systems can help to drive efficiency across your company:

Improve expense reporting compliance with Perk

You don't have to choose between maintaining a tight budget and encouraging your team to work efficiently. Perk automates the manual work, reduces risk, and brings your data together for audit-ready reporting from day one. 

By using real-time receipt reconciliation tools and transparent transaction data, you will soon have a 360° view of your business's expenses. It’s a smarter system that frees up your teams to focus on real work. Book a demo now to see it in action.