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Establishing an Expense Report Policy in NetSuite

By: Chris Haiss on August 17, 2022

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Establishing an Expense Report Policy in NetSuite

ERP and CRM Systems

For any organization with staff members reporting expenses, you need to establish policies to clearly lay out what kinds of costs are reimbursable.

With expense report policies in place, you can ensure your employees are on the same page while maintaining visibility into costs and keeping them under control. As your organization grows and develops, you can amend or add to policies as needed.

Wondering where to start? Below, we’ll explore how to institute expense report policies in NetSuite and what they should include to operate successfully for you and your team.

What is an Expense Report Policy?

An expense report policy functions as a set of guidelines for what constitutes an approvable expense. These guidelines help both your employees and accounting department determine whether an expense is reimbursable or not.

Policies should include details like when a reimbursement will be rewarded and recourse if a reimbursement is rejected.

Setting a Standard

The main purpose of implementing expense report policies is to standardize the protocol for making decisions on whether to reimburse certain costs. Additionally, these policies:

  • Help staff members know in advance whether their purchase is eligible for reimbursement, preventing confusion if not reimbursed for a certain expense
  • Give approving managers a guide for what’s reimbursable
  • Assist in avoiding financial fraud and easily identifying if an employee is taking advantage of the system

What Your Policy Should Include

Expense report policies should layout the following types of information.

  • A complete list of which expenses are reimbursable
    Make sure your list includes (but isn’t necessarily limited to):
    • Hotel accommodations
    • Transportation expenses
    • Mileage reimbursement
    • Food/beverage costs
    • Any rules concerning alcohol
    • Entertainment expenses
    • Business-related items (i.e., subscriptions, electronics, equipment, etc.)
    • Any other miscellaneous expenses (i.e., postage, birthday cakes for employees, etc.)
    • Special considerations for international travel
    • Variations in policy for different roles and management levels
  • Specific budgets for each type of expense
    If your budgets fluctuate throughout the year, use this section to provide general guidelines or price ranges for employees to reference.
  • Explanations around preferred providers
    Ensure employees understand the rules around when they must use preferred hotels, airlines, rental car companies or other providers and when there’s flexibility. Be clear about how and when exceptions are allowed.
  • Clear and concise language
    Write policies in a way that leaves no question about what is or isn’t admissible.
  • All expenses that are not eligible for reimbursement
    Expect this list to grow over time as employees’ expense reports are questioned or rejected. If you’re regularly updating your policies, you can simply insert these ineligible expenses into a new section outlining what’s not covered.
  • Specific instructions for claiming expenses
    Outline the process, any deadlines (i.e., submit all expense reports by the last day of the month when they were incurred) or other details employees need to follow to get reimbursed.
  • Your policy on cash advances
    Determine whether you will or won’t be giving out cash advances. If you are, include the specific steps someone must take to get the advance (and how to report/return any excess funds from that advance).
  • The reimbursement process
    Provide details on when employees can expect to be repaid, how they’ll receive their money and what steps they need to take if one or more items on their expense reports are rejected.
  • Company-issued credit card rules
    If your business provides corporate credit cards for employees, the expense report policy needs to include language around if and when cards can be used for personal purposes, repayment policies and whether personal credit cards can be used to pay for expenses.

Example Expense Report Policy

You can leverage this outline when creating your organization’s expense report policy. Once you start assembling your policy, customize this accordingly to include the relevant points and address any potential issues related to your own operations.

  1. State the policy’s purpose
    This expense policy applies to all employees that are reimbursed for work-related expenses.
  2. Detail what the policy covers
    1. Business travel
    2. Accommodations
    3. Meals
    4. Entertainment
    5. Conferences, training and education
    6. Office supplies and equipment
    7. Miscellaneous expenses
    8. Additional relevant expenses
  3. Detail what the policy does NOT cover
    1. Personal purchases
    2. Expenses incurred by non-employees
    3. Meals and entertainment associated with unauthorized travel or event
    4. More than two alcoholic beverages per day
    5. Tickets for concerts or sporting events unless part of a pre-approved event with prospects/customers
  4. Outline the employee expense reimbursement process
    1. List the steps that workers must take to be reimbursed fully or partially for their expenses
    2. Detail the approval process and who must be involved
    3. Include the timelines for reimbursement

Creating a New Expense Report Policy in NetSuite

To set up a new expense report policy in NetSuite, follow these steps:

  1. Navigate to Setup>Accounting>Setup Tasks> Expense Report Policies>New
  2. Enter a Name for the policy.
    1. Example: Business Meals/Entertainment
      “$500 limit per day - no expense over this limit will be allowed.”
    2. NetSuite will tell an employee if they go over the limit and send a message to click the show policies button. The line on the expense report will be red.
  3. Select the Start Date the policy goes into effect.
  4. Select the End Date if the policy has an expiration date.
    1. You can also choose from Subsidiary, Department, Location and Customer.
  5. Select the Expense Category for this policy.
    1. This is a multi-select option (if necessary).
  6. Select the Limit Type for the policy.
    1. It can be a per day or per expense report.
  7. Enter a Maximum Dollar Amount Allowed for this expense report policy.
    1. Note: A limitation of NetSuite is that it can only be by the expense report or the day. If you have a policy that is once a month, like a phone allowance, it can handle the dollar amount but not the time element.
  8. In the Action field, select how you want the violations of the policy handled.
    1. “Warn but allow expenses outside the limit” or “Do not allow outside of the limit”
    2. If the policy had “Warn but allow expenses outside of the limit” for the action, the expense report can be submitted. You also can have an email sent to the employee’s supervisor or anyone else that you select on the policy when an overage occurs.
  9. Check Requires Memo box to require a memo for any expense affected by the policy.
  10. Check Requires Receipt box to require a receipt for any expense affected by this policy.
  11. Click Save.

expense report policy in NS

Expense report policy in NetSuite

Expense Report Policy Best Practices

Here are best practices for developing your organization’s expense report policy.

Understand the Legal and Tax Implications of Your Policy 

Review any state and federal laws governing expense reporting and reimbursement. Make sure your policy aligns with these laws.

Take a similar approach with tax laws, knowing that there are strict policies concerning which expenses can or can’t be deducted on your business tax return.

Ask Your Employees For Input

If this is your first time putting together a policy, and you’re unsure what to include, ask your employees for input.

What would make the process easier for them? What needs to be more clearly stated? Where have they run into problems with filing expenses in the past (either at your organization or a previous employer)?

Use this input to create a policy that meets everyone’s needs as much as possible.

Talk to Senior Managers About the New Policy

Instead of just springing the new rules on managers, executives and other approvers, get them involved in the policy development process. They’ve probably had to follow similar guidelines in past positions and can share valuable insight with you.

Keep It Simple, But Address the Important Issues 

This will be a balancing act, but your goal should be to keep the policy as simple as possible while hitting on all the key points. Be concise and use as few words as possible without leaving too much up to interpretation.

Don’t Bury the Policy in Your Corporate Paper Pile

The goal is to create an expense policy that all interested parties can read and refer to as needed. Once the policy is complete, distribute it electronically and encourage employees to read it and provide feedback.

Automate Your Expense Management Process

Workers can use their smartphones to easily upload their receipts and get them into the expense management workflow. Once in the accounting system, those expenses can be automatically routed to the right people for approval, flagged or prepared for payment.

Automating the expense management process is a best practice that many companies have embraced, helping them save time and money while reducing the potential for errors and fraudulent transactions.

Need Help?

Contact us online or give us a call at 410.685.5512 to see how to establish and optimize your organization’s expense report policies in NetSuite.

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