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Create an Expense Policy That Just Works: Tips From an Exec Who Has Seen It All

Doggie day spa, taxidermy, dance classes, a flat screen TV and a new car. You would probably never guess it, but these are a few of the bizarre expenses that CFOs dealt with last year, according to Robert Half Management Resources research. The executive search firm's annual survey of unusual, ill-advised expenses always raises eyebrows and shines a light on how fraudulent expenses can impact the company's bottom line — and, for the offenders, possibly their job security.

Silly expense requests aren't just a headache for the back office, they are costly for businesses, drawing time and resources away from meaningful work. The latest survey found that only 11 percent of executives reported a drop in inappropriate requests over the past few years. What's a modern CFO to do?

We caught up with Tim Hird, executive director of Robert Half Management Resources, to find out how businesses can create (and enforce) a sound expense policy. Hird oversees strategy, operations and business development for more than 150 offices worldwide and is a regular speaker and author on issues affecting finance and accounting pros. Don't want your employees to end up on next year's list? Keep reading:

What's your best advice for CFOs who receive a lot of bizarre expenses?
First, look for causes and patterns. Are employees trying to expense obviously inappropriate items, or are the submittals borderline? Are the requests frequently from the same staff members, or is the issue wider-spread? 

After you pinpoint what's happening, find out why. Talk to the employees involved. It's possible they don't understand your company's policy. Communicate your company's expense reporting policy throughout the organization, and make it easily accessible for when employees have questions.

Any tips for communicating the policy?
Use all delivery methods available. An organization-wide email may be the first outreach, but also post the guidelines on your intranet and include a reference for where individuals can turn for more information. If needed, provide a training with more in-depth discussions on what is and isn't appropriate to expense and the proper reporting procedures.

Technology can help, too. Use the latest software, including tools that flag potentially inappropriate requests before they're submitted, to ease the review process.

How do you define a sound expense policy?
A sound policy is clear and offers employees information on where they can go with questions. Make sure managers are equipped with the details on the reporting guidelines and can serve as a resource for their teams. This will help prevent employees from having to guess what is or isn't appropriate and submitting requests that fall outside of policy.

Do you have any advice for businesses looking to reign in their employee spending?
First, explain to staff where to allocate expenses. This explanation must be shared with all employees, and the guidelines should be easily accessible.

Monitor spending and expense reports, including by working with expense-reporting technologies, to spot potential problems. If issues are identified, address them with employees immediately. Show staff members how their spending, including within the budget, affects the company. When people understand this, they can make more informed decisions.

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