The Expense Policy Blueprint for Construction Companies and Contractors

About This Guide

At PEX, we’ve worked with thousands of companies, including hundreds of construction companies and contractors, who’ve used our technologies to embed expense policies in corporate card functionality. Many of these companies also integrated our real-time reporting technologies with their accounting, ERP, and project management software.

In this blueprint, we’ll share procedures that helped our platform’s users optimize the ROI on their technology stack.  

Before You Begin

It’s not a cliche to say no two companies are alike. It’s a fact. Before you begin, we suggest you gather the information that will help you create a sensible policy that is fair and transparent.

• Review your existing expense policy: If your business already has an expense policy, look it over. Make a list of what’s worked, what hasn’t, and anything that might need updating. 
• Review your spending data: Use your accounting and corporate card software to discover the types of expenses your employees incur. Reach out to your vendor partners, as well. Look for insights into who buys (roles), what they buy, and how much they spend. 
• Identify untracked one-off expenses: Emergency equipment rentals or supply purchases often go untracked, compressing margins and leading to budget discrepancies. See what procedures, if any, could have kept these costs from falling through the cracks.
• Reach out to key stakeholders: In addition to getting spending information from them, find out where your current processes for pre-approvals and approvals work—that is, where they successfully enable control and flexibility—and where they need improvement.
• Choose a mobile interface: Your expense management or corporate card provider may offer a mobile app that captures purchase data. Choose the app that’s easy to use and gives you spending information in as close to real-time as possible. Bonus points if the provider’s technology integrates with your ERP, project management, and accounting software.

Organizing Your Expense Policy

The chart below represents a recommended outline for construction company expense policies. The left-hand column has section headers, and the right-hand column contains the information that should be in each section.

Though this information is fairly similar from one expense policy to the next, we’ve made some modifications to serve the needs of construction companies. For instance, we titled the third section “Allowed Spending” rather than “Qualified Expenses” because the word qualified generally means ‘qualified for reimbursements,” not “allowed spending.”

generally means ‘qualified for reimbursements,” not “allowed spending.”

Expense policy section	What’s included in the section
Policy Brief	– Effective date – Reason for the expense policy – Who the expense policy applies to – How to use the expense policy
Responsibilities	– Requirement to comply with policy – Consequences for non-compliance – Responsibility to use corporate cards for company business only – Language expressing zero tolerance for fraud, bribery, and corruption
Allowed Spending	– General rules regarding spending, including the need to obtain approvals before spending over a certain amount – Per Diems – A list of allowable expenses – Spending caps (i.e., maximum $100 per person for client meals)Limits (i.e., economy class for flights)
Non-Allowed Spending	– The general rule for deciding which expenses are non-qualified  – A non-exhaustive list of expenses the company will cover (expect this to grow over time – Explanations, where employees might question the decision not to cover
Exceptions and Out-of-Policy Expenses	– Examples of out-of-policy spending – Importance of pre-approval – Need for justification in final paperwork
Procedures	– Obtaining approvals prior to spending – Documenting and reporting purchases – Cash advances – Approval and reimbursement time frames
Appendixes	– Preferred Vendors – Expense report software instructions – Contacts

Your Expense Policy Blueprint

Because expense policies contain a lot of information, all of it important, they can be intimidating and confusing. To compensate for this, try to use short, simple sentences and keep the tone as friendly as possible. What follows is a brief description of the content for each section of an expense policy and some sample language (in italics). We don’t mean for you to take this text literally. We recommend legal counsel review any expense policy before you release it to your team.

Policy Brief

This first section of your company expense policy is, for the most part, an introduction or overview. Many recommend calling it “Policy Brief” or “About this Policy” because the information in it, like all the information in the expense policy, is binding. 

This opening section explains why you have an expense policy, who it’s for, and how to use it. This section should also include the date of implementation.

About This Policy

This policy, effective [DATE], is for all [Name Company] employees who are authorized or asked to make business-related purchases. 

It contains general spending rules, specific lists of allowed and prohibited purchases, and procedures for obtaining and documenting pre-approvals, reporting purchases, and submitting documentation (receipts).

This policy applies equally to those who use company funds and corporate cards for these purchases and those who use their own funds that we reimburse. It also applies to managers who approve purchases.

Please familiarize yourself with these general rules and consult the lists of approved and non-approved spending prior to making any purchases. These are the same rules and lists that our finance team uses before approving and, where corporate cards are not used, reimbursing expenses.

By keeping everybody on the same page, there should be fewer misunderstandings. The firm can approve spending and issue reimbursements in a timely manner.

Responsibilities

This section is as much about ethics and culture as it is about procedure. You want your employees to know that you trust them to be honest in their business dealings and compliant with this policy. However, you need to also let them know the consequences of failure to comply, including disciplinary actions and delayed reimbursement. This is also the place to state a zero-tolerance policy for fraud, bribery, and corruption.

Because this section may seem intimidating, it’s a good place to reaffirm your commitment to approving and, where necessary, reimbursing spending as quickly as possible manner. Instructions for management on how to do so can help.

Responsibilities

This guide is intended to help [Name Company] streamline approvals and reimbursements. We expect employees to:

• Behave honestly, responsibly, and within the guidelines of this policy
• Submit expenses as soon as possible with a detailed explanation
• Keep and provide receipts

At the same time, we expect managers and approvers to:

• Check that purchases comply with this policy
• Approve expense reports promptly
• Forward expense reports to finance immediately upon approval

Any employee who is in doubt about whether an expense is in policy should ask their manager.

Employees are expected to obtain authorization prior to spending. That authorization needs to come from their manager or, if the manager’s not available, the manager’s manager. In many cases, attempts to use corporate cards without pre-approval will result in declined charges.

When two people in the company incur expenses at the same time, the senior employee should always pay.

[Name Company] takes a zero-tolerance approach to fraud, bribery, and corruption. We comply with anti-bribery laws in all regions where we do business. Offering or accepting a bribe, or behaving corruptly in anticipation of a bribe or advantage, is not acceptable.

Failure to comply with the policies in this guide can lead to delayed reimbursements or rejected claims. Persistent or deliberate non-compliance may result in disciplinary action.

Allowed Spending

This will probably be the longest section and most frequently consulted section of your expense policy. It contains a general overview of the rules regarding spending and lists of the kinds of expenses that the company will approve, as well as spending caps and limits.

Caps and limits may vary by role. For instance, you may cap client meals at $100 per person, but office and crew lunches — when the company treats — at $15. 

The text below also assumes that you are using a corporate card platform that provides spending controls with mobile capabilities for both users and finance administrators. These platforms can generally authorize and fund a card to make purchases in real-time.

Important Note: The following text includes general guidelines for three possible sections but does not suggest an exhaustive list of what you may or may not include in your expense policy. 

As noted earlier, conduct a thorough spend analysis that includes conversations with your staff about the expenses they encounter in their roles and build your “Allowed Expenses” and “Not-Allowed Expenses” lists around those.

Be prepared to revise this section frequently. Your unique experiences will teach you more than any guide can. 

Allowed Spending

All spending requires pre-approval by a manager and budget allocation by a finance administrator (In select situations, they may be the same person; see procedures). This helps ensure that the purchase is funded from the appropriate budget and charged to the correct job.

For many purchases, there may be standing, role-based pre-approvals (i.e., drivers filling company vehicles at an approved filling station). If you attempt to use your corporate card without pre-approvals or outside the scope of standing pre-approvals, the charge will be declined.

Even if you intend to fund purchases through your own resources, management’s pre-approval is required for reimbursement. 

In emergency situations, where your manager or finance administrator can’t be reached, another manager can expedite the request.

Note: The following examples may or may not be relevant to your organization. Choose what works for you.

Travel and Entertainment

All bookings should be made through our corporate account at [Name Resource] and, where possible, booked at least 14 days in advance. Where short notice travel is needed, you must get preapproval from [Name Manager or Title]

All travel should be booked in standard/economy class. You accumulate points on your own frequent flier plans, as long as it doesn’t prevent you from booking the lowest price choice available. However, you are expected to use your corporate card to book travel, not an airline miles card.

As with all spending, your manager needs to pre-approve your travel budget before booking. At that point, the finance administrator will allocate spending power to cover the budget to your corporate card. 

Or, where a company credit card is not used and funds are requested, the company may issue cash advances.

Covered expenses include:

• Air and rail fares (standard/economy class)
• Lodging (standard/economy room)
• Rental vehicles (economy cars for single travelers; sedans for three or four travelers)
• Per diem for personal expenses: $25 per day
• Meals (up to $50 per day)
• Client meals and entertainment (up to $100 per meal or other event)
• Taxis (between hotel and business functions)
• Conference registration fees
• Tolls
• Parking
• Visas (if required for business travel)

On-Site and Field Expenses

Material, equipment, and labor costs have separate budgets for each project, and the vast majority of purchases go through normal procurement or Human Resources (HR) processes. Some of these budgets may be assigned to contractors or subcontractors, who may have their own procurement and HR processes.

However, no project manager or estimator has a crystal ball. Emergency purchases, unexpected repairs, and unplanned on-site needs are inevitable. And while they must be made in a timely fashion, budgets still need to be allocated.

These rules are designed to allow project managers and foremen to make timely purchases while ensuring that budgets are considered and respected.

Preferred Vendors 

[Name Company] has accounts with preferred vendors who will promptly provide for most on-site and field needs. Contact your manager for approval prior to visiting or calling these vendors for your needs. (Note: You can contact the vendor to make sure the supplies you need are available prior to contacting your manager, but wait for approval to place the order.) Once approved, you can make the purchase.

In some cases, these vendors will only require a signature to provide the need. Others may require payment on delivery. In these cases, the company-provided corporate card should be authorized to complete the purchase.

Corporate Card Use 

Select employees and contractors may receive corporate charge or prepaid cards upon employment. These authorized personnel are expected to use a company-provided corporate card for on-site and field expenses. If the person needing to make the purchase has not been issued a corporate card, he or she should contact a manager to make the purchase.

Depending on their role, cards have total spending limits from 0 to $1,000, plus spending limits (e.g., $100 per transaction, $200 per day) and/or merchant limitations (e.g., Gas stations, Preferred Vendor Name, etc.). Field personnel with cards are preapproved to spend within these guidelines. Any attempt to use the card outside these limits, without additional approvals, will result in a denial. 

 If you need to make larger or out-of-limit purchases, contact your administrator (See “corporate card admin” in procedures.) If the timing is tight and you can’t reach your administrator, contact an alternate administrator. If the spending is approved, your card will be enabled to make the necessary purchase in a few minutes.

Covered on-site and field expenses include:

• Building materials
• Small tools
• Tool repairs
• Equipment rentals
• Safety equipment
• Gasoline or battery charging for company vehicles and heavy equipment
• Safety equipment

Where applicable, you are expected to use preferred vendors for all on-site and field purchases. To use another vendor, you need to include your reason in your request for pre-authorization, otherwise the charge may be denied.

Personal Vehicle Expenses

In accordance with Internal Revenue Service (IRS) rules, employees who use a personal car for business will be reimbursed at a rate of 66.5¢ per mile. The following conditions apply.

1. Employees are expected to keep a mileage log and submit it to the finance department as proof of business mileage each month. Logs need to include, for each trip:

• Date

• Purpose of trip

• Starting point

• Ending point

• Vehicle mileage at start of trip

• Vehicle mileage and end of trip

2. Only business travel qualifies for reimbursement. Personal trips and commutes are not.

3. Only travel between business sites qualifies for reimbursement. Travel from home to a business site is considered a commute.

4. When using a personal vehicle for qualified business travel, the company will also reimburse:

• Tolls

• Parking

You may wish to include role-based expense policies. Here is one for crew members who drive company vehicles to and between job sites. 

Special Instructions for Use of Company Vehicles

If your role includes driving a company vehicle, your corporate card will include fleet card functionality. They will work at the pump, but attempts to use the card in gas station convenience stores will be declined.

This card is only to be used for the company vehicle. Your supervisor will determine and inform you of:

• The number of times you can fill the tank in a set period (per day/week, etc.)
• The maximum value of each fill-up
• When exceptions to these rules will be allowed

There is no need to request pre-approval for spending within these parameters. You will need pre-approval for:

• Spending for repairs and maintenance
• Other business-related purchases not covered by pre-approvals

You do not need a separate card for materials or other business-related purchases for which you’ve obtained pre-approval. Once your card is authorized, you will be able to use the same corporate card for these purchases.

Non-Allowed Spending

Expect this list to grow with time. What may seem obvious to you may not seem so obvious to employees. You will need to update and clarify these contents frequently.

Non-Allowed Spending

Generally speaking, personal items and services do not qualify as business expenses. Nor do any penalties or fines incurred, even if you believe you incurred the fine while acting in the company’s best interest.

This is a non-comprehensive list of non-allowed expenses. If you’re not sure if an expense is covered, ask your manager. Managers who aren’t sure should contact the finance team for guidance:

Non-allowable expenses include:

• Airline upgrades
• Airline club memberships
• Child care
• Primary work location commutes
• Personal tools
• Laundry or dry cleaning fees
• Personal entertainment fees
• Travel incidentals 
• Theft or loss of personal property
• Vehicle fines, whether incurred in company or personal vehicles
• Non pre-approved meals or entertainment while on company business
• Expenses for friends or family members joining employees on business trips

Exceptions and Out-of-Policy Spending

No policy can predict every situation that may arise. An executive who’s been asked to stay out of town longer than planned may need laundry services. Or the preferred vendor is not able to deliver needed supplies in a timely fashion. 

In circumstances like these, your company needs to demonstrate flexibility.

Having this section lets you authorize this spending while still being transparent and fair.

Exceptions and Out-of-Policy Spending

No expense policy can anticipate everything that can happen.

If a traveling executive is asked to stay a few more days than planned but doesn’t have enough clothing, we may cover the cost of personal laundry or grooming items, even though it is out of policy.

Or if a preferred vendor is out of stock on much-needed materials, and the project cannot afford the delay, we may need to authorize spending for a higher-cost vendor.

Notify your manager and finance administrator immediately.

Be sure to explain your request in the mobile app and follow up with phone calls and more detailed emails. 

This is more than getting approvals. It’s about increasing your company’s corporate card’s spending power and changing the embedded rules to allow these purchases. At the same time, it ensures that the purchase gets charged to the correct budget.

Procedures

Construction industry accounting standards require your finance team to assign project costs when they are incurred. Without timely, accurate reporting, you may be out of compliance. As a result, you’ve probably invested in mobile and cloud technologies that integrate expense management with ERP and accounting software. You may also use corporate cards with built-in spend controls.

Processes designed around these technologies help you optimize your return on those investments. 

Not all expense management and corporate card providers offer all the capabilities cited in the below example. 

Procedures

Over the past few years, [Name Company] has invested in and continues to invest in credit card and expense management technologies that simplify employee reporting and spare you the hassles of rejected charges and waiting for reimbursements. 

Following these procedures for corporate card use will simplify the expense management process and free you from much of its paperwork. 

Corporate Cards and Expense Management

As an employee or contractor of [Name Company], you may have received a [Name Company] corporate card. These cards have no functionality until activated by an administrator. This is a company-issued card. Your receipt and use of this card have no bearing on your personal credit.

If you receive a card, you are expected, where possible, to make all business-related purchases with this corporate card. 

In some cases, you may receive a “virtual card” account number. Again, this account has no functionality, but you will need it to facilitate expense reporting and reimbursements. 

Mobile App

Upon receipt of your corporate card or virtual card number, please download [Card or Expense Management Provider] from the Apple App Store (iOS) or Google Play (Android). Register your credit card information on the phone.

After you’ve registered your app and phone, go to [insert link] and register for “Receipt reminders.” These reminders will allow you to submit receipts for purchases by responding to a text.

Manager and Admin Pre-Approvals

All spending must be approved in advance (pre-approved) by your manager. If you are using a corporate card, a finance department administrator (admin) may also need to validate the card for the intended purchase. (See “Corporate Cards” below.) These approvals are critical for accurate budget tracking.

In some cases, your manager may have admin privileges to approve purchases. 

Managers with admin privileges may approve their own purchases, provided they do not exceed their budgetary authority.

To request pre-approval:

1. Launch the mobile app and navigate to the request tab. 
2. Input the dollar amount you are requesting and the reason. Keep it simple:
   • $225.00 Paint Sprayer Rental
   • $150.00 8 Steel framing studs to replace damaged pieces
3. Verbally notify your manager/admin*
4. You will receive a notification through the mobile app when your request is approved.

In some cases, your manager may assign corporate cardholders to make the purchase and authorize it without a request. In those cases, it is the manager’s job to document the reason.

* Note that while we ask you to document the request for funds in the mobile app, you can make the verbal request before entering it into the app. Documenting the request in the mobile app gives us a written record of the request that might be needed for compliance.

Reporting your purchase:

With corporate card:

1. The system automatically generates a transaction report after each purchase
2. Launch the mobile app and navigate to the purchase
3. Choose the correct accounting tag from the drop-down menu
4. Add a note. Again, keep it simple:
   • Paint Sprayer Rental
   • Steel framing studs to replace damaged pieces
5. Submit or save your receipt

Without a corporate card*

1. Log into the [Name Provider] website
2. Navigate to Requests
3. Choose Reimbursements
4. Upload a photo of the receipt
5. System AI will extract details from the receipt and populate a transaction report
6. Go to the report
7. Choose the accounting tag and add a note (same as above)
8. Upon approval, reimbursement will be deposited in your account via ACH within 24 hours

Note: Approval and reimbursement takes 5 – 10 business days.

*These steps are PEX procedures. Your provider’s may be different.

Receipts

You are expected to photograph physical receipts for all purchases, submit them within 24 hours, and keep them for 90 days in case any questions arise. Where receipts are delivered electronically, you are expected to forward the electronic copies within 24 hours.

You only need to submit the receipts. You do not have to match them to transaction records or line items on your expense reports. AI systems will link the receipts to your transaction records automatically.

Cash Advances

It is generally not the company’s policy to provide employees with cash advances for travel or other large expenses. Instead, we will load the approved advance onto a temporary corporate card. You will then be expected to use the card for your needs.

All rules for corporate card holders above apply to the temporary card you will be issued. Sometimes, this card may be a virtual card (just an account number, expiration date, and CVV). You can load this information into your mobile wallet and use it to make approved purchases.

Your Expense Policy Behind the Scenes

The procedures in this expense policy take advantage of the cloud-based corporate card platforms that many construction companies use. The more prominent features we touched on include:

Embedded, Role-based Expense Policies

Create roles in your company, define expense policies for each role, and embed those policies in a card’s functionality. Your driver’s corporate card only works at gas pumps (not even the convenience store). The contractor’s card only works at your preferred vendor. 

Flexible Spending Power

Admins can use a mobile app to change a card’s spending rules at any time of the day or night.

Card Distribution Control

It takes less than five minutes to create a sub-account for an employee, complete with spending rules based on their role. No credit checks or bank underwriting is required.

Real-time spend visibility

No more unexplained, off-policy purchases. No more surprises on your corporate card bills. You know instantly every time a card is used. And that lets you track budgets in real-time. 

Receipt Capture and Matching

Each purchase automatically generates a transaction report, and cardholders submit receipts independently. AI matches the receipt to the report.

Integration With Business-Critical Software 

No CSV downloads or manual data entry. The cardholder uses a dropdown menu to choose a tag, which aligns with your GL codes. Upload transactions to accounting, ERP, and project management software with one click.

Spending Rebates

Some providers offer cashback rebates on purchases made with their cards on their platforms. Companies that distribute cards to their employees capture those rebates for their bottom line.

Expense Policy Checklist

This Expense Policy Blueprint is designed to help construction companies and contractors produce a comprehensive policy that supports the industry’s unique needs and investments in technology. To review, your policy should…

Clearly explain what your company will pay for, what it won’t, and the procedures for getting approvals and reimbursements

Inform employees of their responsibility to comply with the rules in the expense policy as well as all applicable laws

Define allowed and non-allowed spending based on experience with your current policy and detailed spending analysis

Include limits, spending caps, and preferred vendors where appropriate (i.e., $15 for meals, economy class for flights, a particular vendor for building supplies)

Allow for the large, unplanned purchases that are often needed to keep jobs on track

Ensure that even one-off purchases—everything from a bag of nails to heavy equipment rentals—are properly tracked and budgeted

Require authorization/pre-approval by a manager prior to corporate card spending in excess of any prior, pre-approved spending limits

Offer procedures for pre-approval of exceptions and out-of-policy spending

Instruct employees in the use of mobile expense management interfaces, preferably from a vendor whose product integrates with your back-office software

Emphasize the need to submit receipts electronically as soon as possible after each transaction

Provide clear instructions for reimbursements when employees use their own funds, including waiting times

Include a cash advance policy that requires the advance to be used in accordance with the expense policy and requires unused cash to be returned

Incorporate advanced features from your expense management and/or corporate card platform

For more information about the advanced technologies used in this blueprint, visit pexcard.com. For a live demo of these technologies and to see how they can help your organization, visit pexcard.com/request-a-demo.