Looking back in the early days of my career, I think about the lessons I learned that have helped me throughout my career. Now that I’m the CMO of Leyard’s international business and vice president of marketing and product strategy at Planar, I’m sharing those lessons in the hopes they will help new employees as they enter the professional workforce.
In your first professional job, business expenses are likely a brand new experience for you. When I started my first office job out of college, the only travel I had done without my family had been with my debate team. When I went to my first trade show with my colleagues, I wasn’t sure what I should buy myself and what was a business expense. When we went to dinner as a team, would the restaurant staff give the bill to me or would my boss pay? Lucky for me, my boss graciously picked up the tab for our dinner, and over time I figured out how business expenses worked.
Each company handles expenses slightly differently. Perhaps your company has issued you a corporate credit card that you can use for business-related expenses that will later be reimbursed by the company. Or perhaps you have been told to “expense” your business purchases on your own credit card. Or maybe your employer has provided you with a per diem—or an amount per day to cover legitimate business expenses. Great, you think. But how do I properly manage these expenses?
Although every company has a different set of policies, in my experience, there are a few rules of thumb everyone can follow to make sure they are following best practices for business expenses.
Here are eight tips to ensure you get off to the right start.
1. Get a credit card
You will need your own credit card with a reasonable limit representing six to eight weeks of expenses. If you plan to travel internationally, get a card that doesn’t charge foreign transaction fees, or prepare to expense those individually. I have found it useful to have a credit card specifically for business purchases. This keeps personal and business expenses separate and makes it easy to audit my statements and expense reports to make sure that nothing is overlooked and everything is reimbursed. If you receive a per diem, you typically don’t need to submit individual receipts. Instead, you are given a fixed amount per meal or hotel night, and it is up to you to manage expenses beyond that limit. Yet even if you work for a company that offers per diem for travel, it is useful to have your own credit card for situations in which your company reimburses for expenses not covered by a per diem (such as a company dinner).
2. Understand your company’s policies
About half of all employees don’t understand their company’s expense policies, while roughly one-third don’t always adhere to them.* And since each company sets its own policies, make sure you understand what’s covered and what’s not. Generally, companies document their expense policies in an employee handbook or corporate travel policy that’s distributed by the HR department or posted on the company intranet. For example, most companies require their employees to fly coach. Some dictate the type of lodging and transportation that’s eligible for reimbursement. Some pay for items like books and subscriptions, while others do not. Some will reimburse alcohol with business dinners and others do not. By familiarizing yourself with your organization’s policies, you’ll avoid footing the bill for non-reimbursable expense later down the line.
3. Obtain supervisor approval before making a purchase
Even after you’ve read your company’s policies, it’s still good practice to obtain prior approval from your manager before making purchases, especially those not directly related to business travel. Many companies require it. And even if they don’t, obtaining the go ahead in advance will ensure there are no surprises later down the line—and that you don’t get stuck with expenses that aren’t reimbursable. This is a good practice to follow, especially at the start, until you get to know the common practices and your manager’s approval process.
4. Save your receipts
For any business-related purchase you make, whether it’s for transportation, hotels, meals, parking, or equipment, it’s important to save your receipts. Always make photocopies or take photos of your receipts from your smartphone as a backup. In addition, be sure to clearly document the business purpose of each expense for which you’re seeking reimbursement. Make notes on the receipts themselves, noting what the expense was for, who attended the business dinner, and what was discussed to make the expense eligible for reimbursement.
5. Keep track of your mileage
Many companies reimburse employees for gas used when driving for company business. Most use the IRS standard mileage rate for employee-owned vehicles [Editor’s note: IRS is for US only, though the same principles apply internationally]. Rental cars are usually expensed at the lease rate and fuel expenses at their value. To claim this expense, maintain a log of business miles driven, including the date and the business reason. One way to do this is to set the trip meter to zero every time you start out on a business trip, and then record your mileage in a notebook you keep in your vehicle. You can also use an online mapping tool, which will provide you with the distance between the starting and ending address. If you submit mileage on a regular basis, such as trips to and from the airport for a business trip, then you don’t need to keep a log. But if you drive a lot for your job and submit mileage weekly or monthly, keeping a log is a good idea.
6. Know when to pick up the tab
Unless you split the bill or make other arrangements, generally the person pays if he or she is the one asking for something, offering products for sale, or trying to influence the other person at the table. If you are taking your customer out, your company should pay. If a vendor asks you to a meal, they should pay. Sometimes companies have limits regarding how much a vendor can buy or supply without it becoming an undue influence on your business. You should know these policies to avoid impropriety. Also, the most senior person at the table generally pays, unless other arrangements are made beforehand.
7. Expense your business meals
If you take a client or customer to lunch, you should be able to expense it. Your own food when you are traveling, generally over a certain number of miles away from your office, is also typically a company expense. This is not like an away game in high school where you swung by McDonalds and everyone pays for themselves. Business meals are paid for by a company, so make sure to track these expenses by keeping and making notes on the receipt. This includes meals at the airport as you are waiting for your flight as well as snacks and water that you might purchase between meetings. Take the lead from your manager as to what is appropriate to order. In general, one shouldn’t buy the most expense thing on the menu or be extravagant. Even if you are not spending your own money, it is always a good practice to make choices as if you were.
8. Submit your expense reports in a timely manner.
The turnaround for paying employee expenses varies by company, so again, make sure you understand your organization’s policies. Once you know the turnaround time, be sure to meet the deadline so that your expenses remain fresh in your mind, and you can answer any questions that may come up. In addition, submitting your expense reports in a timely manner will enable you to better manage your own personal cash flow, especially if you’re just starting out. Some companies can take weeks to reimburse employees, so it is important to not delay. Most accounting departments like to see all open expense reports by the end of the month or the end of the quarter.
By adhering to these principles, you will help your business accomplish its objectives, and be a good steward of company resources—as well as your own finances.
Jennifer Davis is a senior executive, industry presenter, business leader, mentor and volunteer. She is the vice president of marketing and product strategy for Planar Systems, a global leader in display and digital signage technology. More information about Jennifer is available at her website: http://atjenniferdavis.com/#