In business, there’s nothing more exciting than growing from startup to success story. Each milestone introduces new circumstances and complexities requiring constant adaptation. What works on Day One won’t scale to Year Three, and this is especially true for company expense policies. The guidelines you need to support a healthy fiscal culture must evolve as you grow, scale, and stabilize. These tips will help set your team up for success as every stage.
The development of policies and processes in the early stages of any business tends to happen on an ad hoc basis. This can lead to a loose approach that relies heavily on individual judgment and delays the creation of shared fiscal values to guide decision making. Although budding startups may not be ready to set policies in stone, it’s wise to take advantage of this period of smaller scale to experiment and course-correct swiftly, and to start shaping your fiscal culture.
"It's important to get things right in the beginning, when you're small." | CEO, 20-person smart lighting startup
This is the ideal time to begin recording emerging processes and guidelines. That new airfare protocol you drew up after last month’s conference mishap? Codify it. The purchase order process you mapped out? Formalize it. Anytime something starts to take shape, record it. Yes, it takes a concentrated effort in the middle of free-whirling startup days—but it’s far easier than doing it retroactively. At this stage, it’s better to get the basics down than it is to wait until everything is “perfect.” Life is dynamic, and ongoing dialogue is essential. Open lines of communication will give your team the support they need when things are in flux.
- Start with the basics. Work with your leadership to clearly define what expenses are appropriate across key areas including travel, meals, cell phones, transportation, subscriptions, and marketing. Outline approval limits for each managerial level and expected timing, like how long employees have to file a report, save a copy of receipts, or wait to get reimbursed. Ensure at minimum that you are following IRS guidelines, and that your leaders understand them.
- Connect the “why” to the “what.” Communicating why a new policy is important to the company’s fiscal health is just as important as training team members on what is expected. Sharing the benefits of change, not just new rules, will help build buy-in where you need it the most: the people who spend!
- Rally the team around a common goal. Financial health is business health, plain and simple. Connecting teams with the bigger picture can prevent fledgling policies from getting shelved or buried in an inbox folder, never to be referenced again.
Growing and Scaling
This middle stage of growth focuses on balancing “invest in our future” with “be profitable.” Fiscal culture should start to reflect a more intentional approach to spending, especially as companies aim to become cash-flow positive.
“At a certain point, you change from ‘do whatever you want’ to ‘we need to live within a budget.’" | Controller, 500-person software platform company
At this stage, added responsibilities often fall on the finance team, from juggling more expense reports and managing a growing list of preferred vendors to handling an increased demand for data to inform business decisions. Finance can’t be limited to processing expense reports and generating quarterly reports; they need to play a more strategic role in everything from data analysis to fundraising.
This phase calls for widening the net of responsibility by establishing more detailed guidelines and ensuring managers are properly trained and equipped with the tools they need to embrace fiscal leadership. Now is the time to define new approval limits, travel policies, or corporate card usage guidelines to address each level. (Ideally, these are simple updates to early-stage documentation, rather than starting from scratch.)
- Reconsider the feasibility of early-stage policies. “Team-building” expenses like weekly team lunches and individual birthday celebrations may no longer be manageable as the company grows. Discretionary spend policies may need more specificity to create a shared understanding of what’s acceptable, while auditing and centralizing subscriptions may be necessary to avoid duplication across teams.
- Consider implementing request workflows to review spend before it happens. Outline what can (and can’t) be expensed, and what does (or doesn’t) need pre-approval from a manager. This can empower employee spend in a controlled manner, prevent duplicative or wasteful purchases, and ensure resources go to the highest-priority projects.
- Clearly delineate personal and business expenditures—especially for travel, ride-sharing, and meal delivery. Early employees may be used to using personal credit cards for booking flights and then getting reimbursed. It’s important to clarify when employees should purchase through company channels, and when they’re permitted to book on their own accounts, even if you haven’t yet adopted a companywide card program. For example, should Lyfts be reimbursed per-ride, or is a company account needed to cover all business-related rides?
When companies reach 1000+ employees, the idea of scaling is no longer an option—it’s a necessity. More established corporations may focus on simplifying, consolidating, or integrating proven methods. Modifications may be more labor-intensive, but they’ll have a larger-scale impact. This stage of stabilization is about smoothing out flaws in the process and delegating more responsibility outside of the finance team to keep business moving forward.
“The internal processes of companies like ours have to be adjusted and updated as the company changes so the organization remains strong, flexible and efficient.” | Staff accountant, global software company
Strategic priorities increase, so there just isn’t time to spend chasing after receipts. Expense policies need to reach new levels of detail—and usability—by every level of the organization.
- Ensure clear digital documents are easily available for quick reference. At this point, the company should have a list of preferred vendors, a definitive process for every aspect of business travel (from booking travel arrangements to per-diem limits to hosting clients/vendors), policies for unusual circumstances, and predetermined channels for purchasing work materials. These should live in the same place so teams can take ownership of their expenses instead of relying heavily on the finance team for basic procedural answers.
- Build finance priorities into every department. Respecting the company’s budget is a collective responsibility. Emphasize healthy fiscal culture and the value of collecting, analyzing, and applying data learnings to future initiatives. Dismantle any notions of finance being a standalone (or watchdog) department.
- Look before and after the spend. Harness experience and, more importantly, data. Use spending history to empower the future: What are the top three most-rejected expenses? What issues do audits most commonly reveal? What high-effort, low-payoff duty takes up a disproportionate amount of time for the finance team? This deeper analysis often points to worthwhile evolutions of companywide expense policies and processes.