Let’s be honest, nobody enjoys the back-and-forth of expense reimbursements. From lost receipts to unclear rules, a messy process can frustrate both employees and finance teams. But when done right, reimbursements can be fast, fair, and stress-free.

It doesn’t matter if you're a small startup or a growing business, having a clear system saves time, keeps everyone happy, and helps your team focus on what matters most.

In this article, we’ll discuss best practices for creating a smooth, smart, and compliant expense reimbursement process so you can stop chasing receipts and start doing things right.

Start with a Clear Expense Reimbursement Policy

If you want smooth reimbursements, it all starts with one thing: a clear, written policy. Think of it as your team’s go-to guide for what can be reimbursed, how to submit expenses, and who’s responsible for approvals.

A solid policy helps avoid confusion, delays, and awkward “Can I expense this?” conversations. It also keeps things fair and consistent across departments.

Here’s what your reimbursement policy should include:

What’s reimbursable (e.g., travel, meals, office supplies)
What’s not (e.g., personal purchases, alcohol, undocumented expenses)
Submission process (how and where to submit reports)
Deadlines (e.g., submit within 30 days of the expense)
Approval flow (who reviews and signs off)

Always remember, keep the language simple and avoid jargon. Your goal is for every new or experienced employee to understand the process without asking twice.

List What’s Reimbursable and What’s Not

One of the biggest reasons expense reimbursements get delayed or denied? Unclear rules about what’s covered and what isn’t.

Making a clear list of reimbursable and non-reimbursable expenses upfront saves everyone time and a lot of headaches.

Here’s a simple way to break it down:

Common Reimbursable Expenses:

Travel costs (airfare, train tickets, mileage reimbursement)
Hotel stays for business trips
Meals during work-related travel or client meetings
Office supplies bought for work
Professional development (courses, conferences, certifications)

Common Non-Reimbursable Expenses:

Personal expenses (like souvenirs or leisure activities during travel)
Alcohol (unless approved for client entertainment purposes)
Expenses without receipts
Fines or parking tickets
Upgrades (like first-class airfare without prior approval)

Always make sure to update this list as your business grows. New projects, events, or roles might bring in new types of expenses you’ll want to cover (or exclude).

Use an Accountable Plan

If you want your reimbursement process to run smoothly and keep things clean with the IRS, you’ll want to set up something called an accountable plan. It sounds fancy, but it’s actually pretty simple.

An accountable plan is a way for businesses to reimburse employees for business expenses without counting that money as taxable income. In other words, employees get their money back, and nobody has to pay extra taxes on it.

To have an accountable plan, you need to follow three basic rules:

Business Connection: The expenses must be directly related to work. (Example: hotel stays for a business trip.)
Proof Required: Employees must submit receipts or detailed records that show what was spent, when, and why.
Return Excess Funds: If an employee gets an advance and doesn’t spend it all, they must return the leftover amount.

Reimbursements without proper receipts could be treated as taxable income, meaning more paperwork, taxes, and headaches for everyone.

By sticking to these rules, you can keep your expense process compliant with the IRS and save your business (and your employees) from extra tax trouble.

Set Submission Deadlines

When it comes to expenses, timing matters. Setting a clear deadline for submitting receipts and expense reports helps keep everything organized and keeps your finance team from drowning in late paperwork.

Without deadlines, expense reports can pile up, budgets can get messy, and employees might even forget what they spent.

Here’s how to set it up right:

Give a reasonable window: Asking employees to submit expenses within 30 days of the purchase is common and fair.
Tie it to the pay cycle: If you can, line up expense deadlines with your payroll dates for smoother processing.
Send gentle reminders: A quick reminder email (or notification if you’re using an expense app) can help employees stay on track.

Make the deadline part of your written policy and make sure it’s easy to find. A missed deadline shouldn’t feel like a surprise.

Automate the Process with Digital Tools

In all honesty, manual expense tracking is exhausting. Chasing paper receipts, approving endless email chains, and matching spreadsheets take up way too much time.

That’s why more businesses today are automating their expense management with easy-to-use digital tools. It saves time, reduces errors, and keeps everyone happy.

Here are the reasons why it helps:

Mobile receipt uploads: Employees can snap a photo of a receipt and upload it in seconds. No more lost papers!
Faster approvals: Managers get notifications, review expenses quickly, and approve or reject with a tap.
Instant tracking: See spending in real-time, making it easier to catch mistakes or spot trends early.
Simplified reporting: Tools can automatically categorize expenses and generate reports, saving your finance team hours.

Here are some popular tools you can use:

Expensify
Rydoo
Zoho Expense
QuickBooks Online (with built-in expense tracking)

Always look for fintech companies, like Adro, that integrate with tools such as QuickBooks and Xero, seamlessly with your accounting software. That way, everything flows smoothly from employee submissions to your financial records without extra manual work.

Build an Efficient Approval Workflow

Even with the best tools, expenses can get stuck if there’s no clear approval process in place. That's why setting up a simple, smart workflow is a must.

An approval workflow tells everyone exactly who reviews expenses, what gets approved, and how fast things move, without unnecessary delays.

Take note of these steps so you can have an idea of how to build a workflow:

Assign clear approvers: Usually, the employee’s direct manager or department head reviews expenses first.
Set approval limits: For example, expenses under $500 might need only one manager’s approval, while anything higher might need a second check from finance.
Use automatic routing: If you’re using an expense tool, set it up so expenses automatically flow to the right approver based on the amount or department.
Keep it moving: Approvers should aim to review and decide within a few days, not weeks.

Fewer layers mean faster approvals. Try to keep the process short and sweet—one or two approvals max for most expenses.

Reimburse Promptly

No one likes waiting forever to get their money back. Once an expense is approved, it’s important to reimburse employees quickly. Fast payments show respect for your team’s time, and it helps build trust.

When reimbursements are delayed, employees may hesitate to spend their own money again in the future. That’s a morale killer you want to avoid.’

Remember the following if you want your reimbursements to stay on track:

Set a clear payment window: Aim to reimburse within 7–10 business days after an expense is approved.
Batch reimbursements: Instead of handling them one by one, group approved expenses and pay them out together to save time.
Use direct deposit: Whenever possible, reimburse directly into employees’ bank accounts—no need for checks or manual pickups.
Send confirmation emails: Let employees know when payments are processed so they're not left wondering.

Prompt expense reimbursements show employees that their expenditures are valued and handled with due importance, going beyond mere operational effectiveness.

Communicate and Train

Even the best reimbursement policy won’t work if nobody knows about it. Clear communication and simple training for employees make sure employees understand what’s expected and what they need to do to get reimbursed quickly.

The easier you make it, the fewer mistakes and delays you’ll have to deal with.

How to communicate and train effectively:

Share the policy during onboarding: New employees should get a copy of the expense policy as soon as they join.
Host quick training sessions: A short walkthrough or video guide can explain the basics—what’s reimbursable, how to submit, and deadlines to remember.
Send updates when policies change: If you add new categories or adjust spending limits, make sure everyone gets the memo.
Use real-life examples: Show simple “Dos and Don’ts” so employees can easily understand what’s okay and what’s not.

Make the policy easy to find, whether it’s in an internal portal, pinned in Slack, or linked in an email signature. The fewer questions employees have, the faster the process will be. Transparency is always

Audit and Adjust Regularly

Even with the best system in place, things can slip through the cracks. That’s why it’s a smart move to audit your expense process regularly. It helps you catch problems early, tighten up your policy, and make things better for everyone.

An audit doesn’t have to feel like a police inspection, it’s just about making sure everything’s working the way it should.

How to audit and improve your expense process:

Spot-check expense reports: Every quarter or so, randomly review a handful of submitted expenses to check for errors, missing receipts, or overspending.
Look for patterns: Are people consistently missing deadlines? Are certain expenses getting denied over and over? Those patterns tell you where to tweak the policy.
Ask for employee feedback: Your team knows where the process feels clunky. Anonymous surveys or quick feedback sessions can reveal what needs to be fixed.
Update the policy as needed: If new trends pop up (like remote work expenses), adjust your rules and communicate the changes.

Treat audits like tune-ups, not punishments. Small adjustments now can save you from big headaches later. Audits can be a pain, but they will be beneficial in the long run.

Final Thoughts

Building a strong expense reimbursement process isn’t complicated, it’s about being clear, consistent, and willing to adjust when needed. When your employees know what’s covered, how to submit expenses, and when they’ll be reimbursed, everything runs more smoothly. Plus, it saves your business time, money, and a lot of unnecessary stress.

And while having a great reimbursement policy is important, having the right business banking partner matters just as much.

If you're looking for an easy, secure way to manage your business finances, opening a USD business account with Adro is a smart next step.