Expense policies are one of the most effective tools to control company spending and ensure compliance. A well-structured policy tells employees what they can spend, how much, and under which conditions.

Factorial allows you to create flexible spending policies by customizing:

• Categories and subcategories (e.g. Meals, Travel, Lodging).
• Expense forms (fields to be filled in by employees).
• Policy rules based on:
  • Category
  • Amount
  • Currency
  • Timeframe (per expense, daily, weekly, monthly, yearly)
  • Description requirements
  • Affected employees (by team, project, cost center, location, or individual)

Step 1: Define categories and subcategories

Start with a clear list of categories that reflect how your company usually spends. Common examples:

• Meals
• Travel (Flights, Trains, Taxis, Mileage)
• Lodging
• Office supplies
• Subscriptions / Software
• Representation (Client entertainment, Gifts)

Step 2: Customize expense forms

Factorial lets you add or remove fields employees must complete when submitting an expense.

Step 3: Define spending rules

For each category, decide:

• Maximum amount (per expense or per day).
• Currency (if employees work across regions).
• Timeframe (daily, monthly, yearly).
• Description requirements (e.g. mandatory justification for client meals).
• Target audience (which employees, teams, or offices).

Step 4: Example policies you can use

Here are 3 common policies most companies adopt. You can copy these and adjust the values to your needs:

1. Meals
   • Category: Meals
   • Limit: 25 EUR per day
   • Employees: All employees
   • Notes: Receipt required, description must include business purpose
2. Travel - Taxi
   • Category: Travel → Taxi
   • Limit: 50 EUR per trip
   • Employees: All employees traveling on business
   • Notes: Only allowed if no public transport is available or late-night travel
3. Travel - Lodging
   • Category: Travel → Lodging
   • Limit: 150 EUR per night
   • Employees: All employees traveling abroad
   • Notes: Standard hotels, not luxury or resort stays

Step 5: Test and communicate your policies

1. Pilot with one team before rolling out company-wide.
2. Communicate clearly: Share the policies in your internal handbook or Slack/Teams.
3. Train managers: They are the first line of approval.
4. Review regularly: At least once a year, update policies for inflation, new markets, or business changes.

Tips from best-in-class finance teams

• Keep policies simple and easy to remember (e.g. “25 EUR daily meal limit”).
• Use different policies by team if needed (Sales may need higher representation limits than IT).
• Include per diem or mileage policies if employees travel frequently.
• Link each policy to a clear approval flow (see: Set up approval flows).
• Track usage with reports/exports to see if limits are realistic.