This guide includes a list of 5 common reimbursement mistakes we see companies and organizations making—and best practices for avoiding them. 

These mistakes not only cost you precious time and money, but also undermine your IRS compliance. 

Here, we’ll give you 5 detailed ways to resolve and avoid these mistakes. 

1. Relying on manual mileage and expense reporting 

The most common employee reimbursement mistake we see is still relying on manual expense reporting. Manual reporting leads to inflation, over reimbursement, and wasted employee time, especially for mileage. Unfortunately, many organizations are willing to reimburse without any standard documentation.

A manual mileage reimbursement system doesn’t work for teams looking to control costs. By not requiring documentation, you are putting yourself at risk for reimbursement waste. We often see 10–15% mileage inflation with manual tracking/input. It could even open you up to potential compliance issues.

Furthermore, manual logging burdens your employees with tedious work. After all, you’re not paying people for the task of logging miles and filling out expense reports. 

Action items:

  • Give your employees the right tools to automate mileage and expense tracking. For example, a mileage and expense tracker like Everlance offers easy-to-use, automatic GPS mileage logs as well as automatic expense tracking.
  • If you continue relying on manual logging, do a Vlookup at the end of the month/quarter to see where employees are spending most of their time. Are they in a single location too much? Not enough?
  • Make sure that admins have the tools they need to review reports easily. For example, Everlance connects our mobile app with our Team Dashboard, so administrators can easily review, justify, and approve reports.

2. No accountability 

Setting an accountable program includes setting clear expectations. For example, are employees expected to log their mileage in real-time? Does your finance department flag mileage above a certain threshold? 

We’ve heard from customers that “utilizing Everlance will help pay for the product itself” simply because of its hyper-accurate mileage logs and baked-in accountability. A robust reimbursement solution also helps you stay IRS compliant.  

Action items: 

  • Clarify how and when employees should log their mileage.
  • Set a standard mileage threshold by evaluating how many miles employees typically drive.
  • If you don't have the time to reconcile reports, use a  reimbursement solution that automatically keeps employees accountable via GPS mileage logs and expense documentation.

3. Settling on a tool that doesn’t meet your needs

Because manual mileage and expense tracking has so many issues, some teams choose to use reimbursement software. It’s easy to get sold on bloated software that doesn’t do what you need it to—but this is an employee reimbursement mistake. Your buying criteria should be centered on saving your organization money, improving productivity, and boosting compliance. 

You want to make sure you aren’t losing money, time, and productivity gains on clunky, hard-to-use software. 

Action items:

  • If you’re unhappy with your current software, look at mobile-first solutions. For example, products like Stride, Everlance, and MileIQ, make mileage and expense tracking automatic.
  • Test out different apps and get feedback from your employees! Many apps, like Everlance, offer free versions.
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4. Counting commuter mileage as reimbursable mileage 

Commuting between the home and the office does not count as business use. While this may come as a surprise to some people, according to IRS Publication 463, commutes are considered personal expenses, not work-related expenses. 

Make sure that all your employees know this before they start to track their mileage. Finding and implementing the right employee reimbursement policy is crucial, saving valuable time and money, boosting productivity, and improving compliance. 

Action items:

  • Make sure you aren’t reimbursing employees for commuter mileage. For example, it’s best practice not to compensate for the first or last trip of the day.
  • Be sure to spell out your reimbursement policy and educate your employees about what is and is not reimbursable at work.

5. No expense reimbursement requirements

For an expense to be reimbursable, the submitter must have appropriate documentation. To set your organization up for success, it’s essential to be clear about what receipts people need to submit: a photo of receipts? Photocopies? Or the original? 

Also, be sure to set a clear timeframe for backlogging. We typically see 1-2 months as an industry allowance for backlogging expenses.

It’s also essential to set a clear expense reimbursement threshold to reduce internal conflict, cut time spent back-and-forth between colleagues, and manage costs. 

Action items:

  • Ask employees to list all the team members present, enabling cross-referencing across expense reports. 
  • Set a clear allowance for backlogging. We typically see 1-2 months as an industry allowance for backlogging expenses.

We hope you found this guide helpful and feel empowered to fix the employee reimbursement mistakes your organization is making.  

If you are looking for a system that takes care of these mistakes for you, then consider Everlance. Our digital solution takes the tedious work out of reimbursement and helps you stay compliant with the IRS.


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