Expense reimbursement happens every day, and without rules in place it leads to delayed approvals, inconsistent handling, and missing supporting documents. Setting basic rules when launching a Japan office reduces the burden later.
- Procedures for submitting and approving expenses differ from person to person
- There is no set way to keep receipts and other supporting documents
- Reimbursement of out-of-pocket expenses tends to lag
- Headquarters' expense policy does not fit Japanese practice
This article explains the expense reimbursement rules to set up when launching a Japan office.
Why Rules Tend to Stay Vague in the Launch Phase
In the launch phase the team is small and expenses tend to be handled through verbal exchanges. As headcount and transactions grow, however, the absence of rules makes delays in processing and concerns such as personal use of expenses more likely.
Expense reimbursement also affects accounting and tax processing. Expenses without proper supporting documents may affect tax treatment, so it is advisable to manage them properly from the start.
Rules to Put in Place
At a minimum, setting internal rules on the following items makes operations easier.
| Item | What to Set |
|---|---|
| Eligible expenses | The scope and types of accepted expenses, such as travel, entertainment, and equipment purchases |
| Submission and approval procedures | How to submit, who approves, and the scope of approval by amount |
| Keeping supporting documents | How to submit receipts, how long and where to keep them, and how to digitize them |
| Reimbursement schedule | Submission deadline, payment timing, and how out-of-pocket expenses are repaid |
| Limits and prior approval | Limits for high-value or specific expenses, and whether prior approval is required |
Putting the Rules Into Operation
Document the rules and share them with everyone. Using a system or cloud service to centralize submission, approval, and record keeping is also effective.
If headquarters has an expense policy, check its consistency with Japanese practice and tax. Review the rules regularly as the business grows.
Summary
- Expense rules tend to stay vague in the launch phase, making the burden greater later
- Set eligible expenses, submission and approval procedures, record keeping, the reimbursement schedule, and limits
- Document and share the rules, and consider centralizing submission, approval, and record keeping in a system
- Check consistency with headquarters' policy and review as the business grows
Contact
JBN supports foreign companies' Japan offices from building accounting functions through to supporting operations.
To discuss setting up expense reimbursement rules, please contact us.