Why Use an Expense Reporting Software?

Travel expense reports document costs incurred during business trips, covering categories like transportation, lodging and meals. They are essential to comply with the company's travel policy. Software to track and report expenses is known as expense reporting software. It makes reconciliation quick and reduces errors. It also helps companies manage their budget and boost employee morale. 
 

Employees incur various types of expenses on their business travels. These costs must be documented, verified, reimbursed and tracked. A travel expense report is a detailed record of all the expenses, including:

• Mileage
• Airfare
• Accommodation
• Meals 
• Incidentals, along with receipts for each cost. 

Travel expense reports can be created manually or using expense reporting software. In this post, we explain what expense reporting entails and make a case for using advanced expense report software.

Streamline Your Business with Expense Reporting Software

Why are Travel Expense Reports Important?

Expense reports for business travel impact the employee and organisation. Here are the key reasons why the reports are important:

Employees Must Be Paid for What They Spent on the Business Trip

Companies generally provide a per diem (per day) allowance to employees during their business travels. Any additional spend related to the business that isn't covered by the allowance is reimbursed. 

The amounts and nature of spend (food, accommodation, incidentals, etc.) is recorded in the expense report. This ensures employees are fairly reimbursed for the expenses they incur while travelling for business. Accurate recording also helps maintain trust and satisfaction among employees. 

Organisations Can Monitor Costs and Manage Budget

Business travel costs make up a portion of a company's budget. If the costs are not controlled, the company's budget is affected. The expense report shows the areas where the company can cut costs or optimise spending. Expense report software shows spending patterns to aid better financial planning. It also generates reports highlighting trends and offering insights to help the company negotiate better rates with travel service providers. 

Ensure Compliance with Corporate Travel Policy

By having employees provide receipts as proof of spend on their business travels, the company can ensure that everyone complies with its travel policy. It helps in promoting accountability and reduces the risk of misusing company money or making fraudulent claims. As the expense report records all business travel costs along with receipts, it ensures transparency and serves as a source of truth. 

Necessary for Internal and External Audits

Detailed travel expense reports create an audit trail, which is essential for internal and external audits. It ensures that expenditures are properly documented, which helps in accurate tax filings and deductions. Travel expense reports show how funds are allocated, which helps the company ensure compliance with financial standards and laws. 

What Does a Travel Expense Report Include?

A travel expense report includes the following information: 

Personal Information:

Details such as your name, title, employee ID and department.

Trip Dates:

The exact dates of your trip, covering both departure and return.

Expense Details:

• Category: The classification for each expense (e.g., airfare, hotels, meals, transportation, etc.).
• Vendor Name: The name of the service provider.
• Date of Expense: Indicates when the expense was incurred.
• Amount: States the total cost in the particular currency.
• Payment Method: Clarifies how the expense was paid (e.g., personal credit card, corporate card, cash).

Notes: Any additional information for the expense, if necessary.

Receipts and Invoices: Attach the corresponding receipts for each expense.

How to Create a Travel Expense Report?

The steps to create a travel expense report are as follows:

Categorise Your Expenses

Break down your expenses into categories like transportation, meals, accommodation and miscellaneous spends. For each expense, note down the details mentioned above, such as date, description, amount, category and purpose. 

Keep All Your Receipts in One Place

Keep all your receipts consolidated in one location. While it may seem straightforward, it’s easy to misplace receipts during a hectic trip. Gather all receipts for flights, accommodation, meals, ground transportation, and any incidental costs. Organising these receipts as you go can save significant time and effort later. 

Compile All the Information to Create the Travel Expense Report

Add the expense details and receipts to create your expense report. Some companies use basic spreadsheets, while others use expense report software. 

Submit the Expense Report for Approval

Check that all the information in the travel expense report is accurate and complete. Submit the report to the approver, who is typically someone from the finance team. 

Ensure a specific workflow for approvals. Upon the approval of the expense report, any reimbursements to employees will be processed. 

Problems with Manually Creating Expense Reports 

The traditional method of creating expense reports on spreadsheets is time-consuming and error-prone. Many companies are replacing spreadsheets and paper-based methods with expense management tools. 

There are many disadvantages of filing expense reports manually, including:

Human Errors 

There is every risk that calculation errors will occur during reconciliation. Mistakes in the travel expense report can prevent the company from optimising spend. Major errors may even affect a small business's cash flow and revenue. 

Fraud May Go Unnoticed

Managing several expense claims is an involved process. If it isn't done carefully, duplicate receipts or fraudulent expense claims may be overlooked. This can go on until the truth comes to light. In that time, company revenue may be affected adversely. 

Less Time for Higher-value Tasks

Creating paper-based or spreadsheet reports is a time-consuming process. It takes time away from more important tasks. Expense report software is more efficient in this regard, saving time for higher-value activities. 

Delayed Submissions Can Affect Morale

Picture chasing after employees to submit receipts or misplacing receipts. It will inevitably lead to a delay in preparing the expense report. As a result, approvals and reimbursement will also be delayed. In turn, the person handling the report as well as employees may experience low morale. 

How is Expense Report Software Better?

Expense reporting software is a digital tool that streamlines the process of tracking, managing, and reporting business travel expenses. The software helps companies automate and simplify various tasks associated with expense management. Let's look at the features of expense report software and the benefits they offer to businesses of all sizes. 

Captures Receipts Automatically

Rather than providing paper receipts, employees can simply take a photo of their receipts using their smartphone. Using advanced OCR technology, the software will extract relevant information such as date, amount, vendor and other details. Such automatic capture reduces the risk of errors and ensures that all expenses are accurately documented. 

Tracks and Reports Expenses

Expense management tools track all expenses as they happen. You have an up-to-date view of spending patterns. In addition, the tools generate reports showing trends and deviations from the norm. This helps in making adjustments, optimising spend, and planning the corporate budget more efficiently. 

Maintain Accurate Accounting Records

The integration of expense report software with accounting tools means expense data flows from the reporting software into your accounting system. You can eliminate manual effort and the risk of errors. It also makes the reconciliation process easier and faster. All in all, expense report software helps in maintaining accurate financial records. 

View Expenses in Real Time

Rather than waiting until the end of the month to review expenses, you can view spend and receipts as and when they occur. This real-time review helps spot any irregularities promptly. It also helps manage your travel budget more effectively. 

Enforce Travel Policy

One of the benefits of using expense reporting software is ensuring compliance with your travel policy. You can add your travel policy to the software and it will approve flight, accommodation, cab, and other bookings based on your rules and expense limits. This helps prevent unauthorised spending and maintain financial discipline. Automated compliance also saves time for finance teams. 

Available as a Mobile App

Expense report software is available as a mobile app. Employees can submit travel expenses on-the-go and track reimbursements in real-time. It increases the likelihood of expenses being submitted in a timely manner and reduces administrative headaches. In addition, it ensures that expense management is not delayed and financial data is updated continuously. 

Hence, businesses that use expense report software can expect the following:

• Time savings and greater efficiency
• Improved accuracy
• Better control over budget 
• A clear view of cash flow
• Better financial planning
• Expense report compliance
• Faster reimbursement

How to Improve the Expense Reporting Process?

Company expense report software is an effective way to streamline the expense reporting process. Other ways to make expense reporting smoother are as follows:

Provide Company Credit Cards

Implement a per diem/per day policy and provide employees with corporate credit cards. This will make it easier to track and control business travel expenses. All transactions can be made using the credit cards, which expense report software record and report. 

Incentivise Responsible Behaviour

Provide special rewards or perks to employees who always submit receipts and make error-free submissions. This will encourage employees to maintain the desired conduct and also help your finance team avoid unnecessary delays.

Use Analytics and Insights

Identify areas of improvement in your expense reporting process. This is easier with built in expense report software that comes with analytics and reporting tools. 

Regularly Update and Revise Policies

Expense reporting has gone from paper records to Excel spreadsheets to software. As technology develops, it is likely that better ways of expense reporting will emerge. Similarly, business travel policies are also evolving. To keep up with trends, review your expense policies from time to time. Additionally, make sure to update and revise the policies as needed.

Frequently Asked Questions

 

Q1. How does expense reporting software work?

Ans. Expense reporting software allows travel managers to set up the corporate travel policy on the platform, lets employees input their expenses by uploading receipts, and generates an expense report for streamlined expense management. With expense report apps, employees can submit receipts on-the-go and finance can monitor expenses in real time. 

Q2. Is expense reporting software secure?

Ans. Expense reporting software used by thousands of customers is secure. It uses advanced security measures such as encryption and multi-factor authentication to protect your sensitive financial information. 

Q3. Is it easy to train employees to use expense reporting software?

Ans. Expense report software is designed to be user-friendly. It offers a simple interface to aid quick adoption by designated teams and employees. Many providers also offer guides, tutorials and customer support to help users make the most of the expense report software. 

Q4. Can expense report software handle transactions in multiple currencies?

Ans. Yes, many expense report tools support multiple currencies. They automatically convert the specific currency to the home currency.

Related Blogs:

• •  Corporate Travel Management - An Ultimate Guide for Business Travel
• •  What is the Corporate Travel Policy? A complete Guide!
• •  10 Trip Management Tips for Successful Business Travel
• •  5 Effective Business Travel Management Tools
• •  Business Travel: Its Significance & Impact on Your Bottom Line
• • 9 Key Features of Top-Notch Travel Management Systems