Expense Reporting: What Is It and Why It’s Important?

Keeping track of employee expenses during work trips is essential, and expense reporting is the tool that helps achieve this goal. To gain a better understanding of expense reports, let us explore more in the article below:

Expense reports help employees to list all the costs arising during their business travelsm. It is extremely crucial for a business to operate seamlessly. This practice especially comes in handy during employee reimbursements of the bills incurred during-

• Trip bookings
• Meal expenses
• Parking tickets
• Phone bills
• Intracity transfer expenses

.. among other similar costs.

Businesses may therefore require every employee to submit the expense reports enlisting their spending for reimbursements. Additionally, companies can use these reports for:

• Tracking the overall business travel spending
• Projecting the future expenses
• Organising the budget allocation

.. and so much more.

Let us understand more about these reports below:

Reporting your spendings include multiple processes like:

• Recording
• Classifying, and
• Documenting

.. the expenditure drawn by your organization.

It is for this reason that tracking your business spending becomes so much more easier with an expense reporting software. Creating automated reports can therefore help companies track their spending over time. It can further facilitate easy tracking and categorization of the overall costs for:

• Internal audits
• Tax filing
• Budgeting, etc.

Additionally, an expense report can be prepared using an accounting software, or an expense management solution. However, it can also be traditionally done using Word Documents or Excel Sheets.

An accurate expense report system is extremely useful for tracking business expenditures. Businesses can precisely calculate and efficiently reimburse the employees for expenses borne out of their pockets. Apart from this primary benefit, there are a few other reasons expenditure reports are essential:

• Enabling businesses to stay organized when it comes to company’s expenses.
• Ensuring that each employee receives the reimbursement on time.
• Creating digital or paper records of the expenses incurred.

Expenditure reporting also ensures that companies have a complete record of what goods and services incurred the costs among all the purchases of an employee. This warrants complete overview and tracking of the company’s expenditures.

In the world of expense management, there are several types of costs that are supposed to be itemized and recorded. These listings include the type of costs that the business is tracking. While agencies may wish to track client expenses, on the other hand, sales might want to get an overview of accommodation and travelling payments.

Hence there are different inclusions in such reports. However, there are three common parts of automated expense reports:

One-time Costs-

Single-time charges are non-recurring in nature and are often counted amongst variable costs. These are frequently made by an employee and are out-of-pocket. These include:

• Event costs
• Travel Bookings
• Meals
• Accommodation
• Relocation costs

Recurring Costs-

Repeating costs are ongoing in nature. As a result, they are a part of the monthly, quarterly, and annual reports. These include standard payments like:

• Salaries
• Insurance
• Rent
• Administrative costs

Long-term Costs-

Long-term expenditures are periodic in nature. The standard long-term costs of a business include:

• Maintenance
• Occasional trips
• Employee gifts/ bonuses, etc.

There are different kinds of expenditure reports yet most of them require a certain set of information that enables easy-

• Reporting
• Tracking
• Organising, and
• Filing

Let us explore the fundamentals of what must be included in such reports when employees try to claim reimbursements:

Expense Field	Details Required
Company Details	This section must include the employee’s name along with their reporting manager’s name. The employee ID as well as the department that they belong to must be shared in this report.
Date of expenditure	The claims filing report must have the dates of the costs incurred. This date must be aligned with the dates mentioned in the attached invoices. This section must also include the date of report submission.
Reasons for expenses	This report has to include the nature of the spending alongside a detailed description addressing the same.
Costs incurred	List the cost of all the expenses along with the total spending.
Category of expense	Depending upon the company, employees might have to list the department that will be charged for the expense. They might even have to list the expense category. This primarily works for smaller business where it is challenging to split the expenses in the absence of separate departments.
Payment details	Share the payment details like card number, account information, and the date on which the expense was charged.
Signatures	Signatures of both the employee submitting the report and the approving authority who will validate the report is also an important element of reporting expenses.

An automated expense management software or reporting tool helps businesses streamline the tracking and monitoring of their T & E. This is done by providing increased visibility over the business travel and expenses data.

The expense reporting software further ensures that the employees’ spending adheres to the corporate travel policies. This in turn makes sure that organisations are better able to plan their budget and get insights with regard to their future expenses, making their travel program more efficient.

Automated expense reporting is of utmost importance for efficiently managing a company’s corporate travel. While using spreadsheets is a common practice in most companies, it lacks the employees’ ability to simultaneously upload their expense data. This can lead to delays and potential errors.

Employees often have to wait until they return to the office to consolidate their expenses. This can further increase the chances of inaccuracies. These errors, if not thoroughly cross-checked, can lead to inflated reimbursements, which can have detrimental effects on the company's travel budget.

The benefits of mobile expense reporting extend beyond error prevention. This approach is particularly advantageous for small business travel expense management. Automation, therefore, not only saves time but also proves to be an economically viable option.

To mitigate the above-mentioned challenges, the adoption of myBiz, an ideal travel expense management tool, becomes crucial. By enabling the direct extraction of expense data from invoices, mobile reporting eliminates the possibility of faulty reporting. Furthermore, myBiz securely stores this data, providing a valuable resource for cross-referencing during audits and significantly reducing the risk of errors.

Also Read: An Ultimate Guide to Expense Management for Businesses 

With myBiz, there are no additional costs associated with expense management. By embracing mobile expense reporting with myBiz’s business travel management solutions, organizations can streamline their travel and expense management systems, ensuring efficiency and accuracy.

Q1. What is expense process?

Ans. An expense management procedure includes a series of steps that enable a business to streamline their spendings. It is a process through which the employees claim reimbursements for their out of pocket expenditures.

Q2. What is the process for expense reports?

Ans. For filing such expenditure reports, employees must first fill out the claims form and correspondingly submit the relevant invoices, requesting their manager for review and approve.

Q3. What is expense management software?

Ans. An expense management software handles all employee-initiated expenses. This includes travel, accommodation, meals, business calls, and shipping of work-related items. It processes, pays, and audits these expenses.

Q4. What are the benefits of expense management software?

Ans. The right expense management solution helps reduce reporting errors thereby saving costs for businesses. Using the ideal automated expense report apps also helps companies ascertain more accountability for business costs by creating a paper trail for easy monitoring.

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• •  Discover the Top 5 Benefits of Expense Approval System
• •  Top 5 Benefits of Mobile Corporate Travel and Expense Management
• •  Reasons to Automate Corporate Expense Management
• •  Role of Effective Policy Enforcement in Corporate Expense Management