What are expense reports?
Expense reports are a vital part of any business, and without proper systems, they can become an outsized part of an accountant’s job.
Accountants are responsible for managing the company’s finances, and expense reports help them to track and control spending. Unless the processes are automated, the amount of information and back-and-forth in an expense reporting cycle can be crippling.
Expense reports are still done in some companies by taping receipts to a page, some have automated systems that employees fill in and scan receipts. Finally, as you’ll see, there is what is referred to as touchless expense reports for the ultimate in automation.
Expense reports are important for compliance purposes. How they are reported, and the information and documentation required, must all be included. Many businesses are subject to financial regulations that require them to maintain accurate records of all expenses. Expense reports help businesses to comply with these regulations and to avoid costly fines and penalties.
What is included in an expense report?
An expense report is a document that lists all of the expenses incurred by an employee during a specific period of time. Expense reports typically include the following information:
- The date of each expense.
- The type of expense (e.g., travel, meals, lodging, etc.).
- The amount of each expense.
- A brief description of each expense.
Expense reports can be submitted on a weekly, monthly, or quarterly basis. The frequency of expense report submission will vary depending on the company’s expense management guidelines and procedures.
How to create an expense report.
To create an expense report, employees should first collect all of their receipts and other documentation for the expenses they incurred. Once they have collected all of their documentation, they can start to fill out the expense report form.
The expense report form should include the following information:
- The employee’s name and job title.
- The dates of the expense period.
- The type of expense (e.g., travel, meals, lodging, etc.).
- The amount of each expense.
- A brief description of each expense.
Once the expense report form is complete, the employee should attach all of their receipts and other documentation. The employee should then submit the expense report to their manager for approval.
Expense Management Tour
How are expense reports used by finance and accounting teams?
Accountants can use expense reports in a number of ways, including:
- To track and control spending: Expense reports help accountants track and control business expenses by providing them with a detailed record of all employee expenses. This information can be used to identify areas where costs can be reduced and to make better budgeting decisions.
- To improve compliance: Expense reports help businesses comply with financial regulations by providing them with a record of all employee expenses. This information can be used to generate reports that are required by financial regulators, such as the Sarbanes-Oxley Act and the General Data Protection Regulation (GDPR).
- To identify fraud and waste: Expense reports can be used to identify fraud and waste by looking for unusual or suspicious patterns in spending. For example, if an employee is submitting expense reports for meals at expensive restaurants on a regular basis, this could be a sign of fraud.
Tips for using expense reports.
Expense reports are an essential tool for finance and accounting teams. By following the tips listed below, expense reports can be used to track and control spending, improve compliance, identify fraud and waste, and make better financial decisions.
- Develop a clear and concise expense policy: The expense policy should outline the types of expenses that are reimbursable and the documentation that is required for reimbursement. The expense policy should also be communicated to all employees.
- Use an expense management system: An expense management system can help automate the expense reporting process and reduce the risk of fraud and waste.
- Review and approve expense reports promptly: Expense reports should be reviewed and approved promptly to avoid delays in reimbursement.
- Monitor expense reports for unusual or suspicious activity: Expense reports should be monitored for unusual or suspicious activity, such as large or frequent expenses, expenses that are not supported by documentation, and expenses that are incurred outside of the employee’s normal business hours.
- Use expense reports to generate reports that can be used to improve decision-making: For example, you can generate reports on the total amount of money spent on travel, meals, and lodging. This information can be used to identify areas where costs can be reduced and to make better budgeting decisions.
- Use expense reports to identify trends and patterns in spending: For example, you can track the average amount of money spent on meals per day or the average length of stay at a hotel. This information can be used to identify areas where costs can be reduced or to negotiate better rates with suppliers.
- Use expense reports to improve employee accountability: By requiring employees to submit expense reports, you are helping to ensure that they are accountable for their spending. This can help to reduce fraud and waste.
How Airbase helps with expense reporting.
Airbase launched the first touchless expense report in mid-2023 as part of its Expense Management functionality. It uses a combination of OCH technology, and then machine learning and generative AI to populate fields in the Airbase system. This means that an employee simply takes a photo of a receipt and the system does the rest. Airbase can be configured to make payment directly to an employee’s bank account as soon as all approvals have been secured. This major innovation in expense reporting sets a new standard for an old and reviled process.