Expenses are an inevitable part of running a business. As with any form of spending, it’s important to have a process in place to keep track of every expense, including those made by your employees.
While some businesses opt to track expenses manually, an expense report system allows businesses to streamline this process for both employers and employees. Let’s break down the basics of expense reporting and why a business should offer an expense report system.
What Is An Expense Report?
Expense reports are special forms that track business-related purchases. These expenses can include a wide variety of expenses. Some common expense report example categories include:
- Travel
- Parking
- Gas
- Repairs and maintenance
- Meals
- Hotels and other lodging
- Office expenses
The most common type of expense occurs when an employee uses their own money to buy something on behalf of the business. An expense report allows these individuals to provide details of their purchases and request reimbursement from the company. Each expense report form can vary, but many will document a variety of information. These fields include:
- Which employee made the purchase.
- The date when the expense was incurred.
- Where the purchase was made.
- Who the item was purchased for (ex. a specific client, project, etc.).
- The total cost of the expense.
- A copy of the receipt, if required.
- Any additional notes or information regarding the purchase.
Seven Ways Expense Report Systems Benefit Your Business
Expense reporting is an important tool for tracking business expenses, but it can be tedious and time-consuming. In addition, manual expense reports can pose a variety of issues that directly impact both you and your employees. Here are seven ways that an expense report system can directly benefit your organization:
- A simplified expense reporting process
- Efficient reimbursement
- Fewer opportunities for errors and delays
- Reduced operational efforts
- Improved reporting
- Greater expense compliance
- Increased protection against fraud
A simplified expense reporting process
The days of needing to track expenses on paper are gone. Online expense reporting software allows employers and employees to quickly and easily submit costs, approve expenses, and complete other functions in just a few clicks. Some software can even allow users to scan receipts from mobile devices, making it even easier to submit expense reports than ever before.
Efficient reimbursement
Long reporting processes turn into lengthy delays where employees begrudgingly wait to receive compensation for expenditures. Eliminating paper in favor of a simplified reporting system means employers can quickly review and approve expenses for future paychecks, much to the satisfaction of employees.
Fewer opportunities for errors and delays
Between incorrect inputs and duplicate entries, mistakes happen. Sophisticated software can flag various issues as users report expenses so that they can be fixed in real-time. In turn, both employers and employees won’t have to deal with the delays associated with correcting expense reports long after they’ve been submitted.
Reduced operational efforts
By automating expense reporting, you immediately eliminate the time it would take to manually process all your employees’ reports. That extra time savings is not only a boost to operational efficiency but also an opportunity to focus on higher-value tasks that can help you grow your business.
Improved reporting
Expense reporting systems automatically keep track of all the data you and your employees enter through reports. The software can then provide full reports so that employers can review itemized expenses, whether they need overall numbers for a reporting period or specific breakdowns by project, category, or employee.
Greater expense compliance
Expenses are yet another number that impact your business from a tax perspective. An expense reporting system allows businesses to categorize every expense and produce documentation for tax returns and more to help your business stay compliant with any federal, state, and local tax regulations.
Increased protection against fraud
According to the Association of Certified Fraud Examiners (ACFE), 20% of businesses with fewer than 100 employees were victims of expense reimbursement fraud. Software can use custom rules and other tools to detect both innocent mistakes and more malicious issues like fake entries, duplicate entries, and other suspicious submissions.
4 Features Your Expense Reporting System Should Include
There are many expense report systems available to business owners, but not all of them are right for your organization. Use the following criteria to narrow down a solution that benefits you and your employees the most:
- Simple, easy-to-use dashboards
- Customization
- Real-time reporting and information
- Integration with other systems
Simple, easy-to-use dashboards
Software should make people’s lives easier, not more complicated. A good system should make it very simple for users to access, complete, and review expense reports. The dashboard should also clearly present valuable information, including spending limits or the status of any submissions. Features like mileage trackers and other calculation tools are added benefits to save users time.
Customization
Every business is different, so you need a system that can adapt to your organization. The right software should adapt to your companies workflows, policies, and preferred expense categories, so keep customization in mind when you test out different options.
Real-time reporting and information
Your expense reporting system must be able to analyze, approve, and deny claims without having to wait for user validation. Real-time checks not only save your business time but also allow the software to actively track data and flag fraudulent claims. In turn, your business automates the expense process while gaining valuable reporting data.
Integration with other systems
Technology works so much better when all your systems get along. Any expense reporting system you consider should integrate with other tools such as accounting and payroll software to streamline other processes like tax management and paycheck adjustments.
Simplify Expenses and Other Administrative Functions with GMS
Between expense reporting and every other responsibility, it’s not easy for a business owner to focus on growing their business. That’s why GMS partners with employers to take on these time-consuming administrative burdens for them.
GMS gives companies the HR tools and resources needed to make their business simpler, safer, and stronger. That partnership includes access to GMS Connect, our complete human resources information system that covers everything from payroll to expense reporting.
Want to focus on what you do best? Contact GMS now about how we can help solve your business’ HR challenges.