An expense is usually a cost that employees pay in exchange of something that adds value. If you run a business, you will need some specific guidelines to report the expenses you incur that relate to the daily running of your business. So, what is an expense report? This is a report that tracks the expenses a business incurs during the performance of necessary business operations and breaks them down into detail. The expenses can include travel expenses, entertainment and meals for clients, lodging, supplies, tools, and other miscellaneous expenses.
Every business has employees, and each employee needs to perform a set of tasks that may involve some expenditures. Therefore, expense reporting is a crucial part in your business’ accounting operations. An expense report is vital. This is because it can help you save time and money and enable your workforce to go about their tasks easily. Through this article, we will attempt to find out what is an expense report and go further to elaborate on its role within an organization.
What Is an Expense Report?
An expense report generally serves as one of the most convenient tools in your business, particularly the accounting department. It is a form of document that details the expenses that your employees have incurred carrying out job functions.
Today, a good number of businesses have adopted automated expense reports systems. There are a several systems that have been built and the system you choose for your business operations can help to make them easier, reduce errors and costs alike.
Who Needs Expense Reports the Most?
Expense reports are essential to any business. The accounting department needs them to have a detailed document of the expenses encountered. The expense reports are necessary to easily manage enforcement and compliance issues alike. Moreover, once your business adopts a system with automation, you are able to free up valuable time.
It is much easier to use such a system than doing it manually where you have to go through a pile of paperwork. A computer expense report system also helps to keep your employees’ time free because it minimizes any delays in reimbursements. The convenience it creates helps to increase the productivity of your employees.
How Much is Usually Spent on Expense Reports
According to a report submitted by the 2013 Travel and Expense Management Benchmark Report by Paystream advisers, a company incurs about $20.18 to process an expense report manually. However, there are those organizations that fully use computer systems to help in expense reporting.
Those companies with computer systems spend approximately $7.60 for every expense report. When you compare this figure to manual reporting, these automated systems bring about a 62 percent decrease in costs. If you can find a better way that can help you save your business loads of money, why not go for it? This is why most organizations are looking to go the computer way because its benefits clearly outweigh the manual system.
3 Ways to Reduce Your Company’s Expense Report Spending
Let’s say that you run a mid-sized operation and you process about 1,000 expense reports every month. Yet, there are costs that you will definitely incur. Minimizing on costs and expenses is one of the core objectives of most business operations. If you use a system, you should expect to pay $150,960 less each year of what a manual system could cost.
The following are a couple of ways that could help you understand more on what is an expense report, and how you can reduce on its spending.
1. Adopt a Computer Expense Report System
As mentioned above, a manual system will push you into spending a lot of money to produce your employees’ expense reports. However, once you adopt such a expense management in your business operations, you could end up saving a lot of money. An computer system makes the reporting and approval process seamless.
Moreover, such a system in place helps to improve policy compliance greatly. This is because it follows certain standards that make it easier for management to identify employees that are in violation of the company policy. This software is also very efficient in detecting fraudulent activities and minimizing errors.
2. Reduce Unnecessary and Unauthorized Purchases
An organization that has visibility into its employee travels and expenses (T&E) has a better chance of spending less or according to the official T & E budget as compared to an organization that does not. This is made possible through automation as well. It enables management to have real-time visibility into expense reporting.
Therefore, management is able to make timely decisions that are within the set budget avoiding unnecessary purchases.
3. Incorporate Cost Cutting Evaluation
The basis of most business operations is to achieve optimum profits. This is mostly possible through cutting costs as much as it does not affect the employees’ business activity. So, what is an expense report and how can an automated system help to conduct cost-cutting evaluation?
Well, with expense management solutions in place, you can improve your visibility through evaluating all the expenses. Some of them are invoices, cash expenses, and supplier contracts. With the necessary reporting tools in place, you have what you need to negotiate with the suppliers properly. This would result in you paying lower prices than before. More so, expense management solutions also enable you to evaluate on your spending.
To Sum It Up
From the information above, it is easier now for any business to answer the what is an expense report question and easily identify ways that the report helps his or her business attain its objectives. Undoubtedly, small business owners can benefit from incorporating automated expense report systems in their business operations.
Generally, an expense report serves the role of tracking and putting into detail the expenses incurred during business operations. This could include lodging and meals. Expense reporting has a disparity of costs. Yet, choosing a computer system over a manual system could save you loads of cash. More so, automated expense reporting helps to minimize fraudulent activities and saves on time.
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