We Answer: What Are Expense Reports? And Other FAQs.

Expense reports are by far the best way to manage and track employee business expenses. Such business expenses commonly include:

• Travel expenses
• Client meals/entertainment
• Mileage
• Supplies 

Employees naturally expect any personal funds expended for business to be paid back to them. An expense report allows employees to document each business expense, provide a corresponding receipt, and get reimbursed from company funds.

However, the true beneficiary of expense reports is the business owner. Expense reports make it easy to stay on top of expenditures and ensure the proper amounts are deducted from overall revenue — so you don’t pay more in taxes than necessary. Learn more about expense reports by clicking through the questions below. 

• What is a travel expense report?
• What is an income and expense report?
• What should an expense report include?
• Do I really need a receipt for every expense on an expense report?
• Who approves expense reports?
• What should I do if I find an invalid or personal expense on an employee’s expense report?
• How do I create an expense policy?
• Are SAP Concur expense report services affordable and efficient for small businesses?

What is a travel expense report?

For most businesses, the distinction between expense report and travel expense report isn’t necessary. Some organizations ask employees to document and claim expenses for a particular business trip on a separate travel expense report form immediately following the trip. The same employee may submit a separate non-travel expense report for business expenses unrelated to the trip. 

This strategy can help separate spending for different reasons into different buckets (expenses specific to the business trip would be easy to tally). It can also ensure employees get paid back promptly for large expenditures like plane tickets and accommodations. However, the bottom line is that there is no need for two different types of expense reports, and it isn’t necessary to require a separate expense report for travel.

What is an income and expense report?

An income and expense report is entirely different from an expense report and is often created using accounting software or by a company’s accountant or finance department. Such a report is also commonly referred to as a profit and loss statement or income statement. It details all the funds coming in for a specified time period (e.g. one month) and all the funds going out (rent, wages, insurance, utilities, etc.) during the same time period.

What should an expense report include?

While an expense report should be customized to suit your business needs, a standard expense report often includes the following fields:

• Employee name
• Total expense reimbursement amount
• Advances received (if applicable to be subtracted from reimbursement)
• Subtotal
• Your own coding (you may want to code expenses by client, business purpose, or department, for example)
• Amount of each expense
• Date each expense was incurred
• Description of each expense (e.g. hotel, meal, etc.) and reason 

An expense report should always be submitted with itemized receipts matching the totals claimed.

Expense Policy Template

Creating an expense policy can be tedious, but we make it easy with our free template that explains what to include, FAQs, best practices, and more. 

Get started today

Do I really need a receipt for every expense on an expense report?

Yes! Not only is it important as a business owner to confirm that every expense is valid, receipts are non-negotiable if you are audited by the Internal Revenue Service (IRS). If a claimed expense does not have an acceptable corresponding receipt, that expense can be disallowed, and you will be responsible for any taxes and penalties.

The IRS expects you to provide general documentary evidence, like receipts, canceled checks, or bills, to support your claimed business expenses.

Saving receipts is a huge pain point for employees and business owners alike, which is one reason many businesses are turning to paperless expense reporting.

Who approves expense reports?

Depending on your business, you may decide to require one or more levels of approval for your expense reports. For instance, with just 10 employees, the business owner alone may accept responsibility for reviewing and approving all expenses. With 100 or more employees, that model would be less feasible, and perhaps both a department and finance manager would review and approve expense reports before allowing reimbursement.

What should I do if I find an invalid or personal expense on an employee’s expense report?

When the money has already been spent by an employee, it’s an uncomfortable situation. However, it’s important to manage the incident quickly to ensure non-compliant spending doesn’t become part of company culture. 

We recommend sending a letter via email to the employee to inform them that the submitted expense can’t be reimbursed. The letter should include the reason for refusal (e.g. the submitted expense doesn’t comply with your expense policy, the purchase wasn’t used for business, etc.). 

The best way to prevent improper expense claims and eliminate any gray area surrounding which expenses are reimbursable is to have a clear expense policy in place.

How do I create an expense policy?

SAP Concur has developed a fully customizable expense policy template U.S. small and medium businesses. It’s absolutely free and takes just minutes to customize. Your finished expense policy will include:

• Statement of purpose
• Employee and manager responsibilities
• Zero-tolerance fraud clause
• Itemized reimbursable expenses
• Exclusions

Alternatively, your HR department can create an expense policy.

Are SAP Concur expense report services affordable and efficient for small businesses?

If managing expense report paperwork sounds time-consuming to you, you’re not alone. We work with small businesses from coast to coast every day to eliminate the hassles, risks, and costs of paper-based expense reports.

Our services are not only affordable for businesses of all sizes but designed to cost less than manual expense reporting. Watch this two-minute video to see exactly how Concur Expense works. If you like what you see, test out our self-guided Concur Expense demo.