Expense reports are an effective tool for tracking any spending. Whether you need to document all project costs in detail or log how much money an employee used on a business trip, an expense report is of immense help. It can back you up in accounting activities and inform you to make better financial decisions.
The best part – expense reports are incredibly easy to make! Use our free expense report template to itemize and calculate your spending in a convenient format. And make sure to read the content below to learn a bit more about expense reporting and how to do it right.
What Is Expense Reporting?
In the simplest terms, an expense report is a comprehensive list of costs incurred by a business in one way or another; or the paperwork that employees fill out to get reimbursed for the money they’ve spent on behalf of the company.
Think of it like an employee’s note saying, “Hey, I bought some stuff for work – here’s the proof. Now, can I have my money back, please?” It helps to make sure everyone’s playing fair with your company’s cash. Plus, it’s super important for cost tracking, budgeting, routine bookkeeping, and tax filing.
When Do You Need an Expense Report?
Employees may create expense reports when they require reimbursement for work-related spending (e.g., flight tickets and accommodation during business trips). And project managers can write them when they need to see which portion of the set budget is used on different operations and tasks.
All in all, expense reports come in handy in quite a few situations. Here’s a quick rundown:
- Travel expenses | Whenever employees hit the road for business, whether it’s jetting off to conferences or cruising to client meetings.
- Client entertainment | Treating clients to meals, events, or anything fancy to keep business relationships thriving.
- Office supplies & software subscriptions | From restocking the pantry with coffee to those essential software tools that keep everything running smoothly.
- Telecommuting expenses | Home office setups or internet bills for the team working remotely.
- Training & professional development | Workshops, courses, or seminars that beef up your team’s skills.
- Miscellaneous projects | Those one-off projects or events that always seem to pop up and eat up a chunk of your budget.
Who Prepares an Expense Report?
Expense reports can be made by anyone who finds themselves traveling for work or making purchases on behalf of their company.
Typically, employees who incur work-related expenses will prepare these reports as part of a reimbursement process. It’s like gathering all your shopping receipts, but instead of a trophy for your spending, you get your money back to square one.
From sales reps jet-setting for client meetings to office managers stocking up on supplies, anyone with a company card and a mission can end up putting one together.
3 Main Types of Expense Reports
- One-time reports | These are the hit-and-run types. You had a business trip, or maybe you hosted an event, and you’ve got expenses to claim. You compile everything into this one-time report, submit it, and get it over with. It’s all about that specific, one-off occasion.
- Recurring reports | These are the records of your monthly or quarterly costs. They’re ideal for repetitive costs, like office supplies, software subscriptions, or any other routine expense that happens on a regular schedule. You’re basically setting up a rhythm, making it easier to anticipate and manage these consistent outflows.
- Long-term reports | These beasts cover the marathon expenses – the kind that stretch over months or even years (e.g., as long as you’re working on a big project). These reports track the ongoing costs associated with long-term initiatives, giving a clear view of how these substantial investments evolve over time.
How Do Expense Reports Help?
- Track spending | First off, expense reports help you keep a close eye on how and where your money is going. It’s like having a financial diary that tells you how much you spent on those business lunches or trips.
- Improve budgeting | With all the spending details in black and white, you can forecast future expenses better. It gives you a clearer picture of where you can save or splurge.
- Deduct tax | Expense reports are your best friend when it’s time to claim those deductions. They’re like breadcrumbs leading back to potential savings during tax season.
- Comply with policies | Expense reports also keep everyone in line with company policies. They provide a gentle nudge reminding employees about spending limits and what’s considered an OK expense.
- Prevent fraud |Lastly, tight cost tracking means it’s easier to spot anything fishy. Expense reports can act as a watchdog for your company’s pocket, monitoring any unusual spending patterns.
How to Create an Effective Expense Report
An expense report can be as detailed or concise as you want it to be. However, it tends to comprise five key components on average:
- Short item description | Every expense included in the list must have a short descriptive title that will let you or your managers better comprehend what kind of thing or service was bought and whether the price of that item is justifiable.
- Date of spending | An indication of when a purchase was made facilitates expense tracking a great deal. Plus, it lets you analyze how cost-efficient your business was over a particular period of time.
- Expense type | To clarify things even more, it’s useful to state the purpose of spending next to each listed item. Categorizing all expenses by type adds an extra level of control and allows for managing spending in a more orderly fashion.
- Spending subtotals | Precise spending numbers make the very essence of expense reports. So, it’s vital to include accurate information on how much money was spent on every documented product and service individually.
- Total amount spent | Lastly, you need to sum up separate spending numbers to arrive at the grand total. This final value will help you grasp how effective your financial decisions are and whether you need to limit your overall spending or not.
In addition, if you plan to submit an expense report while seeking reimbursement, don’t forget to add your name and contact information to the document. Attach all the relevant receipts to the report too – they will support your claims and make it easier to get the due money.
Track Staff-Related Expenses in a Streamlined Way
Even though our free expense report template simplifies cost tracking a great deal, logging expenses manually is not always the easiest of tasks. Luckily, there is a solution that can help you record staff-related expenses in a more effortless and fast way.
actiTIME has an automatic cost tracking feature that calculates how many expenses your business incurs based on the total hours invested in work. Plus, you can use actiTIME to analyze the financial performance of your projects, enhance budgeting, and simplify your accounting routines.
On top of that, actiTIME offers a bunch of handy features that help to boost efficiency and reduce performance costs:
- Time tracking functionality enables users to log hours in a snap – either manually or automatically – and see at a glance where their time is going. This transparency is key to eliminating time wastages and prioritizing tasks more effectively.
- Built-in automation simplifies such administrative tasks as invoicing and absence tracking. It allows you to quickly create invoices based on the hours logged, reducing errors and saving precious time. Plus, it keeps your entire team in the loop on who’s available and when, which fosters better resource allocation and planning.
- Speaking of planning, actiTIME’s work scope management features are all about setting clear work objectives and timelines, ensuring projects stay on track without overburdening the team.
- Finally, the in-depth reports turn data into in-depth insights, offering a clear picture of your team’s performance, the use of resources, and areas for improvement.
Explore everything that actiTIME has in store for you – sign up for a free 30-day trial.
