Benefits of automating expense reporting

Quick insights

• Business expense reports track purchases made on behalf of a business.
• Many businesses invest in software to automate the process.
• Expense report automation can help businesses save time and avoid human accounting errors.

Most business owners and their employees likely make frequent purchases on behalf of their business. This may include rent, internet, employee travel and payroll. Businesses typically track these types of expenses with expense reports. While you can manually create expense reports for your business purchases, it may be beneficial to automate the process. Many businesses turn to accounting and expense management software to save time and help avoid errors.

Read on to learn how expense reporting works, some benefits of tracking business purchases and how automation can help streamline the process.

What are expense reports?

Expense reports track any spending on behalf of a business, plus how much needs to be reimbursed to individual employees. While these reports will differ between businesses, they typically include the following:

• An itemized list of expenses
• Brief description of purchase
• Date of purchase
• Total purchase amount
• Account the purchase was charged to
• Employee information for reimbursement (if applicable)

When employees manually create expense reports, it can be helpful to ensure they copy over the above information for each purchase to a spreadsheet. Then, save that spreadsheet somewhere they can reference later (for creating budgets, tracking expenses or filing for taxes, for example).

Benefits of expense report automation

There are several reasons that automated expense reporting can be useful for businesses including the following:

Potentially save time and money

Without automation, individual employees need to create and send their own expense reports. Using a template can help employees save time on each report, but they are still responsible for inputting information for each expense, saving the report, sending it to the financial stakeholder and remembering to attach receipts.

As the business grows, employees may need to create more expense reports. This may not be the best use of employee time, especially at scale.

Reduce human errors

If your company chooses to manually create each expense report, there may be a higher number of human errors. This is because each employee creates their own report and manually enters all the information. These errors can cost additional time and resources to fix.

Provide greater financial visibility

There’s more to expense management than reimbursing employees. Monitoring expenses also allows business owners to create data-backed budgets and make informed business decisions.

By automating expense reporting, business owners can view all their important financial information in one place. This can help them identify spending patterns and potentially find cost-saving opportunities or areas for improvement.

Process timely reimbursements

Of course, it can also be important to reimburse employees in a timely manner. But another potential benefit of timely reimbursements is a more accurate view into your cash flow.

For example, you may think you have access to more cash than you actually do if you don’t regularly reimburse your employees. Automated expense management software can help streamline the process and reimburse employees on specific days each month.

As your business grows, you may also want to consider applying for a business credit card. Some business credit cards, like the Chase Ink credit cards, provide employee credit cards at no additional cost. While employees should still track their expenses when using a business credit card, they won’t need to wait for reimbursements. 

How to automate expense tracking

Want to invest in an automated expense management system? Here are a few key steps to help you begin the process:

• Choose a software: The first, and perhaps most important step, may be finding a software option that works for your business. Consider price, capabilities and ease of use. Check to see if any software companies on your list offer free demos so you can see the features in action.
• Assign key stakeholders: If you run a small business, you may not have a designated finance department. It can be helpful to assign a point person who can be the resident expert in your expense tracking software and approve expense reports.
• Educate employees: Once you implement a new software application for tracking expenses, you may want to make sure that every employee understands how to use it. Show employees how to use the software and make sure they know of any key due dates and information related to sending expense reports.

In summary

Automated expense reporting can help business owners better track company spending and potentially save both time and money on manual expense reports. The right expense management software depends on your individual business, but it may be wise to consider one within your budget that has the capabilities you need.