What is an expense report and why is it important?

Updated January 2025 - For many business owners, managing business expenses can feel overwhelming. Monthly expense reports, while essential, are often seen as a burden. However, mastering the expense reporting process is vital for maintaining accurate records, ensuring compliance, and claiming tax deductions during tax season. Whether you’re tracking travel expenses, meal expenses, administrative costs, employee reimbursements, or corporate card expenses, having an effective process simplifies business finances and contributes to sound financial management.

This guide breaks down how to create expense reports, common mistakes to avoid, and why automating the process with expense management software is a game-changer.

What is an expense report?

An expense report is a financial document that records business-related expenses incurred during a specific reporting period. These reports detail costs such as travel expenses, business meals, and employee reimbursements, ensuring that every dollar spent aligns with company policy. They play a critical role in helping businesses monitor their spending and stay compliant with tax regulations.

Types of expense reports include:

• One-time expense reports: For individual claims, such as a taxi fare.
• Periodic expense reports: For tracking ongoing expenses, such as monthly or quarterly spending.
• Departmental expense reports: Focused on employee spending within specific teams or projects.

Expense reports not only help in managing business finances but also improve transparency, enabling companies to make more informed financial decisions.

How to create an expense report

Creating an effective expense report doesn’t have to be complicated—modern tools make the process seamless with features like real-time tracking and automated workflows. Here are the key steps:

1. List all expenses

Document every business-related purchase, noting details such as the date, amount, and purpose. This is especially important for tracking business trips travel expenses, office supplies, or client-related costs.

2. Categorise spending

Assign each item to a standard expense category, such as travel, meals, or equipment. This simplifies analysis and ensures compliance with company policies.

3. Attach supporting documents

Include itemised receipts, invoice copies, or digital records to substantiate each claim. Tools that enable image uploads of receipts can be invaluable.

4. Add key details

Make sure the report includes the employee’s name, the reporting period, and the payment method used for each expense. Comprehensive details help streamline the approval process.

5. Ensure policy compliance

Cross-check the report against your expense policy to ensure all claims are eligible. Common policy violations include personal expenses, exceeding spending limits, or late submissions.

For a one-time expense report, simplicity is key, focusing on specific claims. For larger reports, like business travel expense reports, include more comprehensive data to provide a full overview of costs.

Why are expense reports important for SMEs?

For small and medium-sized enterprises (SMEs), expense reports are more than just a tool for expense reimbursement. They provide valuable insights into business spending patterns, help manage cash flow, and support financial planning. By monitoring business costs through real-time tracking and automated workflows, SMEs can identify areas to cut unnecessary expenses and allocate resources more effectively.

Benefits of expense reports for SMEs:

• Improved udgeting: Expense reports offer a clear view of where money is being spent, helping businesses create accurate budgets.
• Enhanced tax compliance: Detailed reports ensure that all eligible expenses are recorded for tax deductions, reducing the risk of penalties.
• Streamlined approvals: Automating the process reduces time spent on manual approvals and ensures compliance with company policy.
• Better decision-making: Insights from expense trends help business owners identify cost-saving opportunities and plan future spending.

What should your business include in expense reports?

A typical expense report should capture the following details:

What was purchased: Include a clear description of each expense.

Who incurred the expense: Identify the employee making the claim.

When and why: Provide the date and the purpose of the expense.

How much it cost: Record the total amount spent, including applicable taxes.

Additionally, for businesses tracking mileage or vehicle usage, include odometer readings and details of the trip. Aligning reports with company policy ensures consistency and compliance.

Basic expense report template

For businesses using Excel or similar tools, a simple expense report template might include columns for:

• Date
• Expense Description
• Expense Category
• Amount
• Employee Name
• Approvals Required

While templates are useful for small teams, they often lack advanced features. For larger operations, expense tracking software is a better choice, offering automation and integration with accounting software.

Pros and cons of using a business expense report Template in excel

Pros:

• Cost-effective: Free or low-cost options are readily available.
• Customisable: Templates can be tailored to suit company policies.
• Accessible: Most businesses are already familiar with spreadsheet software.

Cons:

• Error-prone: Manual entry increases the likelihood of mistakes.
• Limited functionality: Excel lacks advanced features like real-time tracking or automated approvals.
• Time-consuming: Larger reports may require significant manual effort, delaying the reimbursement process.

How to automate expense reporting with software

As businesses grow, manual processes become inefficient. Adopting expense reporting software, such as tools with receipt scanning and Xero integration, can revolutionise your workflow:

Key benefits of expense reporting software:

• Real-time tracking: Automatically track expenses as they occur.
• Faster approvals: Automate workflows to reduce delays in processing reimbursable expenses.
• Policy enforcement: Built-in checks flag policy violations before submission.
• Enhanced reporting: Generate detailed reports with just a few clicks.

With solutions like Weel, businesses can integrate corporate card transactions, set spending limits, and streamline approvals. By eliminating the need for manual data entry, businesses save time and reduce errors, ensuring compliance with tax regulations and company policies.

Curious to see how Weel can make expense reports a breeze? Sign up for Weel's 2-week free trial.

Common expense report mistakes to avoid

Even with a well-defined process, mistakes can happen. Avoid these common pitfalls to ensure smooth expense reporting:

1. Incomplete documentation

Missing receipts or vague descriptions can delay approvals and raise compliance issues.

2. Policy violations

Submitting personal expenses or exceeding spending limits can lead to rejected claims and strained employee relations.

3. Delayed submissions

Late reports disrupt cash flow and make financial forecasting more challenging.

4. Lack of detail

Omitting essential information, like dates or expense categories, complicates the approval process and may result in errors.

Automating the process with tools like Weel helps prevent these issues, ensuring that expense reports are accurate and compliant.

Expense reports and tax season

One of the most significant benefits of accurate expense reporting is simplifying tax preparation. By keeping a detailed record of deductible expenses, businesses can:

• Maximise tax deductions.
• Reduce the risk of audits by maintaining a clear audit trail.
• Save time and resources during tax season.

Ensure that your reports include all relevant documentation, such as receipts and mileage logs, to make the tax filing process seamless.

Streamline your expense reports with Weel

Managing expense reports manually can be time-consuming, error-prone, and frustrating—for both employees and finance teams. With Weel’s innovative expense management solution, businesses can transform their processes, reduce administrative burdens, and gain complete control over their spending. Here’s how Weel makes it seamless:

1. Digitise and automate receipt capture

Gone are the days of chasing employees for crumpled receipts or deciphering illegible handwritten notes. With Weel’s mobile app, employees can:

• Snap photos of receipts as soon as a purchase is made.
• Automatically match receipts with transactions, ensuring no expense is overlooked.
• Save time by eliminating the need for manual data entry, making audits and tax filings a breeze.

2. Empower employees with corporate cards

Weel’s corporate cards come with built-in spending controls, enabling businesses to set clear limits and policies for each cardholder. Key benefits include:

• Real-time tracking: Every transaction made with a Weel card is logged instantly, giving finance teams a clear, up-to-date view of spending.
• Custom limits: Control spending by setting individual limits for each employee, project, or department.
• Policy enforcement: Prevent overspending or non-compliance at the point of purchase, reducing the need for time-consuming corrections.

3. Automate expense reporting

Weel’s platform eliminates the repetitive tasks associated with creating and submitting expense reports:

• Automatically categorise transactions based on pre-set rules, such as travel, meals, or client entertainment.
• Consolidate all expense data into a single dashboard, making it easy to identify trends and ensure compliance.
• Enable employees to submit expense claims with just a few clicks, reducing back-and-forth emails and approval delays.

4. Generate comprehensive reports with ease

Weel turns raw data into actionable insights with powerful reporting tools:

• Customisable reports: Generate reports tailored to your business needs, whether it’s tracking monthly spending, analysing department budgets, or preparing for tax season.
• Real-time insights: Stay on top of your finances with up-to-date data at your fingertips, enabling better financial decisions.
• Audit-ready documentation: Keep all your records organised and easily accessible, reducing stress during audits or tax filings.

5. Integrate seamlessly with your existing systems

Weel’s platform is designed to integrate with popular accounting software like MYOB, Quickbooks, and Xero streamlining financial workflows:

• Automatically sync expenses, approvals, and receipts with your accounting system, reducing manual reconciliation.
• Simplify the month-end close by eliminating data gaps and inaccuracies.
• Save hours on bookkeeping tasks, allowing your finance team to focus on more strategic priorities.

6. Enhance policy compliance and reduce errors

Expense reporting often comes with challenges like policy violations, missing receipts, or delayed submissions. Weel solves these problems by:

• Enforcing company policies at the point of purchase, ensuring all expenses align with pre-approved guidelines.
• Flagging errors or non-compliant claims automatically, reducing the risk of rejected reimbursements.
• Sending reminders to employees for overdue reports, keeping the approval process on track.

7. Scale your processes as you grow

Whether you’re a small business or a rapidly scaling enterprise, Weel adapts to your needs:

• Manage expenses across multiple teams or locations with centralised controls.
• Access advanced tools like project-based budgets and spend tracking, helping you allocate resources more effectively.
• Enjoy the flexibility to handle high transaction volumes without compromising accuracy or efficiency.

Conclusion

Expense reporting doesn’t need to be a burden. Weel’s innovative expense management solutions streamline the entire process with features like digital receipt capture, real-time tracking, and automated workflows. Whether you’re tracking business trip expenses, managing reimbursable expenses, or integrating data with your accounting team, Weel empowers your finance department to focus on strategic priorities.

Ready to transform your expense management process? Explore Weel's product tour or book a demo today to see how we can help your business achieve efficient, error-free expense reporting.

Frequently Asked Questions (FAQs)

1. What’s the difference between a one-time expense report and a long-term report?

One-time reports cover single claims, while long-term reports track spending over a reporting period like a quarter or year.

2. Can I include personal expenses in an expense report?

No, only business-related expenses compliant with company policies should be included.

3. How do I ensure my reports are tax-compliant?

Detail all deductible expenses, attach receipts, and use tools like Weel to generate accurate records.