What Is an Expense Claim?

An expense claim is a formal request that employees submit to the company to claim and receive the whole expenditure done by themselves during business travel. Business-related expenses are related to food, travel, accommodation, and other expenses related to the company.

It should cover the proper itemized list of expenses, description of the product they purchased, date, and valid proof of expenditure.

Examples of Expense Claims

An expense claim can be about food, traveling, or entertainment. Let’s understand expense claim management through the examples below.

Traveling

Business travel expenses are very common expenditures that employees claim. These expenses cover car rent, flight tickets, and fuel expenditures while traveling in a personal car. Employees can submit requests for a travel expense claim.

Food & Entertainment

Companies offer reimbursement for meal and entertainment expenses, but only if they are solely for a business purpose. For instance, if you have a meal during a business meeting with the client or have a visit to an entertainment moment with your client, the company will reimburse you. Employers can also reimburse you when you have a meal on business trips.

Office Expense

Often, employees purchase office supplies from their funds. In such a case, an employee can submit the request for an expense claim and get reimbursed for all the expenses.

What Is Expense Claim Management?

Expense claim management is an operation under which the financial team reviews and approves all expense reports when employees submit reimbursement requests. Proper management is necessary as it ensures proper documentation and on-time reimbursement for business-related expenses.

Key Points About Expense Claim Management:

Expense Submission – For claiming expenses, employees submit expense claim requests with required receipts and supporting documents.

Approval Process – Managers recheck details and approve the claim based on the company’s expense policy.

Reimbursement – The finance department proceeds with reimbursement after approval of business-related expenses.

Record-Keeping – The claims are recorded for tax compliance and accounting purposes.

Policy Enforcement – Ensure that employees follow company policy rules to prevent overspending or fraud.

How Does the Expense Claim Process Work? Step By Step Process

In some cases, employees bear all expenses during a business trip without using company funds. The reason behind this scenario could be not issuing a credit card or advance payment from the employer.

Following Is a Step-by-Step Process of Expense Claiming:

Employees Bear the Cost

An employee uses his or her money or a credit card to pay for all expenses. The expense can be anything related to food, transportation, or purchasing business supplies.

Get the Valid Receipts

Employees should get all the valid receipts for all the expenses and keep them safe. These receipts are useful during the expense-claiming process.

Fill In the Expense Claim Form

Employers share expense claim forms with employees, and employees have to fill in the form with the correct information. It covers details like location, date, time, and receipts of the same.

Reviewing and Approving By Manager

Once the employee submits the completed form, his or her manager reviews the same. The manager approves the form when verifying the details and makes sure that expenses are aligned with company policy.

Reviewing by Financial Team and Reimbursement

After the manager, it’s the turn of the financial team to review and approve the submitted request. When the team finds it ok, it initiates the reimbursement process.

Receiving of Reimbursement

After going through all the steps above, the company offers reimbursement to workers. Employees get reimbursement as per the payroll cycle and according to company policy.

What Are the Difficulties in the Expense Claim Process?

Missing or Lost Receipts

Physical receipts can be lost or misplaced which affects the expense claim process negatively. The financial team could not perform verification in such a situation. As a result, the employee failed to avail of the reimbursement amount.

Time-Consuming

It could be a time-consuming task, from the initial process of collecting the receipts to waiting for approval. Here, employees can overcome this challenge by collecting the receipt and filling out the form on time.

Manual Data Entry

Expense reporting and claims usually involve the manual data entry. This is a time-consuming operation. Additionally, it may include errors and delay the process.

Policy Confusion

Company policy should be clear and non-confusing because it affects the reimbursable expense process. A complex policy structure will definitely leave an employee with doubts and cause trouble. Overall, it affects the reimbursement expenses.

No Proper Visibility on Company Spend

Most companies rely on a traditional method for expense claiming that does not offer real-time visibility on company expenses. The finance team is waiting for the report submission. This makes it difficult to make budgeting decisions.

Best Practices for Expense Claim Management

Clear Guidelines

Employers should set clear guidelines for claiming expenses. These guidelines represent which reimbursement is eligible and which one is not. It can also cover the type of expense categories covered in expense claims. Clear guidelines are helpful for employees to have a clear picture of their claimed expenses while reducing potential disputes.

Introduce Policy to Employees

Your employees must be well aware of the expense claim reimbursement policy. You can give training, take LIVE sessions, or make a mass announcement regarding policy. Keep the policy document well accessible for employees. Share the guidelines with your employees and be transparent with them.

Regular Policy Review and Updates

Companies must review and update their policies at regular intervals. This is done according to market conditions. Additionally, you can take feedback from the finance team and add improvements accordingly.

Recheck the Expense Details

Review and double-check the expense before submitting a claim. Ensure that the date, amount, description, and data entry details are accurate. Double-checking information reduces the chances of errors that can be major causes of delayed reimbursements.

Opt for the Expense Management Software

Companies can easily streamline the process while using the power of expense management software like Moon Invoice. It automates processes, reducing manual work and administrative burden. An expense management system speeds up the process and leads to high accuracy which affects the further process. Professionals can have real-time visibility of the data.

Adhering to Tax and Legal Requirements

Always stay updated with the legal requirements and tax regulations. Always adhere to the specific guidelines for deductible expenses.

Expense Pre-Approval

For unusual expenses, employees should take pre-approval before incurring them. Pre-approval allows us to review expenses against budget availability and policy compliance. Thus, it lowers the risk of non-reimbursable expenses.

Collect the Required Documents for Expense Claims

Proper documentation is the basis for successful expense claims. Employees should be careful and gather all the required documents, such as invoices, receipts, and expense report forms. Companies should also guide employees regarding what documents are required and which details are important to mention.

Benefits of Using Expense Tracking Software

An expense tracking software like Moon Invoice is the right way to add automation to the expense claim process. It speeds up the overall process, ensures accuracy, and makes advancements in productivity. Here are the key merits that it can offer to the professionals

Recurring: Professionals can easily set recurring by enabling the recurring check box. Additionally, you can also set the interval and the date as needed. Make recurring expenses smooth and accurate.

Duplicate as Expense: Need a duplicate copy of your expense? Effortlessly duplicate the expense with a few clicks and get another copy.

Easy Editing: You can easily edit the details through the editing option.

Sharing via Email: Done with creating expenses? Share it with your desired person easily through email.

Creating Invoice: Easily create an invoice of your expenses while hitting a few clicks.

Import: You can easily import the document through the import option.

Sort by: You can sort the expenses through name, first name, last name, expense number, or category.

Last Word

Expense claims are a crucial part of business related costs. So, employees and employers should handle them properly. Employees should keep all the required documents and receipts safe to avail of an expense claim.
Likewise, employers should carefully review the details, verify them, and initiate a proper reimbursement process. The expense claim procedure should be smooth, accurate, and quick for proper output.

Frequently Asked Questions