The business expense report is a crucial tool for businesses of all sizes, including self employed individuals and multi national corporations. They enable businesses to see the flow of hard cash for individual employees and are the first step in employee reimbursement for out-of-pocket expenses including hotels, air travel, and car travel. Self employed individuals may want to keep business expense reports for tax purposes at the end of the year, and to ensure all expenses are reported correctly.
These reports are generally an easy solution to expense reporting and reimbursement for both employer and employee, as they can be standardized and read very quickly by the responsible party. This article will discuss what business expense reports are, who needs to use these, how much is usually spent generating business expense reports, and present several ways to reduce the costs associated with these important reports.
What Is A Business Expense Report?
At its core, a business expense report is an itemized spreadsheet of employee expenses. The expenses included in this type of report are generally incurred while operating off site, such as mileage reimbursement, meals, lodging, and sometimes entertainment expenses.
Employers generally require employees to fill these out in some form after traveling for business, and may generate their own type of business expense report under a different name. The most common use of these reports is to reconcile employee’s company credit cards with presented receipts, which helps keep employees accountable for charges they make on their corporate cards.
Who Needs Business Expense Reports The Most?
Generally speaking, the organizations that well benefit most from business expense reports are large, domestic or multi national organizations with multiple employees who travel for the company. Organizations that use corporate credit cards and organizations that require employees to use personal cards will both benefit from these reports, as they provide a standardized format for easy disclosure and interpretation. Small businesses with around 100 employees will also benefit from using business expense reports, and small companies may benefit slightly. They provide a standardized format for taxes, which may make them useful.
How Much Is Usually Spent On Business Expense Reports?
The main expense associated with business expense reports is the salary of the person tasked with processing these, which will vary based on business size. A business with a large number of traveling employees will spend more money on report processing than a business with a few traveling employees, although an employee who spends more time processing these reports may be more efficient and spend less time on each report. Some employers choose to have just one person who’s only job duty is to process business expense reports, while other employers spread the duty among multiple employees or give the job of processing these to an employee with other duties. These factors will affect the price paid in salary and benefits for the individual company and should be considered.
Other costs associated with a business expense report may include printing costs, graphic design costs, internet and electricity costs, and other expenses. These may be small enough in the scheme of the company to ignore, but employers should make that decision on their own by evaluating the costs of each factor going into business expense reports and the labor required to generate and process them.
6 Ways in Which You Can Reduce Spending on Business Expense Reports
- Move business expense report processing duties to one individual within the company. Instead of paying multiple people to handle these expenses and having to pay the related training, benefits, and assorted other expenses for two, your business will pay them for one individual. This can save a substantial amount of money per year as it will increase the likelihood of expense reports being processed correctly the first time.
- Ensure the employees responsible for processing these reports are well trained and perform their job as efficiently as possible. This will reduce time spent processing each expense report and keep the cost per report lower. If your employees require retraining, ensure they receive it as soon as possible to reduce the amount of time your company spends with inefficient employees.
- Consider moving paper reports to an electronic format, or vice versa. In some areas of the country it may be cheaper to use one format than the other. Consider compiling a comparison of costs. You should also consider ease of access; if most of your workforce is on the move, it may be much easier to have electronic versions of this form, even if it is slightly more expensive to operate and process.
- If you use paper expense reports, shop around for cheaper printing rates and mailing prices. You may be able to save money on printing and distributing your expense reports. This is especially relevant if your organization has a large work force.
- Set the maximum reimbursable amount lower than it is currently. This will encourage employees to keep business expenses low and discourage extravagant expenditures on unnecessary expenses. Consider pruning extra reimbursements that are not directly related to the job, and carefully calculate the amount the average employee needs for food per day.
- Make sure the employees in charge of processing business expense reports know what expenses are not reimbursable by the company, and establish a set of checks and balances to ensure unauthorized expenses are not being routinely reimbursed.
Overall, business expense reports are an excellent tool for businesses looking to understand employee expenses while traveling and reimburse employees for time spent while traveling. They can be tailored to each business to maximize their usefulness, and may help reduce costs for the employer significantly. Every employer should consider looking at their business expense report system with a careful lens.
Has your business used or changed their use of business expense reports? What are your thoughts?
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