What Is an Expense Report? (Including How to Create One)
By Indeed Editorial Team
Published November 8, 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Companies often ask for an expense report when an employee incurs business expenses while away on a trip. The report's purpose is to provide a record of how you spent company funds before the company reimburses you. Knowing about these reports is the first step to creating an accurate and effective one. In this article, we define what an expense report is, discuss how to create them, highlighting what to include, explaining why it's important, and providing tips, a template, and an example to help you create your own.
What is an expense report?
An expense report itemizes the business expenses incurred by an employee during a certain period. Businesses may often refer to it as an expense claim form, expense claim worksheet, or travel expenses. Businesses typically use this report to reimburse employees for business expenses that the employees have paid for themselves. People usually submit these reports to their employers, while companies may use them internally or send them to clients.
What to include in expense reports
There's no standard approach for creating these reports. The format and content of the report vary depending on the company's requirements. But some basic elements are present in all reports. These include:
Employee's name and contact information
List your name and contact information, such as your work e-mail address, the company name, and your work phone number, at the top of the report. This information identifies the employee who submitted the report. The report may also include the name of the supervisor or manager who approved the expenses. It's also useful for the employer or finance team to have this report as a record in case they want to contact you about your expenses.
Date of expenses
The date of expenses indicates when you incurred the expenses. It's important for businesses to track how much their employees spend. It's also helpful for companies to be able to compare expense claims from different employees.
Description of expenses
The description of expenses itemizes the expenses you incurred. This information helps businesses understand what you spent money on, why, and how much money you spent on each item. It's important for companies to understand their employees' expenses to reimburse them correctly.
The total amount of expenses
The total amount of expenses is the sum of all the expenses you incurred. This figure shows businesses the total money you have used. It's important for companies to know this so that they can reimburse you for the total amount.
The most important part of the report is the receipts, which include copies of all receipts for expenses incurred. For example, if you pay an expense with a personal credit card, the report can contain a copy of your credit card statement showing the charge. These receipts help businesses track expenses and verify that the employee incurred them.
How to create expense reports
Here's a step-by-step guide for creating these reports:
1. Gather your receipts
The first step is to gather all the receipts for your expenses. If you paid for an expense with a personal debit or credit card, include a copy of your statement showing the charge. If you have digital receipts, you can save them as PDFs.
2. Create a list of expenses
Next, create a list of all the expenses you incurred. Include the date, description, and amount of each expense. It's helpful to include the purpose of the expense, such as business lunch or travel expenses. This helps your employer or finance team understand each expense.
3. Calculate the total amount of expenses
Once you have a list of all your expenses, calculate the total amount. This is the sum of all the expenses you incurred. It's the payable amount that you request from your employer or client.
4. Review the company's expense policy
Before you submit your report, review the company's expense policy. Check whether there's any specific template or format that you can use. For example, some companies have specific software that they require employees to use to submit reports. Ask your supervisor or manager if you're unsure about the company's expense policy. They can give you guidance on how to submit your expenses properly.
5. Submit the report
Finally, submit the report to your employer or client. Include all the receipts and supporting documentation. You can submit the report electronically or in person.
Why are these reports important?
These reports are important for businesses for several reasons. These are to:
Track employee spending
These reports help businesses track employees' spending to understand how much and where they spend. They allow companies to identify spending patterns that may indicate fraud. For example, if an employee regularly spends large amounts of money on meals or travel, the employer may want to ask for more information to check that this is necessary.
Help budget for expenses
These reports can help businesses track their expenditure to stay within their budget. Knowing how much employees are spending on average enables companies to better allocate their resources and ensure they're not overspending in any area. This also helps businesses understand where they can cut costs.
Help calculate taxes
Another important reason businesses require these reports is for tax purposes. The CRA requires companies to keep accurate records of all business expenses to deduct them from their income. Without precise reports, businesses may find it challenging to deduct these expenses and this could result in their paying more tax.
Help develop policies
These reports can also help businesses develop policies around employee spending. Companies can create policies to control costs by analyzing employee spending patterns. For example, if employees are spending a lot on meals, the business may develop a policy limiting how much employees can spend on meals.
Tips for creating expense reports
Here are some tips for creating these reports:
Include all relevant information
The report can include all relevant information about the expenses incurred. This comprises the date, amount, description, and purpose of the expenses. This is important to ensure that businesses can track expenses and verify them.
Follow the company's expense policy
When creating a report, it's important to follow the company's expense policy. This can help ensure the validity of your expenses so the company can reimburse you. This policy can provide information about how to report expenses, what receipts to include, and how much you can spend. It's important to review this policy before creating a report.
Keep accurate records
It's important to keep accurate records of all expenses in the report to help the business track spending, verify costs, and develop policies. These records can include receipts, documentation, and any other relevant expense information. This is important to ensure that businesses can properly understand and manage their expenses.
Be clear and concise
When creating a report, ensure you only include relevant information and that it's clear and concise. This can help the business quickly understand the expenses and make decisions about them. It can also help avoid confusion when reviewing the report.
Use a software app
Businesses may want you to use a software program to create these reports. Not creating the reports manually can help save time and money. Many software programs are available, so it's important to find one that works for the business.
Review the report
Reviewing the report helps you identify any errors and ensures all your expenses are accurate. This is important to help you manage your expenses properly. You can make corrections as necessary to ensure accuracy if you find any errors.
Template for an expense claim
A template can help you create a professional and well-organized report. You can use this template for both personal and business expenses. Simply fill in the template with the relevant information to use it for the business. For personal expenses, you can use the same template or modify it to suit your requirements. Here's a template you can use:
[Date of expenses]
[Description of expenses]
[Subtotal of expenses]
[Total amount of expenses]
Example of an expense claim
Here's an example of this type of report:
Name: John Adam
Date of expenses: January 1–January 31, 2022
Description of expenses:
The total amount of expenses: $1,850
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