Painless Expense Reports – How?

  • January 14, 2023
  • George Mahoney

Expense reports are a common and necessary aspect of running a small business. These reports document and request reimbursement for business-related expenses incurred by employees. These expenses can include things like airfare, hotels, meals, transportation, and other expenses that employees may have paid out of pocket while on a business trip or conducting business-related activities. The purpose of expense reports is to ensure that employees are reimbursed for their expenses in a timely and accurate manner and that the business can keep track of its spending.

However, as any small business owner knows, expense reports can be a real hassle. They require employees to keep track of all their expenses, fill out the report correctly, and submit it on time. This can be a time-consuming and tedious process for both employees and business owners. Furthermore, if the reports are not filled out correctly, it can lead to delays in reimbursement, which can cause frustration for employees and financial strain for the business.

Yes, a thousand times yes – I hate expense reports! 

Additionally, expense reports can also be a significant administrative burden for small businesses. This is because they require a lot of time and resources to process, review, and approve. Business owners need to ensure that the reports are accurate, that the expenses are legitimate, and that they fall within the budget. This can take a lot of time and effort, which can be better spent on other important aspects of running the business.

However, the good news is that there are alternative solutions available that can make the expense reporting process less of a burden. For example, many businesses are turning to digital expense management software to automate the process – such as Clyr. Clyr allows employees to easily submit expenses, track them in real-time, and get reimbursed quickly. Additionally, they can also help businesses to keep track of their spending, set budgets, and generate reports. This can save a lot of time and effort for both employees and business owners.

What is an expense report? (not a trick question) 

Expense reports come in two general flavors (neither of which taste good): 

1. Tracking expenses for tax purposes.

One version of an expense report is a document that tracks business spending, mostly for tax deduction purposes. It’s used to itemize and classify business costs by type of expense as well as client, vendor, account, and purchaser. Expense reports can match spending to line items in your P&L. For example, you might categorize trade shows and sales team travel as indirect selling expenses. Office supplies and computer equipment would be categorized as general operating expenses. 

These kinds of expense reports make it easy to find tax deductions when they group expenses by IRS tax category. A sole proprietor can deduct expenses related to: 

  • Travel by airplane, train, bus, or car 
  • Baggage and shipping
  • Dry cleaning and laundry
  • Lodging and meals
  • Communication, like mobile phone usage

For the most up-to-date Schedule C info, check the IRS website.

the road to expense reports can be painless

2. Employee reimbursements.

The other kind of expense report is related to reimbursing employees. Someone (probably you) needs to generate an expense report whenever an employee requires reimbursement for out-of-pocket business expenses. It’s how most companies make sure that employee expenses match the cash being paid out.

Employee reimbursement expense reports are often created in spreadsheet form and generally include:

  • Name
  • Purpose
  • Time period
  • Date of each expense
  • Description of each expense (Vehicle mileage, printer ink, cheese fountain, etc.)
  • Expense type for each expense (meals, lodging, etc.)
  • Amount
  • Employee signature
  • Authorization signature

Once this report is completed and signed by everyone that needs to sign it, the office manager will pay back the employee, often with a good old-fashioned paper check (old school, right?).

Why are my expense reports such a darn mess? 

Small business expense reports are often created using a basic excel spreadsheet that’s been circulating for years. Once the data is entered manually, the report is submitted along with a jumble of receipts collected throughout the month. And yes, it can be messy and error-prone. 19% of expense reports have errors. This type of report is just a means to an end (that reimbursement check). Management isn’t likely to gain any spending insight without some serious data wrangling.

Hidden costs? Seriously? 

Small business expense reports are costing you time and money. It takes 20 minutes, on average, for an employee to complete a simple expense report. That’s time they could be used to generate revenue for your business. Plus it costs your business about $58 to process a single report. 

It’s especially awkward when an employee is waiting for funds, which could cause financial hardship and sap employee morale. Forty percent of employees would stop paying upfront for business expenses if the reimbursement period were significant.

Expense reports always require receipts, and it’s painful to keep track of them. Employees may try to hold onto paper receipts until the end of the month when they may or may not end up smelling funny and have questionable stains on them. 

Do I have to use Excel for expense reports, or can I use something else?

Yes! you can ditch the spreadsheet and start using Clyr’s automated expense reports, an all-in-one expense management and spend control platform. It offers a fast, simple alternative to manual, tedious expense reports. Employees submit a receipt the moment they spend using the Clyr platform. No more crumpled receipts or ink-stained fingers. Clyr automatically categorizes expenses for your to reconcile in the Clyr dashboard, where you’ll be able to view and analyze all your spending data in one place. 

With Clyr, you’ll be able to proactively manage your budget by issuing employees prepaid business cards to cover their expenses. No more reimbursements! This is why (among many other reasons) Clyr is the best expense management software for your company.

From reactive expense reporting to proactive spend management

When it’s done right, expense reporting can be a powerful spending management tool that drives business decisions. Clyr’s expense management solution helps small businesses with the following:

  • Budget with a snapshot of spending by category, employee, and timeline… Are trade show expenses over budget? How much is sales spending on travel? Why are we breaking so many staplers?
  • Track and maximize tax-deductible expenses like sales training, client lunches, or business cards (do people still use these?). 
  • Identify opportunities for efficiencies and cost savings…It’s time to set a cap on educational costs. You should renegotiate your mobile phone plan. Taco Tuesdays need to go. 

More spend control, fewer expense reports and receipts piling up on your desk (and the floor, let’s be honest)

Clyr gives you full visibility, in real time, over the types and amounts of purchases team members make with their corporate cards (which you can easily issue to them, rather than having them use their personal cards on business expenses). For example, you might issue Jill, in marketing, a card with a $250 limit that you only want to be used to print brochures. If Jill needs to travel to a trade show next month, simply adjust her card limit and authorize travel expenses. 

Once company spend starts to flow through corporate company cards, Clyr takes care of the rest. Company spend data is consolidated and digitally accessible. Your accountant can save time and hassle by syncing transactions and receipts with QuickBooks Online (or whichever ERP you’re using). You can analyze spend data in real-time, improve cash flow management, and make better-informed business decisions.

No more frontin’

Now comes the best part. Employees are no longer fronting cash for expenses (they spend more time generating revenue instead). Accounting isn’t tracking down missing receipts. Finance won’t be explaining why a reimbursement check is delayed. You can almost hear them smiling.

George Mahoney
Chief Financial Officer, SMB Finance Expert

George Mahoney is a seasoned expert with extensive experience in financial management for field services, construction, and real estate companies. Known for his strategic financial planning and expertise in optimizing operational efficiencies, George has consistently driven profitability throughout his career.