SPEND MANAGEMENT, EXPENSE MANAGEMENT TOOLS
As your workforce grows or your business needs become more sophisticated, your employees may have to use company money to pay for business expenses. It's important to make sure you're reporting them correctly.
The Inland Revenue Authority of Singapore (IRAS) defines these as “the costs you have incurred in the course of running your business.” They include:
You will then need a system for tracking these expenses and making sure employees are reimbursed if they paid for them out of pocket. This is where an expense report comes in.
An expense report is a form that contains all the information a company might need to get a full picture of a business expense. There are generally two reasons why companies need expense reports:
In any case, an expense report is a crucial component of a company’s expense policy—the rules that define what employees can and can’t do with company money.
Employees complete the form and add an itemized list of expenditures for which they are requesting reimbursement. As proof of these expenses having taken place, receipts are attached to the form, particularly if the corresponding expenditures exceeded a threshold set by the company.
The employer then examines the submitted report for accuracy. If no discrepancies are found, the employee is reimbursed their requested amount. Reimbursed amounts can also be recorded as business expenses, which could then be used to calculate accounting profit and taxable profit.
Expense reports can also be used to record expenditures made against an employee advance. In this case, the employer examines the expense report and records the amounts detailed as business expenses, but no reimbursement is made. Instead, these expenditures are deducted from the amount advanced to the employee.
As mentioned earlier, an expense report will usually require employees to itemize any expenses included in the report and to attach the associated receipts. In turn, these expenses are separated into different categories, making it easier to plug into your bookkeeping or accounting system.
To ensure that each expense is broken down into as much detail as possible, an expense report will often include multiple information fields. Some of these can be specific to the company. But for the most part, these fields require the following core information from employees:
The personal information of the employee submitting the report, including:
The company account the expense will be billed to, such as:
Travel and expense management is something every growing business will have to deal with at some point. Once your employees start traveling for work or have the authority to pay for business expenditures (whether through an advance, petty cash, or out of pocket), you may deal with rising reimbursement costs.
In particular, business travel can lead to uncontrolled spending due to the high costs of hotel accommodations and airline travel. According to the Global Business Travel Association (GBTA), the business travel industry is predicted to be worth US$1.6 trillion in 2020.
Expense reports play a vital role in ensuring that company spending is kept in check. Companies that fail to do so risk losing money.
On paper, expense reports offer a logical way for employees to record how much they spent on business expenditures. However, they’re far from perfect.
For one thing, filling up an expense report can be slow and tedious. A 2015 GBTA report found that the average employee spends 20 minutes on an expense report, plus another 18 minutes to fix any errors. That’s a _lot _of time spent on reports and receipts.
In fact, filling up an expense report can be so stressful that 56 per cent of Singaporean travelers forfeit their expense claims because of the amount of paperwork it requires or because they were not duly reimbursed in the past.
This has prompted many companies to look at new technologies like automation and artificial intelligence to simplify expense reporting and make it easier for employees to report expenses while on the go.
You can download this expense report and modify it to your own business needs.
As your company looks at different ways to track and control your business expenses, it’s important to create an expense policy that includes guidelines for employees to follow when reporting business expenditures. It’s also crucial that you provide employees with the tools to make expense reporting a smooth, and perhaps even enjoyable, activity.
It’s here where an automated spend management platform like Spenmo can be tremendously useful. With Spenmo, your employees will receive corporate cards for their business expenses. These cards give your HR team full visibility over employee spending, making expense reporting and tracking faster, easier, and more accurate.
Schedule a demo today to learn more.