How to create an expense report
A step-by-step guide on how to create an expense report for your business.
By Jessica Rangel on 18 April 2023
Creating an expense report is an essential task for any business or organisation to track and manage their expenses. An expense report lists all the expenses incurred by an individual or a team during a particular period, and includes information such as date, purpose, amount, and payment method.
Here’s a step-by-step guide on how to create an expense report:
❯ Collect all receipts and invoices
1. Collect all receipts and invoices
The first step in creating an expense report is to collect all the receipts, invoices, and other documents related to the expenses. It’s important to have all the necessary information for your accounting including date, expense purpose and expense amount.
For receipts, it is important to include:
- Name of vendor (person or company you paid)
- Transaction date (when you paid)
- Detailed description of goods or services purchased (what you bought)
- Exact amount paid
- Exact form of payment (how you paid – cash, check, or last four digits of credit card)
For invoices, it is important to include:
- Employee full name and address
- Recipient (manager) full name and address
- A unique invoice number
- The invoice date
- The payment due date
Tip: Use a mobile expense app for easier receipt collection
Mobile receipt capture facilitates the tracking and collection of receipts. A mobile expense management app allows you to snap a picture of your receipt and send it to your expense management system. Simplified approval and processing of these claims removes the lethargic process of collecting and processing receipts and invoices.
2. Choose a template
There are many templates available for creating expense reports, including Excel spreadsheets, Google Sheets, or your own PDF template.
Additionally, these sites offer free expense report templates:
- Simple Expense Report Template
- Simple Expense Report Template for Excel
- Google Docs, Google Sheets, and Google Slides Templates
- Business Expense Report Template
Whether you are using a simple template, custom template, or an excel spreadsheet, you’ll want to include sections such as:
- The reporting period: starting dates, ending dates, and purpose
- The submitter of the expense report: name, title, department, and phone number
- The receiver of the expense report: employee ID, manager name, and manager title
- Expense details: date of the expense, expense description, and the expense cost
3. Create a header
The header should provide a general summary of the expense report. These fields should be mandatory, and are likely to remain the same regardless of the type of expense report.
An expense report header typically contains:
- Name of the person or team responsible for the expenses
- Period covered by the report
- Any other relevant information, such as the project name or department
Below is a sample of an expense report header.
4. List the expense categories
Once you have a template, the next step is to provide guidance for how employees fill out expense reports. This can be done by either providing explicit directions in the document or your company policy documentation. Alternatively, you can set up your expense report template with specific fields — this helps employees by limiting any uncertainty or questions they may have.
List expenses in the template including: the date, purpose, amount, and payment method. Be sure to also organise the expenses by category, such as travel, meals, or supplies.
Common expense categories:
- Lodging
- Office supplies
- Business meals
- Parking
- Airfare
Additional expense categories:
- Online tools and software subscriptions
- Home office equipment and technology
- Printing
- Employee gifts
- Maintenance and repairs
Tip: Set up your expense report template with categories
If using expense management software, you can often set categories or cost types to align employee expense reports with your accounting. Having a preset selection makes it quicker and easier for employees to fill out, removing time lost answering excessive questions.
5. Calculate total expenses
Calculate the total amount of each category and the overall total of all expenses. A simple way to do this is use a formula to calculate the amounts entered in the expense form by employees. However, this should always be double checked and matched with receipts and invoices.
When calculating expenses with multiple currencies, it is important to have a policy in place to ensure compliance and accuracy. For example, the University of Amsterdam includes forms and written out directions on their website for students and employees who claim costs from expenses incurred in foreign currencies.
Best Practices: Calculating expenses with multiple currencies
- Forms claiming expenses incurred in foreign currencies must be supported by invoices, bank statements or other documents
- The actual exchange rate on the day of your purchase or on the invoice date must be present on all supporting documents
- If you wish to support your employee with an advancement prior to a business trip, it is recommended that the exchange rate of the date of the purchase/invoice is used.
6. Submit and process expense reports
Once the report is complete, employees can submit it to the appropriate person or department for approval. Depending on your organisation’s policy, this may be a supervisor, manager, or accounting department.
7. Keep a copy of your records
Finally, make sure to keep a copy of the expense report for your records. You may need to refer to it in the future or use it as a reference for future expense reports. Legally, it is also important for your company to store receipts, credit card statements, and online records.
In the Netherlands, business records must be kept for a minimum of 7 years according to the tax and customs administration.
In Germany, businesses must store receipts, sales journals, VAT books, and petty cash records for a minimum of 10 years to comply with tax return laws.
Make use of an expense management system to ensure you keep track of your records, as well as giving the opportunity for employees to look back at their expenses. The overview of all your expense reports will help you with the financial planning of future business expenses, and ease the ability to plan future budgets.
Next steps for managing business expenses
Creating an expense report can seem daunting, but following these simple steps can make the process straightforward and efficient. By tracking your expenses carefully, you can help your organisation manage its budget effectively and ensure that you are reimbursed for all your expenses.
Despite its disadvantages, it’s still much better to have your employees file their claims online as opposed to using physical forms. We are delighted to provide you with a free expense claim report we have created with Google Forms.
Your employees can use it to submit reimbursement requests for everything from travel to meals. Use the form to make expense claims simpler and save a lot of time for the company in the process.
- Download the report by clicking on the banner;
- Adjust the fields to your own accounting workflow;
- Send the expense report to all your employees;
- Justification data will automatically be kept in an overview.
If you have any question regarding the Google Form. Or if you want help and advice with adjusting the fields. Please don’t hesitate to contact our team.
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