Expense Claims: A Guide to Reimbursement & Automation

Does your business allow expense claims? If so, you’re likely all too familiar with the delays, errors, and confusion over what qualifies when the program isn’t managed correctly.

But reimbursement doesn’t have to be a weight on your business’s finances and your employees’ workflow. With a bit of knowledge, the right software, and a dash of automation, you can manage reimbursable expenses like a pro.

This guide will get you started. It explains which expenses are eligible for reimbursement, outlines a typical step-by-step claim process, and shares best practices for efficient, compliant expense management from submission to reimbursement.

Key Takeaways

1. Expense claims are the formal process employees use to get reimbursed for out-of-pocket business costs like travel, meals, or supplies.
2. The typical expense claim process starts when an employee buys a product or service for the business with their own money. They submit that expense, along with any receipt or proof of purchase, through the proper channels to be reviewed and approved or denied for reimbursement.
3. Challenges in the expense claim process include processing time, fraud, lost receipts, manual data entry, policy confusion, and lack of visibility.
4. Expense claim management best practices include creating clear policies with examples, training employees on processes and tools, making use of automation to reduce human error, and conducting regular audits to ensure compliance.
5. Automation and modern tools can help with expense management in a variety of ways, including eliminating manual data entry, reducing human error, capturing and storing receipts at the point of sale, enforcing company policies automatically with spending rules and alerts, and providing real-time visibility.

What Are Expense Claims?

Expense claims are individual requests for reimbursement of specific business expenses that employees have paid for with their own money.

Expense reports are comprehensive documents that summarize multiple expense claims over a certain period (typically one month).

Typically, a business will set a specific number of purchases or purchase amount an employee can make within a month that qualify as expense claims. Above that number, employees must submit an expense report.

Common types of expense claims include travel, meals and entertainment, office supplies, and fuel and transportation.

Within a comprehensive expense management program, these purchases require a receipt or proof of purchase, must be reviewed and approved by managers or finance, and must be paid back to the employee.

Tracking these expenses is vital for preventing fraud and maintaining operational efficiency and compliance within your business.

Expense Claim Process: Step-by-Step Example

Step 1: Your HVAC technician buys supplies for a specific repair job with their own personal card.

Step 2: They take a picture of the receipt, add job codes and information about the purchase, and upload it to the business’s expense management system.

Step 3: When the job is finished, the employee submits the expense claim by filling out a paper form or electronic form.

Step 4: Managers or finance personnel review and approve (or deny) the purchase for reimbursement.

Step 5: Finance department issues reimbursement as part of the payroll process.

Challenges In The Expense Claim Process

Processing Times

Processing times for correct expense claims can be an average of 20 to 45 minutes from start to finish. This includes the time the employee spends on the claim as well as the time managers and finance personnel spend reviewing and approving the claim.

According to Spendesk, a significant portion of expense reports — around 1 in 5 (19%) — contain errors. Correcting these errors can take an additional 18 to 20 minutes on average per report.

Fraud

The Association of Certified Fraud Examiners (ACFE) estimates that businesses lose an average of 5% of their annual revenue to fraud each year.

Expense reimbursement fraud makes up a significant portion of that lost revenue. One study found that 15% of all business fraud is due to expense reimbursement schemes.

Lost Receipts

Lost receipts pose a very real challenge for businesses struggling to keep up with IRS and tax compliance. They also have a big impact on your business’s ability to maintain accurate financial records and keep administrative burden low.

Manual Data Entry

Manual data entry has a higher potential for errors than electronic solutions that often include automated data capture and reminders.

Policy Confusion

Policy confusion can also be a major challenge for businesses that manage expense claims. Without clear documentation and training, employees may not fully understand what qualifies as a reimbursable expense and what doesn’t.

Lack of Visibility

Nearly a quarter (24%) of employees admit to making personal purchases and passing them off as business expenses as a result of their financial circumstances.

Expense Claim Management Best Practices

For successful expense claim management, businesses need to implement an organized process and policy framework to handle, review, and reimburse employee expense claims.

This ensures that all submitted expenses are valid, policy-compliant, and properly documented before payment. It also streamlines reimbursement, improves financial oversight, and reduces errors or misuse.

To build an effective expense claim management process, create clear policies with examples, train employees on all applicable processes and tools, implement automation to reduce human error, and audit all accounts and processes regularly to ensure compliance.

How Automation and Modern Tools Can Help

Modern tools, and automation in particular, can help make any expense claim management system better.

The right solution can help you eliminate manual data entry, reduce human error, instantly capture and store receipts, enforce company policies automatically with spending rules and alerts, and give you access to real-time visibility.

Expense Management Solutions From Coast

Looking to streamline your expense claims and your entire expense management process?

Coast helps you fully eliminate your reimbursements. You can take advantage of advanced tools such as electronic receipt capture and automated reminders for more accurate recordkeeping. You’ll also benefit from digital transaction details that allow you to see the details of every purchase and achieve greater transparency in your fleet.

Plus, all Coast smart cards let you customize spending rules and integrate transactions with QuickBooks Online, NetSuite, Sage Intacct, or any accounting platform.

For more ways that Coast can help your business manage money better, visit CoastPay.com.