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The Case for Automating the Employee Expense Reimbursement Process

Jul 9, 2019

In this fast-paced, ever-changing world in which we live, technology helps companies run more efficiently by simplifying everyday business tasks. From automated payroll services to cloud accounting there is an app for just about anything. This allows company leadership to focus more on growing their business and less on some of the administrative functions.

Take, for example, employee expense reporting and reimbursements. They are often seen as a nuisance for employees. Requiring staff members to periodically submit timely expense reports, getting the accounting department to review and approve a multitude of receipts, keeping accurate records, and dealing with incomplete information can be time-consuming drudgery for all concerned. Let’s take a look at which documentation is needed:

Generally, the IRS states that a company should have documentary evidence for all of its expenses such as invoices, canceled checks, receipts, mileage logs, and so forth. It becomes critical that employees submit this evidence as part of their expense reports. However, there are certain exceptions where receipts are not required:

  • Incidental expenses, lodging and expenses incurred for meals while traveling away from home where your company uses the per diem allowance method under an accountable plan.
  • Expenses other than lodging that are less than $75.
  • Transportation expense for which a receipt is not readily available.

However, certain information is needed regarding the receipts to support expenses. For example, lodging receipts must show the name and location of the hotel as well as the dates of an employee’s stay. Charges need to be itemized showing separate amounts for lodging, meals, calls, etc. Receipts for business meals should contain the name and location of the restaurant, date, amount and number of people. The names of individuals and business purpose for the meal should also be indicated on the receipt. Many companies set different thresholds for expense reimbursement (i.e., no receipts needed for expenses less than $25), however, keep in mind that you still must satisfy the IRS requirements. 

Now that you know the documentation needed, let’s examine how we can make the process easier and less stressful. Not surprisingly, there’s an app for that.

Getting timely, complete and accurate expense reports from your employees can be as simple as taking a picture. There are many cloud-based programs that make it easy to track, record and reimburse employees for their expenses. They can simply take a picture of their receipts from their mobile device, and all of the information will be automatically populated into the expense program. Employees need only add information related to type of expense, attendees, and any other comments needed. Once submitted, the expense report automatically goes to the appropriate person for review. Most of these expense programs integrate with standard accounting programs, thereby automating the process. Another benefit is that receipt images are stored electronically, eliminating mountains of paper while ensuring you have the appropriate documentation.

When it comes to managing employee expenses, knowing what you need, and how to track and record it is crucial for any business. Combining the right knowledge with the proper technology can make the entire process less tedious for employees and more efficient for the organization.

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Yesenia Cardona

Yesenia Cardona is a Private Client Services Group Director experienced with reviewed and compiled financial statements, outsourced finance and accounting, and tax planning and preparation for businesses and individuals.

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