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What are reimbursed expenses?

Reimbursed expenses are payments made by a company to an employee who has made a claim for expenses incurred out of their own pocket for the business, through work-related activities. In general, reimbursable expenses are determined and communicated well in advance so that employees are clear what they can expense as a business cost and what will be approved and reimbursed. The reimbursement is made based on evidence, or receipts, provided in the expenses claim.

Mobile phone receipt

What information needs to be included for business expenses to be reimbursed?

The exact data that needs to be included varies by country, but generally, the documentation must capture the amount, tax, time, date, description of the expense and where it was purchased.

To reimburse expenses, employees must also provide a clear business reason or justification for the expense. For example, common reimbursed expenses include:

  • Travel expenses: business travel expenses can encompass flights, rail tickets, car rentals, hotels, visas, and even vaccines depending on the travel requirements.
  • Meals: business travel can last for days or weeks and the company typically covers the cost of multiple meals and drinks daily, in addition to networking or client dinners.
  • Transportation expenses: parking garages, taxi rides, and the cost of storing luggage all are a part of travel expenses that often go overlooked.

What can delay the reimbursement process for business expenses?

For most companies, the biggest challenge – and the reason reimbursing employee expenses may take longer – is keeping track of business expenses. This can be difficult for a number of reasons.

  1. The employee is submitting the expenses once a month or at other infrequent intervals.
  2. The expense reports are submitted incompletely or incorrectly.
  3. The employees have a difficult time submitting expenses due to a lack of clarity, documentation or general overlooking of small expenses.
  4. Processing expense reports can require a significant amount of manual data entry, which can be time-consuming and prone to error.

Clearly, there are challenges on both the business and employee side with manual expense management. But in order to better manage expense reimbursements, businesses can leverage expense management automation software.

What is the most effective way to reimburse business expenses?

The fastest and most effective way to reimburse business expenses is through expenses management software that can automatically approve and reimburse small expenses and allow employees to submit on the go. Expenses management technology that also includes OCR (optimal character recognition) can extract key details from receipts that make submission and approval seamless while ensuring compliance data is always captured. This will provides finance teams with high-quality and timely data – rather than waiting until the end of quarter to obtain a view of their expenses and teams will have access to real-time insights.

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