Employee expense reports: What it is, types, and best practices

Not all business expenses can be managed under procurement or tied neatly into a contract.

Sometimes, salespeople need to pay for a client’s coffee, managers need to purchase a new phone, and leaders incur travel expenses.

In these cases, it's often easier for employees to make the purchase out of their own pocket, then submit a claim for the company to pay them back.

The process for that is known as an employee expense report. In this article, we’ll explore what employee expense reports are, what information they include, and how to cut down on manual processing time by automating employee expense reports.

What is an employee expense report? 

An employee expense report is a form used by employees to get reimbursed for business expenses they paid out of pocket. It outlines details like the date, amount, and reason for each expense and is submitted to the employer for review and approval.

Expense reports serve two core purposes in a business: 

1. Making sure employees are reimbursed correctly
2. Tracking and categorizing company spending accurately

They ensure that business expenses are recorded correctly in the company’s financial system, which helps maintain accurate budgets, forecast cash flow, and ensure tax compliance.

Employee expense reports are submitted after the employee has incurred and paid for a business-related cost, such as after business travel or a client meeting.

Common examples include:

• Travel and accommodation costs
• Client meals
• Mileage
• Office supplies
• Software purchase 

Whether submitted manually or managed through automated systems like BILL (more on that later), expense reports are a foundational part of maintaining financial transparency and control.

What to include in an expense report? 

Expense reports can’t just be an email with a receipt attached.

They need to follow a specific structure that supports accurate reimbursement and bookkeeping. At a minimum, each employee expense report should include:

• Employee name: Identifies who incurred the expense
• Date: Specifies when the expense occurred
• Vendor: Names the merchant, service provider, or supplier.
• Reference number: Often a receipt number or internal expense code to assist with tracking
• Notes: Additional context, such as the business purpose or names of attendees at a client dinner
• Amount: The exact cost of the expense, ideally with tax and currency clearly noted

Attachments to the main report, like digital invoices or scanned receipts, can help strengthen compliance and speed up approval, requiring fewer clarifications.

Modern expense management platforms like BILL often automate much of this process, pulling data directly from uploaded documents or integrated card feeds.

Essential components of an employee expense report 

To be useful for both reimbursement and financial reporting, an employee expense report needs to include four key components:

1. Itemized list of expenses incurred (possibly grouped by category)
2. Receipts or other proof of purchase
3. Employee information such as their name, department, and sometimes job title
4. Approval from a manager or finance lead (often their signature, name, and role)

These components ensure transparency and accountability while creating a complete audit trail for financial teams.

Examples of employee expenses 

Employee expenses can vary widely depending on role, industry, and company policy. That said, most claims fall into one of these common categories:

• Travel: Airfare, hotel accommodations, taxi or rideshare services, rental cars, and mileage reimbursement for personal vehicles.
• Meals and entertainment: Client lunches, team dinners, or coffee during business travel.
• Office supplies: Notebooks, pens, printer ink, or other materials needed to do the job.
• Software and subscriptions: Tools purchased for work use, such as design software, project management platforms, or online learning subscriptions.
• Work-from-home expenses: Internet upgrades, monitors, or ergonomic chairs, especially in remote or hybrid work environments.
• Training and development: Fees for online courses, certifications, or professional development events.

Ultimately, it's up to each individual organization to define (in an employee reimbursement policy) what qualifies as a reimbursable expense and what doesn’t, helping to prevent confusion and ensuring fair, consistent treatment across team members. 

Expense report template 

Providing your employees with an expense report template to follow ensures that every time they submit a claim, they include the right details.

This will streamline approvals and payouts, so it's a win for both the finance team as well as employees claiming expenses.

With BILL’s employee expense report template, you have the framework of what makes a successful expense report process to take out the guesswork and consistently get high-quality reports that are easy to work with.

The employee expense reporting process 

So, what steps should an employee take to submit an expense report?

While every organization should decide on and communicate the exact process they wish their employees to follow, this is a pretty common workflow:

1. Collect receipts and documentation (physical or digital)
2. Log each expense with a date, vendor, category, and amount for each item
3. Attach receipts or other proof of purchase
4. Submit the report via an expense management system platform   

Approval workflow and timelines

Naturally, employees can’t just submit and claim and get paid out automatically. There needs to be some kind of approval process, and that takes time.

Here are a few common timelines for approvals, depending on what kind of checks are required:

• Manager review: First-level managers or team leads check for accuracy and business justification. Typically expected within 3–5 business days.
• Finance team audit: Finance reviews for policy compliance, duplicates, or errors. Usually completed within another 2–3 business days.
• Escalations or clarifications: If something is unclear, the report is returned to the employee for correction before moving forward.
• Automated workflows (if applicable): Tools like BILL can automate these steps with status tracking and reminders.

Reimbursement process for employees

Once the relevant approvals have been granted, a few final steps must be completed before the employee expense reimbursement process is totally complete.

Here’s what that looks like:

1. Approved expenses are passed to accounts payable
2. Payment is issued (via direct deposit or payroll, depending on company policy)
3. Confirmation is sent, usually via email
4. Funds are received in the employee’s account 

Benefits of automating expense reports 

Many businesses are still using manual expense reporting processes.

But doing this manually is slow, error-prone, and frustrating for both employees and finance teams. Automating the process with tools like BILL delivers a range of benefits that improve efficiency, accuracy, and control:

• Streamlined reporting process: Employees can snap a photo of a receipt, and the system auto-fills key details. Reports are submitted with fewer clicks, and approvals are routed automatically, no chasing signatures or juggling spreadsheets.
• Improve accuracy with fewer errors: Built-in validation rules catch duplicate entries, missing receipts, or out-of-policy expenses before submission, helping eliminate manual mistakes and ensuring compliance with company policies.
• Enhanced spend visibility: With all expense data centralized and categorized in real-time, finance teams gain better visibility over spending. That makes it easier to monitor budgets, identify trends, and make informed decisions.

Best practices for managing employee expense reports 

When expense management is proactive and well-communicated, it builds trust with employees and keeps your financial reporting clean and accurate. These best practices help keep everything running smoothly.

Establishing clear expense policies

Here’s how to make your expectations clear:

• Define what counts as a reimbursable expense and what doesn’t
• Set spending limits by category 
• Outline documentation requirements
• Make sure your policies are accessible and easy to reference 

Training employees on submission procedures

Even with the best tools, errors can creep in if employees don’t know how to use them. So, it’s a good idea to offer short training sessions or guides that walk through how to log expenses, attach receipts, and submit reports on time.

Regular audits and compliance checks

Finally, set up periodic reviews to catch things like:

• Policy violations
• Duplicate claims
• Unusual spending patterns 

Automated tools are able to flag high-risk entries, but human oversight helps ensure accountability.

Managing employee expense reports with BILL 

Employee expense reports are an important component of spend management, but doing them manually in spreadsheets and long email chains is just a recipe for disaster.

That’s why the best teams use BILL’s expense reporting and management software.

With BILL Spend & Expense, teams can:

• Capture expenses in real time
• Instantly auto-generate spending reports
• Submit and approve expenses on the go
• Enforce spend policies automatically
• Reduce fraud risk
• Integrate with their accounting platform of choice 
• Streamline reimbursements and approvals

Automate employee expense reports today.

Frequently asked questions

What should be included in an expense report?

A complete expense report should include:

• The employee’s name and role
• Date of each expense
• Vendor name
• Amount
• A brief description or business purpose
• Supporting receipts

Many companies also assign a reference number to track each report internally.

What is the purpose of an employee expense report?

Expense reports serve two main purposes:

1. To reimburse employees for out-of-pocket business expenses
2. To help the company accurately track, report, and manage its spending.

What are the steps in creating an expense policy?

1. Identify common expense categories
2. Set clear rules for what’s reimbursable
3. Define spending limits, required documentation, and submission timelines
4. Communicate the policy to employees 
5. Revisit it regularly to ensure it stays relevant and compliant

Are expense reports mandatory?

Ultimately that’s a per-business decision.

If employees make work-related purchases with their own money, submitting an expense report is typically required to receive reimbursement. From a business perspective, reports are essential for accurate financial records and audit readiness.

What is the difference between an invoice and an expense report?

An invoice is a request for payment from an external vendor or contractor. An expense report, on the other hand, is submitted by an employee to get reimbursed for business costs they’ve already paid out-of-pocket.