Businesses take many approaches to permitting employee expenses.
Some route everything through a centralized procurement team. Others use a combination of temporary and permanent corporate credit cards.
Others still prefer for employees to make an out-of-pocket purchase and then submit a request to be reimbursed via check.
In this article, we’ll explore the ins and outs of expense checks, covering what they are, the benefits of using them, and how to process, track, and manage expense checks in your own organization.
What is an expense check?
Expense checks, or expense reimbursements, are payments that repay employees for work-related costs such as travel, meals, or lodging. They allow companies to cover expenses employees pay out of pocket while conducting business.
Common scenarios where expense checks are used include:
- Business travel costs such as flights, hotels, meals, and ground transportation.
- Mileage reimbursement for personal vehicle use on company business.
- Client or team entertainment, like meals or event tickets purchased to support business relationships.
- Office supplies or equipment purchased when standard procurement channels are unavailable.
The purpose of an expense check is to ensure that the person who made the purchase is made whole for legitimate business purchases that they have made out of pocket.
Companies using expense checks create reimbursement policies that outline:
- What qualifies as a reimbursable expense
- The level of approval needed
- Document required (such as receipts)
How are they different from wages?
Wages are compensation for labor, whereas expense checks are reimbursements for business purchases.
These are very different from a tax perspective. Wages are considered taxable income and are subject to payroll tax withholding, but properly documented reimbursements for qualified expenses are generally not taxable.
They also differ in timing and purpose.
Where wages are paid on a regular schedule for ongoing work, expense checks are issued as needed, after the expense is incurred and a reimbursement request has been submitted and approved. The amount is tied to the actual cost rather than an agreed salary or hourly rate.
Importance of expense reimbursements
Reimbursing legitimate business expenses promptly and accurately is more than an administrative task. It plays a direct role in financial integrity, employee satisfaction, and compliance.
Here’s why expense reimbursements are important.
Promoting fairness and equity
Employees shouldn’t be out of pocket for costs they incur on behalf of their company.
A clear and consistent expense reimbursement process prevents this, ensuring everyone is treated fairly regardless of their role or location.
Accurate financial planning
Well-documented reimbursements provide a clear picture of operational costs, including those that occur outside of the formal procurement process.
It helps finance teams forecast budgets, allocate resources, and ensure expenses are recorded in the correct accounting period.
Preventing fraud
Strong reimbursement policies with clear approval workflows, required documentation, and audit trails reduce the risk of inflated or fabricated claims.
Maintaining compliance
In some jurisdictions, employers are legally required to reimburse their employees for necessary business expenses.
Since non-compliance can lead to disputes, penalties, and reputation damage, a solid expense reimbursement process is essential.
Employee retention
Employees who feel supported, aren’t burdened by work-related costs, and don’t have to wait an unnecessary amount of time to be reimbursed are more likely to remain engaged and less likely to look for opportunities elsewhere.
Examples of expenses covered
Every company has a different policy that outlines what does and doesn’t qualify as a reimbursable expense.
That said, most expense checks cover costs that are considered necessary, reasonable, and directly related to business activities, such as:
- Travel: Airfare, train tickets, mileage reimbursement for personal vehicle use, parking fees, and tolls.
- Accommodation: Hotel stays or other lodging required for business travel.
- Meals: Business-related meals with clients, partners, or colleagues during travel or official meetings.
- Other: Office supplies purchased to complete work tasks, client gifts, and registration fees for conferences, seminars, or training events.
Benefits of using expense checks
Issuing expense checks as part of a structured employee reimbursement process offers a number of advantages for both employees and businesses.
These include:
- Streamlined reimbursement processes: Clear systems ensure employees are reimbursed promptly, reducing administrative delays and improving the employee experience.
- Improve expense tracking and reporting: Expense checks are tied to documented claims, which provides a reliable record of business spending, making it easier to prepare financial statements and analyze trends.
- Enhanced financial oversight and control: A formal reimbursement procedure helps leadership monitor spending, supporting stronger governance and reducing financial risk.
- Better budget management: By categorizing and reviewing reimbursed expenses, businesses can spot areas where costs can be reduced or negotiated with suppliers.
How to process expense checks effectively
A well-structured expense check processing workflow ensures your employees are paid back quickly, expenses are recorded accurately, and your business remains compliant with both internal policies and external regulations.
Here’s what a typical expense check issuing process looks like:
1. Expense submission
The employee completes an expense report and attaches any required documentation.
2. Manager review
A supervisor confirms that the expense is business-related, properly documented, and within policy limits.
3. Finance approval
The finance team verifies the expense claim, ensures budget availability, and confirms compliance with internal policies.
4. Check issuance
Approved claims are processed during payroll or accounts payable processing, and a check is issued to the employee.
5. Recordkeeping
Finally, all expense documentation is stored for audit purposes and future reference.
Best practices for managing employee reimbursements
Integrate these best practices for managing employee reimbursements and improve compliance and accuracy:
- Maintain a clear, accessible expense policy that outlines allowable costs, approval steps, and submission deadlines
- Keep policies updated to reflect changes in laws, tax rules, or company priorities
- Require itemized receipts to ensure accuracy and transparency
- Regularly train employees and managers on expense policies and any regulatory requirements
- Implement a periodic expense report audit to identify patterns of overspending or policy violations
- Make your reimbursement timelines clear, then follow them consistently to prevent delays and build trust
- Use expense management software to speed up approvals and reduce manual errors
- Be sure to clearly separate legitimate reimbursements from taxable income to avoid payroll and tax compliance issues
Tracking and managing expense checks
Efficient expense check management is about more than just issuing payments. It requires accurate expense tracking, secure storage of documentation, and strong integration with your broader financial systems.
Linking your reimbursement process to your accounting software creates a seamless workflow where your ledgers are updated automatically, reducing manual entry errors.
With BILL, you can streamline your entire expense reimbursement process, from submission to payment.
BILL Spend & Expense is packed with features for smarter expense management, including:
- Employee credit cards
- Integrated reimbursement management
- Real-time expense reporting
Frequently asked questions
What types of expenses are typically reimbursed?
While the exact list of expenses that can be reimbursed depends on your company’s expense policy, common examples include:
- Business travel, like flights and hotels
- Mileage, parking, and tolls
- Office supplies
- Business-related meals
- Client gifts
How long does the reimbursement process take?
This ultimately depends on the company’s reimbursement policy and the efficiency of its accounts payable team.
That said, many businesses aim to process approved claims within one to two pay cycles or within a set number of business days (e.g., 15 days).
What documentation is required for expense claims?
Most companies require an itemized receipt or invoice, along with a complete expense report that details the purpose of the expense, purchase dates, and amounts.
Mileage claims typically need a log with trip details.
