Expense management and report automation: The complete guide

Definition: Expense report automation uses software to submit and manage expense reports, improving efficiency, reducing errors, and controlling spending. 

Manual expense reporting is cumbersome, time-consuming, and prone to errors. It’s a task that no one enjoys dealing with—not the employees who submit expenses for reimbursement, not the managers who approve them, and certainly not the finance people who have to fix errors, ensure compliance with corporate policies, and reconcile accounts. However, expense report automation can turn a dreaded, laborious monthly data entry task into a simplified process that requires far less effort and is far more accurate.

What is an expense report?

An expense report is a document that details an employee’s business-related spending for anything from one-time purchases to travel expenses while on business trips. This report typically includes key information about each expense, including date, amount, currency, purpose, and supporting documents like receipts or invoices. Once complete, the expense report is typically submitted to a manager for approval. The manager ensures that the expense is accurate and meets corporate policies. Finally, the approved expense report is forwarded to the finance department for internal reconciliation and to issue any reimbursements. 

Expense reports are vital for reviewing, recording, and reimbursing your employees’ work-related purchases. They help companies manage expenses by tracking employee spending patterns, ensuring accountability and financial oversight. 

Common challenges of non-automated expense reporting

Manual expense reporting presents many challenges and roadblocks for businesses of all sizes. 

• It’s time-consuming: Collecting paper receipts, filling out forms, and waiting for approvals is cumbersome and slow. 
• It’s error-prone: With so many manual steps and people in the process, mistakes can happen, resulting in inaccurate records and reporting.
• It delays reimbursements: Manual reviews and approvals take time, especially if there are errors, meaning employees are left waiting for reimbursements.
• It’s hard to enforce spending policies: Manual expense reporting makes applying company spending policies consistently across the organization difficult.
• It’s hard to see the big picture: Manual reporting can make tracking and analyzing employee spending patterns difficult, especially in real-time. This impacts the ability of finance teams to find cost savings and budget and forecast effectively.
• It makes compliance difficult: Without a clear audit trail, it can be challenging to comply with regulatory requirements and internal policies.
• It often lacks integration: Manual reporting isn’t integrated into your other systems, slowing things down and making it hard to get a clear picture of your company spend.
• Global expenses are a headache: Foreign currencies and varying policies across different countries make manual expense reporting exponentially more difficult. 

Manual expense reporting can significantly impact your company’s efficiency. It wastes time for employees, managers, and the finance team. With inefficient workflows, additional time and energy is spent chasing down approvals. Because mistakes are a regular occurrence, even more time is wasted tracking down errors to keep financial records accurate. Those delays result in unhappy employees waiting for reimbursement (not to mention frustrated approvers).

How does expense report automation work? 

The solution to inefficient and error-prone expense reporting is automation. Automated expense management relies on software to streamline the process, reduce errors, enforce policies, and provide a better view of company spend.

Automation software breaks down the expense reporting workflow into a the following steps:

1. The employee makes a business purchase.

2. They log this expense by scanning or uploading the receipt to a platform like Zoho Expense, Expensify, or Rippling.

3. The automation platform analyzes and checks the submitted claim against company reimbursement policies. 

4. The platform notifies the employee’s manager and requests approval. 

5. Once approved, the request is routed to the appropriate department for final approval and reimbursement. This can be done immediately or held for batch processing.

6. The expense is categorized and synced to the company’s general ledger and is available for real-time reporting and analytics. 

7. An audit trail is automatically created for compliance and review, if required. 

And that’s it. Automation makes quick work of what used to be a frustrating, mistake-filled process. 

5 benefits of expense report automation

Expense report automation offers several key benefits for your organization: 

Faster reimbursements

With an automated expense report process, each step takes far less time. Submitting receipts correctly and obtaining approval doesn’t have to wait until the end of the month. And because there is little chance of an error after submission, reimbursements can be processed immediately or at the end of the current cycle, eliminating delays caused by manual expense reporting. 

Better spending insights

With automation, teams have access to spending data. You can monitor and review employee spending patterns in real-time. You can keep on top of your business spending and budget and forecast accordingly. 

Fewer manual errors

According to the Global Business Travel Association, nearly 20% of expense reports have errors. When filing expenses manually, mistakes can happen at almost every step. Employees have to enter information by hand and include the correct paper receipts. Approvers have to ensure that the information submitted is correct before approving the claim. Finance has to double-check the information and make sure the claim meets internal spending policies. And all the numbers need to line up for the books to balance. A mistake anywhere along the line means starting over and delaying reimbursement even further. When the expense reporting process is automated, there is far less opportunity for errors to creep in. If there are errors, they’re flagged immediately and can be rectified in real-time. 

Happier employees and managers

Relieved of the burden of manually inputting expenses, employees aren’t wasting their (and your) time hunting for paper receipts and wrestling with spreadsheets at the end of the month. They just submit their expenses as they happen, and that’s it: no painful forms, no lost receipts, and no long waits for reimbursement. With automation, managers no longer have to chase down employees for their expenses and don’t waste time double-checking everything. 

Increased productivity 

With automated expense reporting, your team no longer wastes long hours dealing with piles of paper, numbers that don’t match up, and trying to find the latest corporate policy covering reimbursements (it’s here somewhere!). With the burden of expense reporting removed, that wasted company time can be used more productively. 

6 key features of automated expense reporting software

Scalability, ease of use, and integrations are all essential features to look for. However, for a more robust solution, look for automated expense reporting software that is part of an expense management platform or suite. In addition to automating expense reporting, expense management platforms offer additional benefits to streamline the expense process further.

Easy to set up and use

First and foremost, you want an expense reporting tool that is easy to set up. You don’t want a solution so complex that it requires months to configure or requires someone to babysit it. It should be ready to go right out of the box. 

The management software should be easy to use, from entering receipts to manager approvals and expense reimbursements. The entire expense report process should be automated, requiring only a few clicks and scans from your team. 

Scalability 

Scalability is vital for growing businesses. You don’t want to be limited by the number of users you can add (or remove). 

The following features are typically found in larger expense management platforms and suites rather than expense report software. 

Permission levels for managers and financial controllers

Role-based permissions in expense management platforms like Rippling give you precise control over access for approvers and financial controllers. For example, managers are permitted to view and approve expenses for their team, while financial controllers have broader permissions, allowing them to review and manage costs for the entire company. Permissions can be customized based on different attributes, including department, level, and location. This ensures controllers and managers have the right level of access as determined by their level of responsibility. 

Easy approval workflows 

You should be able to configure expense approval workflows that put the correct transactions in front of the right managers. For example, approval requests for small purchases are sent to direct managers, while big-ticket purchase approvals are sent to finance. 

Corporate cards integrations

If your organization uses corporate credit cards, you should be able to manage them in your expense management platform. This will help finance teams track spending patterns, build granular reports, and guide your budgeting process. 

Accounting software integrations

By integrating with accounting software, expense management software can auto-categorize expenses to your general ledger in real-time, saving your finance team hours of work manually logging transactions from different vendors to the right expense categories and reconciling them at the end of reporting periods. Thanks to an electronic audit trail, it’s easy to stay on top of compliance. 

Rippling: automated expense reports for your business 

Rippling consolidates your company’s finances—from payroll and benefits to corporate cards and expense management—giving you an up-to-date view of cash flow across your company and offering unprecedented control over spending patterns.

While most expense management solutions only allow for basic employee-manager approval chains, with Rippling expense management’s advanced policy engine, you can set hyper-custom policies based on the vendor, dollar amount, and expense category, helping you block out-of-policy expenses with ease. You can also tee up automated workflows that help you control spend, like triggering an alert when a department’s expenses sharply increase. 

Rippling makes it easy to automate expense reports. Here’s how: 

1. Create custom expense policies: You can easily build granular policies based on employee data such as role, department, and transaction details (vendor or amount). 

2. Create automated approval chains: Configure role-based approval workflows that automatically forward expense details to the right person based on your predefined rules. 

3. Create real-time expense policy checks: Automatically flag out-of-policy spending for additional scrutiny. This will ensure compliance with your organization’s expense policies.
4. Integrate with your accounting systems: Connect Rippling to your general ledger for automatic expense categorization and syncing, streamlining the reconciliation process.

5. Set up mobile expense management: Rippling's mobile app enables employees to easily submit their business and travel expenses from anywhere at any time. Managers can then review and approve them remotely.
With Rippling, you can manage all of your company spend—expense reimbursements alongside vendor bills, payroll, and corporate cards—together on one intuitive platform. This gives companies unprecedented control and visibility over spend. With Rippling, you can create customizable reports, approval chains, and policy enforcements.

Since Rippling uses employee data to connect finance with the rest of your workforce management processes, company expense management policies will automatically apply to new employees as soon as they onboard and automatically adjust if they ever change roles.

What's more, if your company has an international presence or eyes global expansion, Rippling’s expense management solution lets you reimburse employees around the world in their local currency—all while reviewing transactions in your native currency.

FAQs on expense report automation

Is expense report automation secure?

Expense management platforms like Rippling ensure secure expense report automation through robust security measures. Most feature audit trails for accountability and automated policy enforcement to prevent unauthorized business expenses and fraud. 

Can expense report automation help with policy compliance?

Yes, expense report automation enhances policy compliance by allowing companies to create customizable expense policies that are automatically enforced. The system flags or blocks out-of-policy spending and routes business expenses to the appropriate approvers based on role and department. This automation saves time and improves accuracy, helping companies maintain better control over managing expenses and reduce unauthorized spending.

How does expense report automation integrate with other financial systems?

Let’s use Rippling as an example. Our expense management software integrates deeply with other financial systems, particularly payroll and accounting. It syncs expenses directly to your general ledger, automatically categorizing each expense's fields to save time on bookkeeping. The system lets you manage and report on all company spending—including payroll, expenses, bills, and corporate cards—in one unified platform. This integration enables faster reimbursements, consolidated reporting across all spend types, and automated policy enforcement based on employee data.

This blog is based on information available to Rippling as of August 21, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.