Travel Management

Expense management: everything you need to know

Grégory Meslin
Responsable Marketing & Communication

Expense management is an essential process for companies to control and reimburse business expenses incurred by their employees. This article explores the different facets of expense management, including best practices, automation tools, and the benefits of effective management.

What is an expense report?

An expense claim is a document used to record and justify business expenses incurred by an employee during travel or in the course of professional activities. Its main purpose is to enable the employee to be reimbursed for these expenses by his or her employer.

Expense claims are generally used in the business context when employees need to travel for meetings, conferences, training courses or customer visits. It can also be used for expenses related to meals, transportation, accommodation, parking, communication, etc.

Why is it important to manage expense accounts properly?

Effective expense management is essential for both companies and employees. Here are just a few reasons why proper expense management is important:

  1. Expense control: Effective expense management enables companies to control spending and ensure that employee expenses comply with company policies. This limits abuse and overspending.
  2. Tax compliance: Proper expense management ensures that business expenses are properly recorded and justified. This facilitates the tax deduction of business expenses and avoids problems with tax authorities.
  3. Financial transparency: Effective expense management provides a clear and transparent view of the expenses incurred by employees. This facilitates financial decision-making and enables better allocation of company resources.
  4. Fairness and employee motivation: Effective expense management ensures that employees are reimbursed fairly and promptly for expenses incurred in the course of their work. This helps keep employees motivated and reinforces their commitment to the company.

The consequences of poor expense management can be damaging for companies and employees alike. This can lead to excessive and unjustified expenses, tax compliance problems, delays in reimbursing employees, loss of confidence and a poor corporate image.

The consequences of poor expense management can be damaging for companies and employees alike. This can lead to excessive and unjustified expenditure, tax compliance problems, particularly with regard to VAT recovery and payment, delays in reimbursing employees, loss of confidence, and a poor corporate image.

What types of expenses can be reimbursed by the company?

Companies generally reimburse various types of expenses incurred by their employees. Here are a few examples of these expenses and how they are explained:

  • Transportation expenses: These are professional expenses related to business travel, such as train tickets, plane tickets, cab fares, car rental, etc.

Example: An employee goes to a meeting in Paris and uses the train to get there. The company will reimburse the cost of the train ticket.

  • Lodging expenses: These are expenses related to accommodation during business trips, such as hotel costs.

Example: An employee attends a conference in Lyon and has to spend one night in a hotel. The company will reimburse the accommodation costs incurred in booking the hotel room.

  • Meal expenses: Meal expenses incurred during business travel.

Example: An employee is out of town for a full day and has to eat lunch outside. The company will reimburse meal expenses incurred for this lunch.

  • Communication costs: These are costs associated with business communications, such as telephone and Internet charges.

Example: An employee uses his cell phone to make business calls while traveling. The communication costs incurred for these calls will be reimbursed by the company.

  • Parking costs: These are the costs of parking vehicles during business trips.

Example: An employee drives to a meeting and has to pay parking fees. The company will reimburse the parking costs incurred.

It is important to note that each company may have its own policies for reimbursing business expenses. Employees must comply with these policies and provide the necessary supporting documents for each expense incurred.

How can expense claims be reimbursed?

When it comes to reimbursing business expenses incurred by employees, there are different types of expense reimbursement. Two commonly used methods are actual reimbursement and flat-rate deduction reimbursement. Each approach has its advantages and disadvantages.

Actual reimbursement

Actual expense reimbursement is a reimbursement system based on the actual expenses incurred by an employee in the course of his or her professional activities. Unlike other flat-rate reimbursement methods, actual reimbursement takes into account the specific, real expenses incurred by each employee.

In this system, the employee submits a detailed expense report including supporting documentation for the expenses incurred, such as invoices, receipts or sales slips. The company then examines these receipts and reimburses the employee for the exact amount of expenses incurred, within the limits of the company's reimbursement policies.

Actual reimbursement is generally used for variable and specific expenses, which may vary from one employee to another or from one situation to another. It allows greater precision in the reimbursement of business expenses and ensures fairness between employees. However, it requires rigorous management of expense reports and receipts, as well as good communication between the employee and the company to ensure proper reimbursement.

Reimbursement by flat-rate deduction

Flat-rate reimbursement is an expense reimbursement system based on predetermined fixed amounts for each type of expense. Instead of reimbursing actual expenses incurred by the employee, the company uses scales or flat rates to calculate the amount to be reimbursed.

The advantages of flat-rate reimbursement are as follows:

  1. Simplicity: This system is easy for companies to set up and manage. It eliminates the need to collect and check receipts for each expense.
  2. Time-saving: reimbursement by lump-sum deduction saves time, both for the employee and the company, by eliminating the need to collect and process receipts.
  3. Cost predictability: By using fixed amounts, companies can more easily forecast and budget their expense expenses.

However, reimbursement by means of a flat-rate deduction also has disadvantages:

  1. Lack of precision: By using fixed amounts, lump-sum reimbursements may not reflect the actual expenses incurred by the employee. Some employees may be at a disadvantage if their expenses are higher than the lump-sum amounts.
  2. Lack of fairness: Employees whose expenses are lower than the lump sums may benefit, while those whose expenses are higher may be disadvantaged.
  3. No incentive to control spending: Flat-rate reimbursement does not encourage employees to control their spending, as they know they will be reimbursed according to fixed amounts, whether they have spent more or less.

Reimbursement by flat-rate deduction is preferable in certain circumstances, in particular :

  1. For current and recurring expenses: When expenses are predictable and similar from one employee to the next, lump-sum reimbursement may be more practical.
  2. For small expenses: When expenses are small, it may be more efficient to use lump sums rather than collecting receipts for each expense.
  3. For situations where collecting receipts is difficult: In some cases, it may be difficult for employees to provide receipts for every expense, for example when traveling abroad.

It is important to note that the choice between lump-sum and actual reimbursement depends on the specific policies and needs of each employer. Some employers may also opt for a combination of the two methods, using actual reimbursement for some expenses and lump-sum reimbursement for others.

Employees: How do I make an expense claim?

Create expense report

Expense reporting is an essential step in recording and justifying business expenses incurred by an employee. Here's the process for creating an expense report, along with essential information to include and common mistakes to avoid:

  1. Collecting information: The employee must collect all expense receipts, such as invoices, receipts or sales slips, for each expense incurred.
  2. Identifying essential information: The employee must ensure that essential information is included in the expense report, including :some text
    • Date of expenditure
    • Detailed description of expenditure
    • Expenditure amount
    • Payment method
  3. Compliance with company reimbursement policy: Employees must familiarize themselves with the company's policies on reimbursing business expenses. This includes reimbursement limits, authorized expense categories and specific procedures to be followed.
  4. Accuracy and legibility: It's important to fill in expense forms accurately and legibly. Information must be clear and easy to understand, to facilitate processing and reimbursement.
  5. Avoid common mistakes: Here are some common mistakes to avoid when creating an expense report:some text
    • Forget to enclose the necessary supporting documents
    • Not providing sufficient details of the expense
    • Failure to comply with company policies
    • Failure to submit expense claims on time

In some companies, employees have the option of filling in their expense claims online in a simple and convenient way, thanks to dedicated tools. These online platforms enable employees to easily enter the required information, upload the necessary supporting documents and submit their expense claim electronically. This approach facilitates the expense management process, reduces errors and speeds up the processing and reimbursement of business expenses.

By following these steps and avoiding common errors, employees can create a complete and accurate expense claim, facilitating the process of justifying and reimbursing business expenses.

Justifying expense claims

It is essential to justify every expense, including the associated VAT, in an expense report to ensure the transparency and compliance of business expenses. Justification provides tangible evidence of the use of company funds for legitimate purposes. Here are a few tips for effectively justifying every expense in an expense report:

  1. Provide acceptable receipts: Acceptable receipts may vary according to company policies, but can include invoices, receipts, sales slips, credit card statements, contracts, purchase orders, etc.
  2. Mention relevant details: For each expense, include relevant details such as date, description of expense, amount, supplier and method of payment. This information helps clarify the nature of the expense and facilitates subsequent verification.
  3. Keep original receipts: It is important to keep original receipts for a set period of time, in accordance with employer policies and legal requirements. This enables us to respond to any audit or verification requests.

Here are some examples of receipts accepted for different expenses:

  • Transportation costs: train tickets, plane tickets, cab fares, toll receipts, etc.
  • Accommodation expenses: hotel bill, accommodation rental receipt, etc.
  • Meal expenses: restaurant ticket, catering invoice, etc.
  • Communication costs: telephone bill, SIM card statement, etc.
  • Miscellaneous expenses: parking invoice, receipt for professional equipment, training contract, etc.

By properly justifying each expense, you contribute to the company's financial transparency and facilitate the process of verifying and reimbursing business expenses.

Get your money back

Once employees have submitted their expense report, there are usually several steps to follow in order to be reimbursed for their expenses. Here are the typical steps in the expense reimbursement process:

  1. Verification and validation: The company reviews the expense claim to ensure that it is complete, compliant with reimbursement policies and accompanied by the necessary supporting documents. This may involve verifying amounts, authorized expense categories and internal policies.
  2. Approval: Once the expense claim has been checked and validated, it is submitted for approval. This may involve approval by a line manager, a finance manager or a specific department responsible for managing expense reports.
  3. Processing: Once approved, the expense claim is processed by the company's finance department. This may include entering the information into the expense management system, verifying the amounts to be reimbursed and preparing payments.
  4. Reimbursement: Once the expense claim has been processed, the employee is reimbursed for expenses incurred. Reimbursement can be made by bank transfer, cheque or any other means of payment agreed between the employee and the company.

Reimbursement times may vary from one employer to another. However, typical reimbursement times for expense claims are between one and four weeks after the expense claim has been submitted. Some employers may also have specific policies regarding reimbursement times, which are communicated to employees.

It is important to note that employees must comply with the company's expense reimbursement policies, in particular by respecting submission deadlines and providing the necessary information and supporting documents.

Companies: How to optimize expense management?

Automation solutions for expense management offer numerous benefits, simplifying the process, reducing errors and improving overall efficiency. These solutions use technologies such as accounting and dematerialization to improve the financial management of business expenses. Here's how they can deliver significant improvements:

  1. Process simplification: Automation solutions (software, web software, internal processes, etc.) enable employees to submit their expense claims electronically, using online platforms. This eliminates the need to manually fill in paper forms, reducing the time and effort required to create and submit an expense claim.
  2. Error reduction: Automation solutions incorporate automatic validation functions that check the information entered by employees. This detects and corrects potential errors, such as incorrect amounts or incompatible expense categories, reducing the risk of inaccuracies and rejections.
  3. Receipt dematerialization: Automation solutions enable employees to easily scan and upload necessary supporting documents, such as invoices and receipts. These documents are stored electronically, reducing the need to retain paper copies and making it easier to search and retrieve information during audits or verifications.
  4. Real-time tracking: Automation solutions provide real-time visibility on the status of expense claims, enabling employees and managers to monitor the validation and reimbursement process. This improves transparency and communication between stakeholders, reducing the delays and frustrations associated with manual tracking.
  5. Integration with accounting systems: Automation solutions can be integrated with corporate accounting systems, facilitating data transfer and financial reporting. This enables greater synchronization between expense management and accounting processes, improving overall efficiency.

In short, automation solutions for expense management simplify the process, reduce errors, and improve efficiency by using technologies such as accounting and dematerialization. They offer a more efficient, modern approach to managing business expenses, freeing up time and resources to focus on higher value-added tasks.

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