What is an Expense Report and How to Fill It Out

Managing expenses in the UAE, especially for small and medium-sized businesses (SMEs), can be challenging. Many employees avoid submitting expense reports because the process is often complicated. According to a report by SME10X, inefficient filing and administrative processes contribute to an average annual loss of 13,206 AED per employee for companies in the UAE.

 Hospitality Net also reports that nearly 19% of expense reports contain errors. These challenges can lead to missed reimbursements, stress, and lower employee morale.

Efficient expense management is crucial for both individuals and businesses. A clear and accurate expense report helps track spending, ensures timely reimbursements, and builds trust within teams.

In this guide, we’ll break down what an expense report is, why it matters, the types of expenses it should cover, tips for filling one out, and how modern tools can simplify the process.

What is an Expense Report?

An expense report is a document that employees use to record and report the expenses they incur during business activities. It helps businesses track spending, reimburse employees, and maintain financial transparency.

Why Do Businesses Use Expense Reports?

Businesses rely on expense reports to manage finances efficiently. They play a key role in:

1. Tracking Spending: Expense reports provide a clear record of business-related expenses, ensuring accurate financial records.
2. Reimbursing Employees: They enable companies to reimburse employees promptly for eligible out-of-pocket expenses.
3. Budget Monitoring: By reviewing expense reports, businesses can track spending patterns, control costs, and identify areas for savings.
4. Ensuring Compliance: These reports help organisations adhere to company policies and regulatory requirements, promoting accountability.
5. Tax Preparation and Audits: Detailed expense records simplify tax filings and reduce risks during audits.

Common Expense Categories

Businesses use expense reports to document various costs, such as:

• Travel: Flights, hotels, meals, and transportation.
• Office Supplies: Stationery, equipment, and related materials.
• Meals and Entertainment: Costs from client meetings or team events.
• Transportation: Mileage or public transit for business purposes.
• Professional Development: Fees for workshops, courses, or training.

The Shift to Automation

The shift from traditional paper-based expense reporting to automated systems has revolutionised how businesses manage expenses. Modern expense report software and applications streamline approval workflows, enhance accuracy, and save time by eliminating redundant tasks such as chasing misplaced receipts. These automated systems not only simplify the submission process for employees but also provide businesses with greater visibility into spending, ensuring compliance and improving financial controls.

Alaan offers a comprehensive solution that automates expense management, providing real-time visibility and control over all your spending. By leveraging Alaan's platform, businesses can digitise expenses, automate mundane tasks, and establish robust financial processes, leading to significant time and cost savings.

Also Read: How to simplify travel expense management

 Now that we have a clear picture of what an expense report is, let's understand why it is crucial in businesses.

The Importance of Expense Reports

Expense reports are far more than just a way to track spending—they are integral to maintaining financial discipline, fostering trust within teams, and ensuring compliance with legal and organisational policies. Here’s why they matter:

1. Promoting Financial Transparency and Compliance

A well-maintained expense report ensures that every transaction is accounted for and aligns with company policies. This transparency:

• Prevents misuse of funds by providing clear documentation of business-related expenditures.
• Reduces the risk of non-compliance with regulatory requirements, safeguarding the organisation from potential penalties.
• Enhances accountability by holding employees and departments responsible for their spending.

2. Ensuring Fair and Timely Employee Reimbursement

Expense reports ensure employees are reimbursed for business-related costs they incur, such as travel or meals during client meetings. Timely and accurate reimbursement:

• Boosts employee morale by showing that the company values their efforts.
• Reduces financial stress for employees, fostering a positive work environment.
• Encourages employees to submit claims regularly, improving overall compliance with expense policies.

3. Simplifying Tax Preparation and Audit Readiness

During tax season or audits, well-organised expense reports are invaluable. They:

• Clearly document deductible business expenses, simplifying tax filings.
• Reduce the likelihood of errors or discrepancies in financial records.
• Provide auditors with transparent and accurate documentation, ensuring smoother and faster reviews.

Expense reports are vital for managing finances effectively, maintaining trust within teams, and adhering to legal and regulatory standards. Now let’s look into how you can fill one out step by step to make the process as smooth as possible.

How to Fill Out an Expense Report

Filling out an expense report may seem overwhelming at first, but following a structured process makes it much easier. Here’s how to approach it step by step:

1. Choose the Right Format

The first step is to decide on the format for your expense report. You have two main options:

• Templates: Pre-designed spreadsheets or documents, such as those created in Excel or Google Sheets, are ideal for smaller teams or one-off reports. These templates provide a straightforward way to log expenses, but they require manual data entry and calculations.
• Software or Apps: Digital tools like expense management software or mobile apps streamline the entire process. These tools often include automated calculations, built-in compliance checks, and features like receipt scanning. They are especially useful for businesses with frequent expense claims or large teams.

Selecting the right format depends on your needs, but automated tools often save time and reduce errors.

2. Record and Organise Expenses

Once you’ve chosen your format, start recording each expense. Be as detailed as possible to ensure accuracy and transparency. Include the following for each entry:

• Date: The exact day the expense was incurred.
• Description: A brief explanation of what the expense was for (e.g., "Client dinner with XYZ Corporation").
• Category: Classify the expense under predefined categories like travel, meals, office supplies, or training.
• Amount: The exact cost of the expense, preferably in the currency used.

By categorising and detailing expenses, you create a clear and organised record that simplifies the approval process and ensures compliance with company policies.

3. Calculate Totals and Review

After entering all expenses, group them by category and calculate subtotals for each. Then, sum up all the subtotals to arrive at the overall total. This breakdown not only ensures accuracy but also gives approvers an overview of spending patterns, making it easier to spot discrepancies or budget concerns.

What might be the next step after filling out an expense report? Yes, approval process, let’s take a quick glance at what it looks like.

4. Attach Receipts

Receipts are essential for verifying your claims. Attach all supporting documents, such as invoices or payment confirmations, to your report. Follow these best practices:

• Ensure Clarity: Use digital scans or photos that are clear and legible. Avoid submitting faded or crumpled receipts.
• Organise by Expense: Attach receipts in the order they appear in your report to make it easier for approvers to match them with the corresponding entries.

Many modern tools allow you to upload receipts directly into the software, where they can be linked to specific expenses automatically.

5. Submit for Approval

Once your report is complete, submit it through your company’s designated process. This could involve:

• Uploading the report and receipts to an online expense portal.
• Emailing a PDF copy to your manager.
• Delivering a printed copy with attached receipts to the finance department.

Follow up to ensure it reaches the appropriate approver and monitor the status of your submission.

6. Ensure Compliance Before Submission

Before submission, cross-check your report against company reimbursement policies. Verify that all expenses:

• Fall within approved limits.
• Are accompanied by valid receipts.
• Align with company guidelines on allowable expenses.

Non-compliance can result in delays or denied claims, so it’s essential to review everything thoroughly.

As we have broken down expense reporting here, it might sound really simple. Yet there are some common hurdles many face in expense reporting. Shall we learn about it?

Challenges in Expense Reporting

Managing expense reports can be a complex and time-consuming process, especially for growing businesses. Below are some of the key challenges organisations face:

1. Manual Data Entry

• Error-Prone Process: Entering expenses manually increases the likelihood of mistakes, such as incorrect totals, missing entries, or duplicate records.
• Inefficiency: Employees spend significant time inputting data instead of focusing on more strategic tasks.

2. Receipt Management

• Lost or Misplaced Receipts: Employees often misplace physical receipts, making it difficult to validate expenses.
• Storage Issues: Managing and organising a large volume of receipts manually is cumbersome and inefficient.

3. Lack of Policy Compliance

• Non-Adherence to Rules: Employees may inadvertently or intentionally submit expenses that don’t align with company policies.
• Difficulty in Enforcing Policies: Without automated checks, identifying and rejecting out-of-policy claims becomes tedious.

4. Approval Delays

• Bottlenecks in Workflow: Manual approval processes often lead to delays as managers struggle to review and validate reports in a timely manner.
• Lack of Transparency: Limited visibility into the approval process can cause frustration for both employees and finance teams.

5. Limited Scalability

• Growth Challenges: As businesses grow, the volume of expense reports increases, making manual processes impractical.
• Resource Drain: Finance teams may be overwhelmed with the additional workload, leading to delays and inefficiencies.

6. Inadequate Financial Oversight

• Incomplete Reports: Lack of real-time tracking tools can result in incomplete or inaccurate financial data.
• Missed Insights: Without detailed analytics, businesses miss out on identifying spending trends and opportunities for cost-saving.

Keeping the process of expense reporting manual sounds like the major villain here. What differences might be there between manual and automated expense reporting?

Manual vs. Automated Expense Reporting

When it comes to managing expense reports, businesses can choose between manual processes and automated systems. Each approach has distinct advantages and challenges.

Advantages of Automation

Automated expense reporting systems offer several benefits:

• Time Efficiency: Automation reduces the need for manual data entry and calculations, speeding up the process significantly.
• Improved Accuracy: Digital tools minimise human errors by automatically categorising expenses and flagging discrepancies.
• Policy Compliance: Many systems include built-in rules that check for compliance with company policies, reducing the risk of out-of-policy claims.

Challenges of Manual Processes

Manual expense reporting, while straightforward, has several drawbacks:

• High Error Rate: Manually entering data increases the likelihood of mistakes, such as incorrect totals or missing receipts.
• Time-Consuming: Sorting through receipts, categorising expenses, and calculating totals manually can be tedious, especially for large reports.
• Limited Scalability: As a business grows and the volume of expense reports increases, manual processes become less practical and more prone to bottlenecks.

Benefits of Expense Management Software

Expense management tools address these challenges by offering features designed to streamline the process:

• Policy Compliance Checks: Automatically flag expenses that don’t align with company guidelines.
• Receipt Tracking: Digital storage and easy retrieval of receipts simplify auditing and approval.
• Automated Reporting: Tools generate detailed reports in seconds, providing insights into spending patterns and helping with financial forecasting.

Switching to automated systems allows businesses to save time, improve accuracy, and ensure seamless expense management, making it a worthwhile investment for organisations of any size. 

Alaan, ranked #1 by Khaleej times for expense management, empowers businesses with customisable tools tailored to their unique needs. Whether you're a tech startup, a retail business, or a large corporation, Alaan simplifies expense management across all departments, providing visibility, control, and efficiency.

Let’s explore how Alaan transformed Hello Chef’s expense management system:

Case Study: Hello Chef’s Expense Management Transformation with Alaan

Hello Chef, a Dubai-based meal-kit service, faced significant challenges in managing its expenses. As their operations expanded, they struggled with manual processes that consumed over 50 hours of their finance team’s time monthly. The lack of a streamlined system caused delays in approvals, misplaced receipts, and inefficiencies in tracking and reporting expenses.

Hello Chef adopted Alaan’s innovative spend management platform, which provided:

• Automated Expense Processes: Eliminated time-consuming manual workflows, saving over 50 hours of administrative work monthly and freeing resources for strategic tasks.
• Real-Time Receipt Tracking: Enabled employees to digitise receipts instantly, ensuring timely and accurate submissions while reducing errors.
• Customisable Spending Policies: Integrated predefined rules into corporate cards to align expenses with company policies, ensuring compliance and financial control.
• Enhanced Approval Workflow: Streamlined approvals with automated notifications and digital workflows, boosting efficiency and accountability.
• Improved Financial Oversight: Provided real-time insights into spending trends, enabling informed decision-making and accurate reporting.
• Boosted Employee Satisfaction: Simplified expense submissions through Alaan’s mobile app, improving compliance and fostering a positive employee experience.

By leveraging Alaan’s platform, Hello Chef streamlined its operations, reduced administrative burdens, and achieved greater financial transparency, enabling the business to focus on growth.

Alaan’s platform is designed to scale with your business, seamlessly adapting as your team expands and transaction volumes grow. Its intuitive design and robust infrastructure ensure expense management remains efficient, accurate, and error-free, regardless of your company’s size.

Conclusion

Expense reports are more than a formality—they are a crucial part of efficient financial management for both employees and businesses. Accurate and timely expense reporting ensures fair reimbursements, supports financial transparency, and provides a foundation for strategic decision-making. However, traditional manual processes often lead to delays, errors, and inefficiencies, which can hamper productivity and morale.

The shift to automation is not just a convenience—it’s a necessity in today’s fast-paced business environment. Businesses that adopt advanced expense management solutions are better positioned to save time, reduce costs, and scale efficiently.

At Alaan, we are committed to helping businesses streamline their expense management workflows. Schedule a free demo today to see how our platform can revolutionise your financial operations and help your team focus on what truly matters—growing your business.