Reimbursable expenses: How to manage claims for your business

Whether you're a growing startup or an established enterprise, managing employee expenses is crucial for business success. In this comprehensive guide, we'll explore everything you need to know about reimbursable expenses, from defining what qualifies to implementing an effective management system.

What are reimbursable expenses?

Reimbursable expenses are costs that employees incur on behalf of their company using their personal funds. These expenses must be:

• Directly related to business operations

• Properly documented with valid receipts or invoices

• Compliant with company policy and local regulations

To maintain transparency and fairness, companies must establish clear guidelines about which expenses qualify for reimbursement. Valid documentation should include:

• Total amount (including tax)

• Date and location of purchase

• Detailed description of products or services

• Vendor information

Common types of reimbursable expenses

Now that we know more about the characteristics of valid expenses, it's time to dig deeper into the various categories that your company could consider reimbursing.

1. Business travel expenses

As one of the biggest sources of employee reimbursement, company travel covers a large number of things. Travelling for business purposes means making a lot of payments, and most of these should be seen as valid expenses.

You might want to consider working remotely if cutting costs is important to your business. Business travel is not as crucial as it was once thought to be. Many companies manage by working remotely throughout the year and probably will continue to do so. Not only does it bring down costs for everyone involved, but it’s also more sustainable and preferred by employees. You can find out how to get started with a transition to remote work on CompanyReviews if you’re interested. Regardless, if remote work simply isn’t an option for you, then read on for some reimbursable expense examples.

It all starts with getting to the airport — a short trip that starts racking up costs by taking public transport or a taxi service. The flight itself also accounts for a large sum, and should include any in-flight food and drink purchases up to a reasonable amount. Upon arrival at the destination, lodging costs are another staple expense that needs to be covered.

While all of these expenses are relatively common, there are also some less-known travel costs that are worth mentioning. For example, visas or other travel documents might be needed when travelling to some parts of the world, while others could even require employees to get vaccinated. Both of these things don't come cheap, and seeing as they’re an unmissable part of the business trip, it makes sense to cover them as expenses.

(For UK readers, here's our guide to HMRC travel expenses, and a guide to Germany's per diem rules for our German readers.)

2. Meals and entertainment

If an employee is having dinner on a work trip, it should automatically be covered as a travel expense — of course. But then there's the possibility that an employee wants to treat a client or contact to dinner because they think it would positively impact the business relationship. In this case, covering these costs would definitely be in the interest of your business.

The scope of these kinds of “networking“ expenses should include most entertainment, like going to a music or sporting event — but it only counts if the client is actually present.

(We explain HMRC's meal allowance rates here.)

3. Transport costs

During a trip, most forms of transport should be covered — it's work travel after all. But your employees might incur travel costs when they're not on the road, for example when commuting in public transport or driving to the office every day. Should you cover these costs?

This really depends on a lot of different things. A well-funded and successful enterprise might want to chip in on fuel costs, but a young startup should perhaps put its money elsewhere. If your company is looking to be more sustainable, it might make more sense to offer something different altogether, like sponsoring the purchase of a bike.

Make sure to pay attention to the specific rules per reimbursement category. For example, if UK employees use their private vehicle for business purposes, the HMRC has defined certain limits on how much you can pay them for it.

4. Office expenses

If you want your people to be able to do great work, it makes sense to give them access to the best tools. Nothing can mess with productivity levels like a slow computer or broken keyboard, so you should include these and other tools in your expense policy.

5. Communications

When your team is constantly on the move, you want everyone to always be available. That's why you might want to cover your employees' phones and cellular plans — especially for positions that involve talking a lot of calls, like in sales.

For companies that exclusively work with people in a single, local office, this might not be interesting — as always, make sure to think if this applies to your situation.

How to track employee expense reimbursements

For most companies, the hard part isn't defining what employees can claim reimbursement for. As we've just seen, these are mostly classic company costs, and staff will mostly be able to use their common sense.

The harder part - both for individual employees and the company as a whole - is staying on top of these costs.

For the employee

It's tricky for employees for a few reasons:

1. The way they pay at work is different from how they pay in their private lives

2. Costs can be small and irregular, and therefore easy to forget

3. They need to understand the right way to report expenses, and especially what kinds of documents are required

Overall, the biggest issue is that there isn't a clear, formal process. And if there is, most employees don't know about it.

For the company

In this case, we're really talking about the finance team (or in smaller companies, the office manager). They're the ones who have to deal with each employee expense claim.

For them, the problems are more glaring:

1. Expense reports are often incomplete and full of errors

2. Claims can arrive any time during the month or quarter, and employees expect to be reimbursed promptly

3. Processing claims requires a lot of manual data entry, which is even worse when there are errors

To overcome these challenges, you'll need to make changes. And the single best way to improve expense claims for both employees and finance teams is to automate all of the worst parts.

This starts with a good expense management tool to help employees make claims. Most of these start with a mobile app that walks the team member through their claim. There will be mandatory requirements to ensure that no information is missing.

And the best part - the employee can simply take a photo of their receipt. They don't have to rummage through their wallet once a month and try to remember what every payment was for. Which is excellent.

But the real benefit of these systems is their impact on finance teams. For one, there is no data entry at all. The employee already filled in all the information, and there's no need to copy it to a spreadsheet.

The finance manager opens up their dashboard, does a quick check of the employee's claim, and then approves (or denies) it for payment.

• This process takes seconds

• There's no need to search through your email inbox and open attachments

• Receipts are saved digitally to the correct folder

• Approved claims are sent to your accounting tools for payment

When you think about the sheer amount of your day spent on manual processes, it's alarming. Expense reports are probably already costing your travellers and finance team valuable time, simply because the system is awkward.

Reimbursable expenses made easy with Spendesk

Unfortunately, even the best expense policy can't keep expenses from being a bit of a hassle — for the financial department, it's a big administrative burden, while employees often need to wait a long time to get reimbursed.

But successful spend management can make things a whole lot less painful.

Reimburse with Spendesk

We've built special tools to manage the full expense process for your teams. They can make a claim, receive managerial approval, and send the complete request to the finance team in seconds.

And the most exciting part: finance teams can now reimburse employees directly from the Spendesk platform. It's virtually instant, and teams no longer have to wait until payroll to be reimbursed for work expenses.

That's fairer, faster, and works better for everyone involved!

If you'd like to test it out for your business, we'd love to hear from you: