Whether you have a small company or a big multinational organization, the key to a successful business is record-keeping. We are not talking about keeping a record of employees’ performance, sales graphs, effectiveness, or marketing strategies but there is another very important element; expenses. When a business keeps a record of its expenses, the owners or higher management can easily evaluate if the money is serving the right purpose or if it’s going to waste. This makes it more crucial for companies and organizations to prepare and keep expense reports. On a micro level, these expense reports will include every transaction or expense but on a macro level, this is a report that tracks the expenditures of employees.
Uses and Importance of Expense Reports:
Companies work under government rules and regulations and one of those rules states that if an employee is spending money on behalf of the company for the betterment of the company, he has to be reimbursed. For instance, your employees are allowed to take their clients to lunch meetings and close the deals in their client’s favorite restaurants or you ask your employees to take part in seminars in another city. In these and many other cases, company employees spend their money and they have the legal right to get it back from the company. They need to fill out the office expense forms to get the money they spent back. These forms include the details of expenditures for financial purposes. Once an employee is reimbursed for office expenses, the detail goes on the expense reports.
Another situation is when a company spends money on office stationary or furniture and the purchasing department gets approval for the purchase from the executive board. Once the purchase is completed and money is transferred in return for office goods i.e. a photocopier machine new chairs or raw material for production, the details go on expense reports. You can assume that an expense report keeps a record of all the money spent on the development of a business.
Expense Report Templates – MS Word
Here are Free Expense Report Templates in MS Word format for your kind assistance.
The most important purpose of keeping an expense report is to check if the company is spending money in the right manner. Before any major purchase is approved, the financial department will look at the expense report and ensure that they approve what is necessary. If the budget is low, maybe employees need to wait a little longer before they get new computers, or if the budget allocated for marketing purposes last quarter didn’t result in any increase in sales, maybe it’s time to invest in a different advertising technique. Another important benefit of expense reports is tracking each employee’s expenses. Employees working in different departments have separate limits to spending company money and with the expense reports, whatever they spend is recorded and it’s analyzed later to check if an employee has spent more money than other employees.
Expense Report Templates – MS Excel
Here are Free Expense Report Templates in MS Excel format for your kind assistance.
Market Practices of Expense Reports:
It solely depends on the type of business and what kind of expense report format you need. For instance, an IT firm will use a specific type of expense report format which will be completely different from the expense report format that a garment factory is using. You can see various examples of expense reports online and check if any of them suits your requirements but it would be better if you could understand the key elements from available examples and create your expense report.
An important market practice about expense reports is to give certain codes to regular expenses. For instance, you acknowledge your sales staff to take their clients out for meals and close the deals in a restaurant or a fast food joint. This means that this expense will occur more often and because an expense report is kept precise and short, there is no purpose in writing reimbursement for a meal with the client every time on the report but you can just write a specific code. This code will indicate the expense made because each expense will have an individual code.
Keeping a record of what the company and its employees are spending is important and so is the effectiveness of each expense. Smart businesses understand that to stop wasting company resources, it’s important to act fast so they prepare monthly expense reports. At the start of each month, a committee sits together and evaluates the expense report from the previous month. They discussed if an expense wasn’t necessary or if one particular employee could take the client to a less expensive restaurant or if for a business meeting in another city, a different employee should be sent because his family is in that city and he could be allowed to take 1-2 days off and have a long weekend so the company didn’t have to reimburse for his travel charges.
