How To Create An Expense Report | Beginner’s Guide

Though it’s true that medium and large-sized enterprises handle numerous reports without technological help, a cost or spendings report is very crucial for small-scale enterprises and hence they have to be more conscious about it. There is another myth prevailing in the market that expenditure reports are useful for your employees only. Which is not true. The truth is, expenditure reports are important for every and any employee who needs to get reimbursed for business expenditures they have made such as expenditures on gas, meals, mileage, etc. But, if you are an owner of a business, it is important for you to keep track of every business expenditure you yourself may incur. Here, the necessity may differ, but making an expenditure report can help the business greatly in daily operations by letting you know how much the business is spending and on what and for how many times or how long.

This data is invaluable while filing your business tax returns, or even for making financial estimations for the next year.

How to build an expenditure report?

As we have seen above, expenditures reports and their use are not confined to employees only. Creating an expenditure report for your own expenditures leads to a better understanding of your spending levels. You can keep track of your expenditures thoroughly.

There are many accounting software in the market that does not offer a feature to create an expenditure report. Rather, these applications work with third-party software to export receipt images, track expenditures, and build expenditure reports.

However, if you are in search of free expenditure report templates, Microsoft Excel can help. It offers multiple different templates where you can track expenditures. It also lets you keep a mileage log and provide a template to forecast costs.

What is an expenditure report?

Now that we are talking so much about the expenditure report and its importance, let us first understand the definition of an expenditure report.

Expenditure reports track expenditures made while performing the required job responsibilities. An expenditure report can be a mileage log that is maintained to request reimbursement, accommodation and parking expenditures, or a log showing meals and entertainment expenditures made as a part of the business process.

What type of information can you find on a typical expenditure report?

• The total amount of the expense
• Dates on which expenditures are made.
• Type of expense (such as parking, travel, meals, hotels, etc.)
• The account on which the expenditures are charged.
• A subtotal for every expense as per the category.
• A grand total of the expenditures.
• Deduction of cash advances if any
• The total due amount.

Earlier, creating an expenditure report used to be a tiring task, but with the introduction of expenditure report softwares that offer ready templates, the process has become manageable, faster, accurate and tidy.

In many cases, expenditure reports are typically relied upon to itemize those employee expenditures for which employees request reimbursement. Apart from this, expenditure reports are also used as proof of the expenditures incurred using company-provided credit cards.

Advantages of utilizing an expenditure report

There are over 30.2 million small-scale entrepreneurs operating as of 2018, and they’re probably creating a great deal of expenditure reports.

Obviously, entrepreneurs are the principal recipient of expenditure reports. Having an organized report from your employees (or yourself) permits you to see precisely how much your travelling related costs actually sum to.

Having this data readily available permits you to create a financial plan for those costs, or maybe cut down on travelling if costs are too much.

Step by step instructions to make an expense report

If you have deployed independent company bookkeeping software such as Xero, or QuickBooks Online, FreshBooks, you probably realize that it does not make sense to make an expenditure report using these or similar applications. You can also use the free formats available on the internet, such as Microsoft Excel layout.

There are a variety of approaches for creating an expenditure report that is suitable to your business culture, the bookkeeping system you follow, and how much you wish to digitize the business, etc.

Use one of the templates available online

Numerous modest organizations choose to utilize a common expenditure report template like the one offered by Excel. Excel can be downloaded and permits you to enter detailed information into the proper segments, where it will be automatically calculated.

Small businesses prefer Excel sheets that help to keep track of expenditures and where the businesses do not have to spend money on buying software.

The template comes with default expense categories which are convenient, and are easy to edit as per the wish. The user can add an extra column or if the user has other expenditures that do not belong to the given categories they can create other columns to include these expenditures.

Of course, the information on the spreadsheet will need to be entered into your accounting software in order to process reimbursements that are due to your employees — and to make sure that your business expenditures are accurate and updated in your accounting software.

Use accounting software

While accounting ERP software plays a crucial part in the expense management cycle, most of the small-scale business accounting apps available in the market at the current moment do not let users create an expenditure report. Instead, users have to rely on other third-party expenditures management applications that are built specifically for this purpose.

Use expense management software

The core advantage of relying on third-party applications is the degree of automation you can bring to the expenditures report creating process.

These third-party expenditures management applications are built to perform the below-given functions:
Connect to the appropriate individual(s) for approval
Reconcile expenditures with financial institutions
Automatically create expenditure reports
Capture receipt images
expenditure report templates

While there are a number of free expenditure report templates available online, it would be beneficial if you decide to use the templates available in Excel.

Excel’s expenditure report with Mileage

This template lets you track expenditures like meals, hotel, and transportation, etc. You can track mileage expenditures simply by entering your starting and ending mileage, and excel will automatically calculate the expense. This template has a user-friendly interface that offers a sum of every category included at the top of the spreadsheet and it can be easily dropped into the accounting software to process due reimbursements or simply to keep track of the charges.

Excel’s Travel Expense Calculator

The Travel Expense Calculator offers you and your employees an easy way to calculate potential expenditures by filling expenditures like transportation, meal, lodging, etc, with columns for each separately. This is a useful tool to define and understand if a trip or travel plan is financially feasible even before making any expense on it. This calculator makes even more sense if your business is operating on a tight budget.

Excel’s Mileage Log and expenditure report

This can be an inevitable tool for any business that wishes to spend a lot of resources on the road-based or travel-based expenditures. This report is available to both the employees and the business owner.

Expenditure reporting for your business

Whether you’re a one-person business or a proprietorship, or you manage a staff of dozens of employees, expenditure reporting is crucial to your business operation. If you plan to make a lot of expenditures on the road.