![\"Expense](\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2024\/11\/Expense-approval-system-cover.jpg\")
<\/figure>\n<\/div>\n\n\nWhat is expense approval?<\/h2>\n\n\n\n
Expense approval refers to authorizing each purchase employees make on behalf of a company. A typical expense approval workflow involves the following steps:<\/p>\n\n\n\n
- \n
- Employee incurs an expense,<\/li>\n\n\n\n
- Employee submits an expense report<\/a>,<\/li>\n\n\n\n
- Approver examines the report to determine whether it aligns with the expense policy, <\/li>\n\n\n\n
- Approver approves or rejects the request, and<\/li>\n\n\n\n
- Employee gets reimbursed if the expense was approved.<\/li>\n<\/ol>\n\n\n\n
For an expense report to align with the expense policy, it needs to contain the details outlined in the policy. This usually includes:<\/p>\n\n\n\n
- \n
- Type of expense,<\/li>\n\n\n\n
- Amount, and<\/li>\n\n\n\n
- Date.<\/li>\n<\/ul>\n\n\n\n
Additionally, it\u2019s common to require employees to submit receipts for each expense.<\/p>\n\n\n\n
In the following section, you\u2019ll find more information about expense categories and policies.<\/p>\n\n\n\n
Steps to set up an expense approval system<\/h2>\n\n\n\n
Now that you know what an expense approval system looks like \u2014 here are 3 steps to building an efficient system.<\/p>\n\n\n\n
#1: Define expense categories clearly<\/h3>\n\n\n\n
The first step when setting up an expense approval system is to categorize expenses. In fact, vague categories create confusion among employees, especially regarding what expenses are reimbursable.<\/p>\n\n\n\n
For that reason, make sure your expense categories are clearly defined, without overlaps.<\/p>\n\n\n\n
Common expense categories<\/strong> include:<\/p>\n\n\n\n
- \n
- Office supplies,<\/li>\n\n\n\n
- Advertising, <\/li>\n\n\n\n
- Travel,<\/li>\n\n\n\n
- Meals, and<\/li>\n\n\n\n
- Entertainment. <\/li>\n<\/ul>\n\n\n\n
An expense management app like Clockify<\/a> allows you to easily create expense categories. In Clockify specifically, you simply name your category, define the amount<\/em> and unit<\/em> \u2014 and click Create.<\/p>\n\n\n
\n![\"Creating](\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2024\/11\/Creating-expense-categories.png\")
Creating expense categories in Clockify<\/figcaption><\/figure>\n<\/div>\n\n\n Having specific expense categories allows you to monitor spending more effectively and set budget limits for different kinds of expenses. That way, you avoid cost overruns<\/a>.<\/p>\n\n\n\n
Categorize expenses with Clockify<\/a><\/p>\n\n\n\n
#2: Refine your expense policy <\/h3>\n\n\n\n
Once you\u2019ve defined expense categories, it\u2019s time to create an expense policy or revise an existing one.<\/p>\n\n\n\n
An expense policy aims to outline what expenses are eligible for reimbursement and how to submit expenses for approval. <\/p>\n\n\n\n
In contrast, an ambiguous expense policy makes it difficult for employees to understand what to do. This will likely lead to increased unintentional non-compliance.<\/p>\n\n\n\n
For that reason, make sure the policy covers all the essential details<\/strong>, including:<\/p>\n\n\n\n
- \n
- Who the approvers are,<\/li>\n\n\n\n
- What expenses are reimbursable,<\/li>\n\n\n\n
- When the submission deadline is,<\/li>\n\n\n\n
- What documentation is required, and<\/li>\n\n\n\n
- What the spending limits are.<\/li>\n<\/ul>\n\n\n\n
Using Clockify for company expense tracking<\/a> vastly improves expense policy compliance.<\/p>\n\n\n\n
Namely, Clockify enables employees to submit expenses quickly and accurately \u2014 without delays.<\/p>\n\n\n\n
Moreover, project<\/em>, category<\/em>, and amount<\/em> are required fields when creating an expense in Clockify. Therefore, since your employees can\u2019t submit reports without these details, you won\u2019t receive any incomplete reports.<\/p>\n\n\n
\n![\"Adding](\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2024\/11\/Adding-expenses.png\")
Creating an expense in Clockify<\/figcaption><\/figure>\n<\/div>\n\n\n A well-defined expense policy is one of the key elements to establishing an expense management process that runs smoothly.<\/p>\n\n\n\n
\n\ud83d\udca1 CLOCKIFY PRO TIP<\/strong><\/p>\n\n\n\n
Having remote employees makes the matter of who pays for what a little more complicated. For clarification, read this article:<\/p>\n\n\n\n
- \n
- Remote Work Expenses \u2014 Who Pays Them?<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n
#3: Automate the expense approval workflow<\/h3>\n\n\n\n
The manual expense approval workflow is time-consuming and error-prone.<\/p>\n\n\n\n
Companies surveyed in the Emburse Travel Expense Trends Report<\/a> cited the improvement in report submission timeliness<\/strong> as the biggest advantage of switching to a cloud-based expense approval solution.<\/p>\n\n\n\n
Apart from that, the Association of Certified Fraud Examiners Report<\/a> suggested that companies using a manual system are more susceptible to expense reimbursement fraud. This type of fraud involves employees exaggerating expense amounts or<\/em> making up non-existent expenses.<\/p>\n\n\n\n
The report revealed that companies suffered a median loss of $1,400 a month<\/strong> due to expense reimbursement schemes.<\/p>\n\n\n\n
As a remedy, a trusted and secure app like Clockify makes it possible to spot such fraud attempts more easily.<\/p>\n\n\n\n
You can see all the expense details in detailed expense reports, which you can filter by:<\/p>\n\n\n\n
- \n
- Team,<\/li>\n\n\n\n
- Client,<\/li>\n\n\n\n
- Project,<\/li>\n\n\n\n
- Task,<\/li>\n\n\n\n
- Tag,<\/li>\n\n\n\n
- Status, and<\/li>\n\n\n\n
- Description.<\/li>\n<\/ul>\n\n\n\n
The filters allow you to quickly discover any discrepancies, as you can focus on one team or project at a time.<\/p>\n\n\n
\n![\"Expense](\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2024\/11\/Expense-report.png\")
Detailed expense report in Clockify<\/figcaption><\/figure>\n<\/div>\n\n\n Automating expense approvals with powerful software speeds up the whole process, reduces the risk of errors and fraud, and allows you to monitor your budget easily.<\/p>\n\n\n\n
\n\ud83d\udca1 CLOCKIFY PRO TIP<\/strong><\/p>\n\n\n\n
For a detailed explanation of how to keep track of expenses, read this:<\/p>\n\n\n\n
- \n
- How to keep track of expenses<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n
Enhance your expense approval process with Clockify<\/h2>\n\n\n\n
- How to keep track of expenses<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n
- Remote Work Expenses \u2014 Who Pays Them?<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n
![\"Expense](\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2024\/11\/Expense-approval-permissions.png\")
![\"Expenses\"](\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2024\/11\/Expenses.png\")
![\"Approving](\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2024\/11\/Approving-expenses.png\")
![\"Sharing](\"https:\/\/clockify.me\/blog\/wp-content\/uploads\/2024\/11\/Sharing-reports.png\")