What is an expense report? Here’s how to simplify it

Month-end close should be boring, but for most finance teams, it still feels like a battlefield.

It shouldn’t feel stressful or rushed. However, without proper organization or accuracy in the expense report, more hours are wasted and more money is spent.

A 2025 Navan × Skift survey found that 40% of business travelers spend an hour or more filing a single expense report, and 63% of managers admit they still rely on at least some manual steps to process those claims. 

And that lost time piles up right when leadership needs a crystal-clear view of runway, payroll, and cash flow.

Manual effort carries a hard cost. Nearly half of organizations continue to key expenses by hand, according to Emburse’s 2024 automation brief. The same analysis pegs the average price of processing a single paper-based expense report at $58, before corrections. 

Add the fact that about 1 in 5 reports contains errors, and finance ends up paying twice: first in processing fees, then in rework and delayed insight.

This guide is designed to flip that script. We’ll define what an expense report really is, show why it remains indispensable even in a swipe-first world, dissect the traditional workflow, and share seven proven moves that let modern finance teams reclaim hours every month. 

Along the way, you will see how we at Rho unite corporate cards, banking, and expense management in a single, real-time ledger, so your next close feels routine, not rushed.

What is an expense report?

At its core, an expense report is a record of business expenses incurred by an employee or contractor. 

Whether submitted through a mobile app, a browser form, or a spreadsheet template, every report answers five questions: who spent money, when they spent it, where the money went, how much was paid, and why the purchase was business-related. 

Those answers usually sit in fields such as date, merchant, total amount, expense category, and a brief description of the business purpose. Receipts are attached as photos or PDFs, and the finance team approves reimbursements or reconciles card transactions.

Beyond simple bookkeeping, expense reports protect your deductible expenses at audit time and ensure employees are paid back promptly.

Need more? Check out our complete 2025 expense management guide.

Why expense reports are still necessary (even in 2025)

As payment technology advances, it’s tempting to assume expense reports have outlived their usefulness.

But they’re still essential—because they do more than help you track spend. Expense reports safeguard budgets, support audit readiness, and demonstrate financial discipline to lenders, investors, and internal stakeholders. They also protect your business legally.

For example, the IRS disallows deductions that lack “adequate substantiation,” meaning receipts must show amount, time, place, and business purpose. The Fair Labor Standards Act and many state laws require timely reimbursement of out-of-pocket costs to ensure employees’ net pay doesn’t fall below minimum wage. And under Sarbanes-Oxley §404, public companies must document and test internal controls—expense approvals included.

In short, formal reports remain the backbone of credible financial statements and legal compliance. If your current process feels loose, a good place to start is to review your expense policy strategy and tighten the rules.

The traditional expense-reporting process (and why it hurts)

• An employee makes a business purchase—maybe office supplies or airfare.
• A receipt sits in a wallet or inbox while the business trip wraps up.
• At month-end, they open an expense report template, copy over total amounts, and guess the GL codes.
• The spreadsheet travels to a manager, who reviews, asks questions, and approves.
• Finance re-keys data into accounting software and issues reimbursement.

Every handoff delays close, lost receipts mean missed tax deductions, and miscategorized spend throws off cash-flow forecasts. For finance teams, the pileup hits just as payroll and payables are due.

How card transactions are different from expense reports

It’s easy to assume that a card swipe tells the whole story—but it only captures part of what finance needs.

A card transaction records the merchant, date, and amount—but not the business purpose, category, or receipt that accounting and auditors require.

An expense report fills in that missing context so spend can be verified, categorized, and tracked accurately.

If you use Rho corporate cards, your card transactions can auto-sync into expense reports with prefilled fields and built-in policy checks—but no matter what system you use, you still need the report to capture purpose, category, and proof.

Elements of a high-quality expense report

A solid report does more than list numbers. It provides context, proof, and an audit trail, all in one place. 

Each entry in your expense reports should show:

1. Real-time receipts are attached at the moment of purchase.
2. Pre-filled GL codes and cost centers that save the finance team from recoding.
3. Policy notes that explain any exceptions, a higher airfare for a last-minute flight, for example.
4. Digital approvals are stamped with date and time so auditors can follow the chain of command.

A time-stamped system log ensures all changes are recorded, giving auditors a clear view of the approval trail and deterring fraud before it starts.

The Association of Certified Fraud Examiners estimates that expense-reimbursement fraud costs businesses 5% of annual revenue on average, making built-in anomaly detection more than a nice-to-have.

When every report meets these standards, tax season becomes more of a search and less of a scramble.

Types of expenses captured on a report

Not all business spending looks the same—grouping expenses into clear buckets helps finance teams stay organized and audit-ready. Here’s what to track:

1 - One-time expenses

These are purchases that happen once and don’t recur:

• Airfare
• Car rentals
• Hotel stays
• Client dinners
• Event fees or registration costs

2 - Recurring expenses

These show up on every monthly expense report:

• Software subscriptions
• Utility bills
• Office rent
• Internet or phone services

3 - Planned long-term expenses

These cover large or multi-year investments:

• Maintenance contracts
• Equipment purchases
• Capital upgrades or infrastructure projects

4 - Other commonly overlooked items

These often appear as lump sums but should be broken out to satisfy auditors:

• Mileage reimbursement
• Tolls
• Per-diem meals

Thoughtful categories like these make your reports subtotal cleanly—and reduce frantic reclassing during month-end close.

Plus, if you need ideas for business travel categories, our expense policy article has you covered.

How to fill out an expense report manually

Some companies still rely on manual forms, especially during early growth or in low-connectivity environments. If that is your reality, follow these steps:

Begin by itemizing each expenditure, recording the merchant, date, and total amount. Add a brief description of the business purpose, then attach receipts. 

Next, categorize every line under predefined labels such as business travel, office supplies, or software. Once complete, subtotal each category and calculate the total cost of the report. 

Finally, submit the document for approval and reimbursement.

A manual process works, but it keeps your finance team in firefighting mode and your employees waiting for cash. Automation turns that firefight into a background task.

Manual still functions in a pinch, but only automation scales with the business.

Common expense-report mistakes to avoid

Even well-intentioned teams slip up. Most headaches trace to missing receipts, miscoded categories, or vague spending limits. 

Missing documentation can undermine IRS compliance and stall reimbursement. Misclassified categories could distort departmental budgets and force rework. 

And a lack of expense policy leaves managers guessing at spending limits, leading to inconsistent approvals.

That’s why modern platforms like Rho now enforce your policy at the point of sale—flagging policy violations before a transaction goes through, and prompting users to attach receipts in real-time.

Need help building a clear expense policy?

Use the same framework we do at Rho. You can download our free expense policy template to give your team clear guidelines that work with any system.

How to simplify expense reports—seven actionable steps

Automation does not start with code; it starts with clarity. Follow this roadmap and each step compounds.

1. Define allowable categories, set spending limits, and state the reimbursement process. Make rules easy to read so employees can follow them on a busy business trip.
2. Map every expense category, including travel expense, car rentals, and office supplies, to a single GL code.
3. Replace personal cards with Rho corporate cards to enforce policy in real-time and remove out-of-pocket pain. Rules can even auto-decline first-class airfare unless advance written approval is logged, giving travel managers tighter control without the paperwork chase.
4. Our mobile app prompts cardholders to attach receipts on the spot, eliminating end-of-month surprises.
5. Merchant rules assign categories; Rho’s workflows route larger charges to directors while auto-approving low-risk items. For international teams, the workflow can convert foreign-currency amounts at daily spot rates, eliminating FX headaches during close.
6. With cards, banking, and expense management in one ledger, your finance team tracks expenses in real-time.
7. Live dashboards show budget burn and flag non-compliant spend before month-end.

Follow this sequence once, and every expense report that follows takes care of itself.

How to choose expense-report software

To choose the right expense-report software, start by asking how quickly the platform captures the basics: does its mobile app let an employee snap a receipt, note the business purpose, and tag the correct category in a matter of seconds? 

Next, look at the card layer: the best systems pair each swipe with rules that automatically enforce spending limits and map transactions to the right GL code. From there, shift to governance. 

Approval workflows should flex for every department without constant IT tickets, and the tool should connect straight to your accounting software rather than relying on nightly CSV uploads or third-party middleware. 

Pricing deserves the same scrutiny. Transparent, contract-free terms are a reliable sign that the vendor plans to earn your renewal, not lock you in. 

Because audit season always arrives sooner than expected, confirm that the trail of approvals is immutable yet still exportable in whatever format your auditors require, and double-check that the provider’s retention policy lines up with IRS Publication 463 record-keeping rules.

Once those fundamentals are in place, run a short pilot with a handful of power users, gather feedback, fine-tune the settings, and then deploy in waves across the company. 

Choose a tool that grows with you. Switching again in a year costs more than picking the right partner today.

Automating expense reports with Rho expense management

Rho bundles corporate cards, commercial banking, accounts payable, and expense management into one platform:

• Instant card issuance generates virtual or physical cards with category-level controls.
• AI receipt matching attaches proofs automatically and reminds users if anything goes missing.
• Smart categorization maps merchants to GL codes, so finance reviews instead of retyping.
• Live dashboards combine card transactions, wire transfers, and ACH to track expenses and cash flow.
• Native ERP integrations push approved data straight to NetSuite, QuickBooks, or Sage Intacct.
• Multi-entity consolidation lets holding companies monitor spending across subsidiaries.
• SOC 2 Type II controls satisfy even the strictest auditors.

Teams that move to Rho reclaim weekends, close their books three days faster, and reimburse employees without bottlenecks.

Automation is not about adding another tool. It’s about removing every extra step between swipe and ledger.

Why integrated cards and banking actually save time

When your corporate-card data lives in one system and your bank data in another, finance spends hours reconciling the two. 

Rho removes that work entirely. Because our commercial checking, treasury, and corporate cards share the same real-time ledger, every swipe, ACH, wire, or check touches down in one place with a single timestamp and category.

That unified feed delivers three advantages:

1. Cash-flow dashboards update the moment money moves, so you always know how much is available to spend.
2. Transactions are already matched, coded, and approved, turning month-end close into a quick review instead of a week-long project.
3. The same policy rules that govern card swipes also flag large ACH payments or off-cycle wires, giving you consistent oversight across all spend channels.

In short, integrated cards plus banking mean no imports, no mismatched totals, and no blind spots, just one accurate source of truth for every dollar that leaves the business.

A quick expense-report software implementation checklist

Rolling out new software can feel daunting, but a clear plan removes friction.

• Kick-off: Appoint a finance lead and champion in each cost centre.

• Policy review: Align rules with the new workflow.

• System setup: upload GL mappings, limits, and approval chains.

• Integration: connect HRIS and ERP for real-time sync.

• Pilot: Onboard a small team, refine settings, and showcase quick wins.

• Company launch: Train staff, monitor compliance for 30 days, adjust rules.

• Post-mortem: Capture lessons and lock improvements.

A thoughtful rollout turns change management from a headache into a quick win for both Finance and employees.

Pull your entire expense workflow into one place with Rho

Expense reports may never be fun, but they can be almost invisible. By defining a sharp expense policy, equipping staff with corporate cards, and automating every approval workflow, you transform a time-sink into a background task. 

Rho’s unified platform lets business owners, controllers, and CFOs track expenses in real-time, enforce company policy at the point of sale, and close their books with confidence.

Ready to streamline reimbursements, cut manual entry, and automate the entire expense-reporting process? Get started with Rho.

FAQs about expense reports

Are expense reports taxable?

Reimbursements under an accountable plan are not taxable to employees because each line includes a receipt and a valid business purpose.

How long do we need to keep receipts?

We recommend at least seven years, matching the IRS audit window for deductible expenses and most state record requirements.

Can small businesses stick with spreadsheets?

Yes, but expense-report software captures receipts, categorizes charges, and automates approvals in real-time, saving hours even for teams under ten people.

What is the difference between an expense report and an invoice?

An invoice bills a customer; an expense report documents business-related costs employees incur so the company can reimburse them or reconcile a corporate card.

Why attach receipts if card data exists?

For travel expenses, lodging, and any purchase over $75, the IRS still mandates receipts. A mobile app makes adding them instant and audit-proof.

Which types of expense reports does Rho support?

Our platform handles travel expense reports, monthly expense reports, and multi-entity roll-ups without extra configuration.

How does Rho automate approvals and coding?

Policy rules tag transactions with GL codes and route them to the right manager instantly, then push approved data to your ERP in real-time.

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