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How to Approve Expense Reports

Manual expense approvals are prone to errors, often costing businesses time and money. Harvest streamlines this process by enabling timely manager approvals of expenses.

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Understanding the Expense Approval Process

The expense approval process is a critical component of business operations, ensuring that only legitimate and compliant expenses are reimbursed. However, manual approval systems often lead to errors, with 19% of reports containing mistakes. These errors can be costly, requiring an average of 18 minutes and $52 to correct each erroneous report. Furthermore, inefficient processes can delay approvals, causing employee frustration, especially in remote work scenarios where delays are more pronounced.

To streamline the expense approval process, businesses should consider implementing automated solutions. Automation can reduce processing costs by up to 78% per transaction and save over 1,800 employee hours annually. Harvest, a time tracking and expense management software, facilitates timely approval of expenses by sending notifications to managers, ensuring that financial reporting remains on track and employees remain satisfied.

Best Practices for Approving Expense Reports

Approving expense reports efficiently requires clear policies and streamlined workflows. One of the biggest challenges is managing complex multi-level approval structures that can cause delays. By automating low-value approvals and randomizing secondary reviews, organizations can overcome these bottlenecks. Experts also recommend defining clear and comprehensive policies to avoid misunderstandings and ensure compliance.

Harvest simplifies this process by allowing managers to approve timesheets that include expenses promptly. While it doesn't automate routing based on thresholds, its straightforward approval process ensures that expenses are reviewed and approved quickly by direct supervisors, which is crucial for timely financial reporting.

Ensuring Compliance in Expense Approvals

Compliance is a crucial aspect of the expense approval process. In the US, for example, the IRS requires businesses to substantiate expenses with detailed records. Failure to comply can result in disallowed deductions. Similarly, in the UK, HMRC mandates that expenses must be "wholly and exclusively" for business purposes, requiring precise documentation.

While Harvest does not automate compliance checks, it facilitates manual entry and attachment of receipts, helping users maintain the necessary documentation for compliance. For businesses, adhering to legal standards involves setting clear documentation standards and ensuring that all expense claims are backed by appropriate receipts and explanations.

Avoiding Common Mistakes in Expense Approvals

Common mistakes in the expense approval process include losing receipts, mixing personal and business expenses, and delayed reporting. These issues can be mitigated with clear policies and the use of technology. For example, mobile apps for instant uploads can prevent the loss of receipts, and separate payment methods can help avoid mixing expenses.

Harvest supports timely expense reporting by integrating expense submission with time tracking. Although it does not provide automated alerts for overdue approvals, its notification system ensures that managers review timesheets, including expenses, without delay. This integration helps maintain a consistent flow of information, reducing the likelihood of errors and omissions.

Streamline Expense Approvals with Harvest

See how Harvest enables efficient expense report approvals, helping managers process expenses quickly and accurately.

Harvest interface showing expense report approval features.

How to Approve Expense Reports FAQs

  • Approving an expense report typically involves verifying the accuracy of the claims, ensuring compliance with company policies, and confirming the legitimacy of supporting documents. Automating this process can reduce errors and enhance efficiency.

  • Automation significantly reduces costs and errors in expense approvals. It can decrease processing expenses by up to 78% per transaction and save over 1,800 employee hours annually, allowing teams to focus on more strategic tasks.

  • Harvest assists with expense approvals by notifying managers of pending timesheets, which include expenses. This ensures timely reviews and approvals, enhancing financial reporting and employee satisfaction.

  • Common mistakes include losing receipts, mixing personal and business expenses, and delayed reporting. Clear policies and timely submission reminders can help mitigate these issues.

  • Compliance can be ensured by maintaining detailed records that substantiate each expense, as required by authorities like the IRS or HMRC. Using a tool like Harvest helps in documenting and storing these records effectively.

  • Remote work can complicate expense approvals due to delays and increased scrutiny. Streamlined, automated workflows can alleviate these challenges by routing requests promptly to the appropriate approvers.

  • Clear policies prevent misinterpretations and ensure compliance. They outline the types of expenses that can be claimed, the required documentation, and the approval process, which are essential for smooth operations.