Back to Basics- Expense Reports

money Many business owners are reflecting on 2008 and thinking about some improvements for 2009. Once thoughts of recession subside and marketing plans have been drawn up, its usually time to think about financial management. Although the very thought of bookkeeping makes some sick to their stomachs, everyone agrees that good record keeping is the foundation of sound financial management.

One excellent way to improve bookkeeping is to implement a policy of expense reports. Whether you area solo-preneur or there are several people in your office, whether you get reimbursed or you use a company credit card, expense reports can greatly improve your overall process of bookkeeping.

An expense report is a simple document that is filled out with each purchase or group of purchases that your company makes. For example, if you were to go to staples and buy a multi-function printer, some paper, and snacks for your office, instead of putting the receipt on the bookkeeper’s desk or in a folder (or shoebox) somewhere, you would fill out an expense report. On your expense report you would divide out- printer-$300, office supplies- $65. and snacks- $25.

If you were on a client job, a conference, or a sales trip, all the purchases on that trip would be put on the expense report. The mileage for the company or personal vehicle would also be included. All the receipts should be affixed to the report.

For more advanced users desiring to have less paper flying around the office, the user would scan the receipts to an adobe .pdf file. The finished expense report would be printed to a .pdf file, and the two would be combined. The finished file would be emailed to the bookkeeper for entry into the company bookkeeping file.
Things to include on your expense report:

Type of expense (i.e. job, conference, sales trip, or other)
Job Code (if available)
Budget
Approval Code (if available)
Description of Purchase
Amount of Purchase
Method of Payment

If you don’t want to make your own, go to my website for a free excel expense report template. The template contains two worksheets. One for reimbursable expenses and one for purchases made with a company credit (or, God forbid, debit) card. The ACCT code would be the code from your company’s chart of accounts.

When you do this, you will have successfully eliminated the following small office problems:

Who made the purchase?
Why did they buy that?
Was the purchase for a client?

Don’t make the bookkeeper interpret receipts. They could be wrong! Always make the the one who did the purchasing fill out a report.

I would be remiss if I didn’t mention electronic expense reports. There are some excellent web applications available that allow users to submit expense reports from anywhere in the world. Nexonia, and Virtual Time and Expense are two of the top choices. With these, the data can be automatically exported to QuickBooks, eliminating the pesky double-entry.