How to automate your expense approval process

A streamlined and transparent expense approval process empowers employees to make business-critical purchases confidently and quickly. It also ensures your team’s purchases stay within budget.

Unfortunately, a manual expense approval process can be time-consuming, tedious, and error-prone. Luckily, there are steps you can take to automate the entire process, making it smoother for everyone involved.

In this article, we explain the steps in the expense approval process and the different types of approvals companies use. We’ll also offer advice on the benefits of automated expense approval and tips on how to automate your expense approval workflow to boost operational efficiency.

What is the expense approval process?

The expense approval process refers to the steps involved in reviewing and approving employee expense reports. A good expense approval process ensures that spending complies with the company’s expense policy and that employees are reimbursed quickly for any expenses they make on behalf of the business. This helps companies avoid overspending and prevents expense fraud.

Types of expenses that require approval

Unless you’ve already pre-approved the expense or provided a cash advance, every business expense should go through the proper expense approval workflow. Some common examples of expenses that need approval include:

• Travel expenses, including airfare, hotels, car rentals, and other transportation
• Business meals (including meal expenses during business travel)
• Business mileage
• Customer entertainment
• Office supplies
• Equipment purchases or rentals
• Professional dues and licensing fees
• SaaS subscriptions

This list is far from exhaustive. The safest approach is to assume that every expenditure should go through your expense approval process.

Steps in the expense approval process

The expense approval process is usually pretty similar from one company to the next. It typically looks something like this:

• An employee makes a purchase: The expense approval process kicks off when an employee makes a purchase or otherwise incurs a business expense
• The employee submits the expense for approval: The employee compiles this and any other expenses into an expense report and submits it for approval. The report should include the amount, date, business purpose, and required documentation (e.g., a receipt or credit card statement) for each expense in the report.
• The expense undergoes review: The employee’s manager or finance team reviews the expense report for accuracy, documentation, and expense policy compliance
• The expense is approved or denied: If it is deemed legitimate and within company policy, the manager approves it. Otherwise, it may be returned to the employee for further explanation or documentation, if not outright denied.
• The employee gets reimbursed: If the employee paid for the expense out of pocket, the employee receives a reimbursement—either by direct deposit or physical check.

Methods to handle expense approvals

Companies can handle expense approvals in several ways. They can either be pre-approved, manually approved, or automated.

Pre-approvals‍

With pre-approvals, the expense is authorized to be within budget and company policy before the employee incurs it. Pre-approvals often make it easier for businesses to reduce unnecessary costs by maintaining stricter control over employee spending. However, relying entirely on pre-approvals can lead to rigidity and inflexibility, especially for expenses you can’t predict, like incidentals. And, if you’re using a per diem, it can require very careful planning.

Manual approvals

With both manual and automated approvals, the expense comes first. When approvals are handled manually, each step in the process requires manual input and data entry from your team. This can lead to inefficiencies and errors that slow down the entire expense approval process, especially if you ever need to chase down an audit trail.

Automated approvals

In contrast, modern expense management software can help you automate many of the steps in the process. The best tools let you define your expense policy and configure custom controls to automate most employee expense approvals. You can also set triggers to require manager approval or a multi-step approval workflow for certain expenses. Automated notifications and reminders ensure expense claims don’t go unnoticed.

Benefits of automated expense approvals

Integrating expense approval software into your expense management process will make a real and lasting impact on both your business and financial operations. These are a few of the key benefits:

• Efficiency: You will save time and energy across the expense path as your employees no longer need to manually enter every expense and save every paper receipt, and your finance team won’t have to pour over every line of expense reports.
• Compliance: Expense approval software automates your company policies. This reduces the risks of error and fraud and eliminates any guesswork about which expenses are eligible for reimbursement.
• Transparency: Automated expense workflows provide reporting and dashboards that give you better insights into where your money is going in real-time. You can easily track against your budgets and know precisely how your expenses impact your bottom line.
• Cost savings: Most importantly, using expense approval software will save you money. The time savings allows your team to focus on their actual business tasks, but you also can spot trends and make policy adjustments as you go to ensure you’re always staying on or even besting your budgets.

Tips to automate your expense report approval process

As you begin exploring ways to automate your expense approval process, you should start by evaluating your existing processes. Where are you or your team members spending the most time on approvals? What are you doing manually in a spreadsheet that could be made more efficient through technology?

Your answers may present opportunities where you can overcome challenges. Here are some ideas for optimizing your expense approval process:

1. Define a clear and thorough expense policy

If you spend a lot of time explaining what is and isn’t reimbursable to your employees, or rejecting expense submissions, it might be time to revisit your expense reimbursement policy.

Address any confusion or frequently asked questions so your employees can determine whether an expense complies with company policy. Be sure that your policy outlines:

• Which expenses are eligible for reimbursement
• Which expenses (if any) require pre-approval
• What spend limits (if any) employees must adhere to
• What documentation, like proof of purchase or price quotes (in the case of pre-approvals), are required
• How long an employee has to submit an expense after incurring it
• Your reimbursement process, especially the timeframe for reimbursements

While this step won’t directly help you automate expense approvals, implementing a thorough expense policy saves you a lot of time and back-and-forth communication. Likewise, walking through your policy may help you identify bottlenecks you can eliminate with automation software.

2. Use corporate cards to automate pre-approved expenses

Manually approving every expense is a surefire way to slow down your approval process—before or after the expense has been incurred. One way to streamline your expense management process is to set a monthly budget for each employee with a corporate credit card.

If an expense is within an employee’s budget for the month or is auto-approved, it can be automatically approved at the point of sale. On the other hand, if the employee has exceeded their monthly budget or is trying to purchase in a category that isn’t pre-approved, the purchase can be automatically rejected in real time, eliminating the need for manual review altogether.

3. Collect digital receipts instead of paper receipts

It’s not uncommon to waste time tracking paper receipts if employees forget to submit them in their expense claims. And once you do find them, you then need a system for storing and organizing them—whether that means you’re digitizing them on the backend or storing them physically. In short, receipt collection can be a tedious, inefficient process.

With the right expense management platform in place, you empower your employees to upload a digital photo of their receipt as a part of the expense submission process. Expense submissions without receipts are automatically rejected or otherwise flagged for manual review, cutting down on how often you have to chase your employees for documentation.

As a bonus, digital receipts are automatically matched with the corresponding expense in your expense management system. This makes tracking down the necessary documentation easier if your business ever faces an audit.

4. Use software to categorize expenses automatically

Expense categorization is an important part of the approvals process. Thorough and accurate categorization makes tracking spending in discrete expense categories easier, allowing you to see exactly where your money is going and identify trends over time. It also makes distinguishing between deductible and non-deductible business expenses easier, which can help you maximize your tax savings each year.

With a modern expense management platform, AI and machine learning can automatically categorize expenses during the submission process, removing the potential for mistakes and freeing up your staff for more important tasks.

5. Replace paper mileage logs with digital trackers

Relying on your employees to track their business mileage—whether driving a company car or a personal vehicle for business purposes—can lead to reporting inaccuracies. After all, who remembers to check the odometer before every drive? While inaccurate mileage reports might not seem like a big deal, they can lead to under-deductions and over-reimbursements.

A digital mile tracker removes this uncertainty by automatically calculating the mileage for each trip. Likewise, an expense management platform that integrates directly with Google Maps or a GPS removes the need to verify mileage reports manually.

6. Generate reports automatically on a preset schedule

Forecasting, reconciling expenses against payments, and otherwise monitoring where your company spends its money require periodic reporting and analysis. But whether you run those reports daily, weekly, monthly, or quarterly, manual reporting takes time, and gleaning insights from those reports requires a certain level of financial expertise.

The good news is that reporting doesn’t need to be a manual process. Modern financial technology can help you automate the reporting process. Plus, many are easy to synchronize with your existing accounting software.

How Ramp eliminates manual expense approvals

Manual expense approval processes drain countless hours from finance teams who find themselves chasing down receipts, cross-referencing policies, and routing requests through multiple approvers. The back-and-forth between employees and managers creates bottlenecks that delay reimbursements and frustrate everyone involved.

Ramp's expense management software transforms this tedious process through intelligent automation that enforces your policies without the manual oversight. When employees make purchases with Ramp corporate cards, the platform automatically captures transaction details and matches them against your predefined spending rules. Instead of waiting for month-end reports to catch policy violations, you'll receive real-time alerts when spending exceeds limits or falls outside approved categories.

The platform's automated approval workflows route expenses to the right approvers based on amount thresholds, merchant categories, or custom rules you define. For instance, you can set all marketing expenses over $500 to require CMO approval, while routine office supplies under $100 auto-approve if they're from pre-approved vendors. This eliminates the guesswork for employees and ensures consistent policy enforcement across your organization.

Receipt collection becomes effortless as Ramp automatically prompts employees to upload documentation via text message immediately after transactions. The system uses OCR technology to extract merchant names, amounts, and dates, eliminating manual data entry. For recurring subscriptions or regular vendors, Ramp can even auto-categorize expenses based on historical patterns, further reducing the administrative burden on your team.

By replacing spreadsheets and email chains with automated workflows, your finance team saves hours each week on expense management tasks. More importantly, employees get reimbursed faster, managers spend less time on administrative approvals, and you gain complete visibility into spending patterns—all while maintaining stronger compliance than manual processes ever could.

Start automating with Ramp today

Beyond expense approvals, Ramp extends automation across your entire finance stack. Track with Google Maps integration for accurate reimbursements. Use AI-powered insights to identify savings opportunities in your spending data. Schedule reports to run automatically so you always have the latest financial picture at your fingertips.

Ready to see how much time you could save? Try an interactive demo to experience Ramp's automation capabilities firsthand.