What is a travel expense report?

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The cost of business travel is easier to stomach once you understand the potential opportunities. According to a 2023 Harvard Business Review survey, 84% of managers say their organizations see tangible benefits from traveling to meet with customers and prospects in person.

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But to accurately calculate return on investment, it’s essential to track where and how you’re spending your business travel budget. Travel expense reports are a crucial tool for keeping budgets in check and making the most of your available funds.

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Keep reading to learn more about travel expense reports, including how companies benefit from them, how they work, and how you can maximize your ROI by automating your expense reporting process.

What is a travel expense report?

A travel expense report (T&E report) is a physical or digital document that lists an employee’s business trip expenses. These expenses could include airfare, lodging, meals, mileage, and more.

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T&E reports, also called travel and expense reports or travel expenditure reports, include critical details about each business travel expense, like the purchase price, date of purchase, and expense category. Reports also include receipts or other proofs of purchase that verify the accuracy and business necessity of each expense

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Travel expense reports allow companies to track travel costs and analyze spending patterns. Employees are reimbursed for any out-of-pocket business travel expenses they pick up during their trip.

Elements of a travel expense report

On a typical T&E report, employees provide the following:

• Name of the employee, title, identification number, and contact information
• Trip details, including location, dates, and business purpose
• Expense categories:some text
  • Transportation (e.g., airfare, train tickets, car rental, mileage)
  • Lodging, including hotel stays and Airbnb rentals
  • Meals
  • Entertainment
  • Other business-related expenses
• A list of expenses within each category
• Grand total of all expenses incurred on the trip

Each expense listed should include:

• Transaction date
• Purchase cost
• Description of the expense
• Vendor name
• Payment method (e.g., per diem, credit card, etc.)
• An itemized receipt or invoice for each expense

Why are travel expense reports important?

Although travel expense reports might sometimes seem like administrative busywork, they are important financial records. Here’s three reasons why they matter:

1. Budgeting and cost monitoring: If your organization is exceeding its travel budget, you can use the data from T&E reports to find cost-saving opportunities. Additionally, trip expense reports help finance teams monitor spending trends for more accurate travel budget forecasting.
2. Compliance to travel policies and guidelines: By having employees submit T&E reports as part of the expense tracking and travel reimbursement process, finance teams can ensure compliance with their organization’s T&E policy. Requiring itemized receipts for every transaction listed on an employee’s trip expense report also helps to reduce expense fraud.
3. Tax preparation: Generally, business-related expenses—including travel reimbursement—are tax-deductible. However, the IRS and many other tax authorities require an itemized receipt or some other proof of purchase for each transaction to qualify for these deductions in case of an audit.

Benefits of automating T&E reports

When you implement a travel expense reporting process, you gain greater control and visibility into your team’s travel spending. 

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Many small businesses choose low-tech options, like paper reports or digital spreadsheets, because they’re simple to use and implement. And although this expense reporting method can save you some money upfront, manually filling out and reviewing T&E reports can lead to errors and eat up valuable time—which can cause issues for employees seeking expense reimbursement if the system gets backed up.

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As you might imagine, the benefits of automating your expense reporting come at a cost. Depending on the software you choose and the size of your organization, these solutions can be quite an investment. However, the time you save with expense reporting alone is often well worth it. You can expect most expense management platforms to come with the following features:

• Receipt capture and scanning, eliminating paperwork
• AI scanning for T&E policy compliance
• Mileage tracking
• Automatic expense categorization
• Customizable expense policies
• Integrations with HR and accounting software
• Automated approval workflows, enabling faster reimbursement

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Best practices for tracking and automating T&E reports

Here are some strategies for streamlining the process of tracking and automating your travel expense reports:

• Simplify your expense reporting process. Keeping your expense reporting process as simple as possible, makes it easier for employees to submit expense reports that comply with your corporate travel policy, which, in turn, reduces the amount of time your finance team spends reviewing T&E reports and chasing down travelers for missing information.
• Digitize your policies and guidelines. Create a digital copy of your travel policy your team can easily access when they have questions. Even if you aren’t ready to invest in expense management software, you can create a standardized travel expense report template for employees to use that includes a link to the policy.
• Take advantage of corporate cards. Consider offering corporate credit cards instead of asking your travelers to foot the bill in advance. This switch reduces the risk of expense fraud, controls spending, and saves time. Corporate credit cards capture transaction data in real time, eliminating the need for a convoluted expense reporting and reimbursement process. 

Ramp: Travel expense reporting that pays dividends

Ramp’s expense management platform streamlines the expense reporting process from beginning to end, eliminating busy work so finance teams can close their books faster and reimburse employees sooner. Whether you’re looking for customizable travel policies, integrated corporate cards, powerful automation workflows, or all of the above, we’ve got you covered.