What is a travel expense report?

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The cost of business travel is easier to stomach once you see the opportunities it brings. According to a 2023 Harvard Business Review survey, 84% of managers say their organization experiences 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 and describes the expenses an employee incurred while on a business trip. These expenses 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, including the purchase price, date of purchase, and expense category. Reports must also include documentation like receipts or other proofs of purchase that verify the accuracy and business necessity of each expense.

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

How a travel expense report works

Although travel expense reports might take only a few minutes to complete, gathering the information they need can take much longer. If travelers book their flights and hotel reservations early, they may have to start collecting receipts weeks or months in advance.

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During the trip, they’ll collect receipts for all their work-related expenses, including meals, car rentals, tolls, and dry cleaning. When they return, employees fill out an expense report with the appropriate information. They should also attach receipts for every transaction before submitting the completed form to the finance department.

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After a finance manager reviews and approves the expense report, the company reimburses the traveler if needed, typically via payroll or expense management software.

Key details to include in a T&E report

For each expense, employees should provide the following:

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• Purchase cost
• Transaction date
• Description of the expense
• Expense type (e.g., transportation, lodging, meals, entertainment, etc.)
• Vendor name
• An itemized receipt or invoice for each expense

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T&E reports should also include information about the traveler and the business trip overall:

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• The full name of the employee submitting the expense report, as well as their job title, employee identification number, and contact information 
• Trip start and end dates
• Business purpose for the trip
• Grand total of all expenses incurred on the trip

Why are travel expense reports important?

They support expense management and budget planning efforts

Travel expense reports provide visibility into how a company uses its travel budget by tracking employee travel expenditures. If you find your organization is exceeding its travel budget, you can use the data from these reports to find cost-saving opportunities.

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Additionally, trip expense reports help finance teams monitor spending trends for more accurate travel budget forecasting. Say your company sends employees to San Diego for an industry conference every year. Spending data from past travel expense reports can help you estimate how much money to earmark for future conferences.

They ensure employees comply with travel policy 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.

They help companies comply with tax regulations

Generally, all business-related expenses—including travel—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. Travel expense reports also create a record for government agencies to review in case they conduct a financial audit of your organization.

How do companies manage T&E reports?

Paper reports or digital spreadsheets

Many small businesses choose this low-tech option because it’s simple to use and implement. All you need is a travel expense report template for employees to fill out—and there are hundreds of them online, whether you’re looking for a paper form, Excel file, or Google Sheets.

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Although this expense reporting method can save you some money upfront, manually filling out and reviewing T&E reports takes time—which can cause issues for employees seeking expense reimbursement if the system gets backed up. This method is also prone to errors and inconvenient for employees who travel frequently or for long stints at a time.

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So, even though it’s a good place to start for companies just beginning to invest in business travel, this method isn’t ideal for the long term.

Expense management software

Most established companies use dedicated expense management software instead of manual processes to track and manage expenses. In particular, travel and expense management platforms are ideal for organizations that send employees on multiple trips each year because they simplify expense reporting and reimbursement for travelers and finance teams alike.

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As you might imagine, the benefits of using specialized software 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 often makes it well worth it. You can expect most expense management platforms to come with the following features:

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• Receipt capture and scanning
• Mileage tracking
• Automatic expense categorization
• Customizable expense policies
• Integrations with HR and accounting software
• Automated approval workflows

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3 benefits of automating travel and expense reports

Companies largely implement a travel expense reporting process for greater control and visibility into their travel spending. But if you’re serious about maximizing the ROI on your travel budget, consider automating your expense reporting process with expense management software. Here are three reasons why:

1. Automates travel policy compliance

With a manual workflow, you must review travel expense reports individually for compliance with your company’s travel policy. This takes an enormous amount of time and effort to complete. Modern expense management platforms use AI to scan T&E reports for compliance with company policy, so finance managers only need to review reports that violate those guidelines.

2. Eliminates paperwork

Traditional expense reporting processes produce a massive amount of paperwork, from the forms themselves to the receipts accompanying T&E reports. As a result, companies eventually require more and more space to store these documents.

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Digitizing your expense reporting process with dedicated software means these documents can be stored in your expense management system, where you can access them with just a few clicks—even if you’re not in the office.

3. Enables faster reimbursement 

Expense management software gives finance teams a simple way to verify the accuracy of trip expense reports. These platforms can pull transaction data from employee corporate cards for comparison against reported travel expenses, allowing finance teams to quickly approve employee reimbursement requests.

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Travelers who require reimbursements can still benefit from expense management software since many platforms enable employees to submit expenses on the go for quicker turnarounds. This is a crucial feature since 33% of travel decision-makers say their employees still use personal cards to book business travel, according to a Mastercard report.

Best practices for tracking and automating T&E reports

Simplify your expense reporting process

Keep your expense reporting process as simple as possible. This will make it easier for employees to submit expense reports that comply with your corporate travel policy, which, in turn, will reduce the amount of time your finance team spends reviewing T&E reports and chasing down travelers for missing information.

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For companies that aren’t ready to invest in expense management software just yet, this might look like creating a standardized travel expense report template for employees to use. And if employees are required to fill out trip expense reports digitally, include a link to a digital copy of your travel policy so they can easily access it if they have any questions.

Take advantage of corporate cards

Instead of asking employees to front the company’s travel expenses with their own funds, consider giving your travelers corporate credit cards instead. This simple switch can help you reduce the risk of expense fraud, control spending, and save time for travelers and finance teams.

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Corporate credit cards capture transaction data in real time, eliminating the need for a convoluted expense reporting process. You might still ask employees to submit expense reports for the company’s financial records, but finance teams can easily reconcile these documents with your corporate card transactions.

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Providing employees with a travel card also means you don’t need to reimburse them for any payments, so they no longer have to jump through hoops to get their money back.

Ramp: Travel expense reporting that pays dividends

Choosing expense management software with automated expense reporting pays off immediately. Slack’s 2023 State of Work survey showed that 77% of workers believe automating routine tasks would significantly improve their productivity. Respondents who had already begun using automations at work, meanwhile, saved 3.6 hours of work each week.

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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.

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Check out our interactive demo to see firsthand how Ramp’s all-in-one finance platform saves businesses an average of 5% a year.