The expense report validation and approval process is a crucial step in ensuring compliance with a company’s reimbursement policy. It involves checking each expense incurred and detecting errors and missing receipts, while respecting the budgets that have been set. It is also a particularly tedious and repetitive process for managers and the accounting department. Here is a series of best practices you can follow to implement a more efficient expense validation process for everyone.

The different processes for validating expense reports

Although it varies depending on the size of the organization, the expense report validation process involves two distinct types of controls:

  • Approval by the manager, to ensure the legitimacy of the expense report and to determine whether the employee has incurred the expense as part of his or her role.
  • Purely accounting validation, which involves checking all the tax data: amounts, VAT, recoverable VAT, in order to post this information into the accounting system.

In large companies, an additional step of approval by the manager’s supervisor, often the department head, can be added to the workflow. In small organizations, it is not uncommon for the director to take direct responsibility for approving expense reports and entrust the accounting verification to an external accountant.

Some companies prefer expense reports to be approved by a supervisor before going through the accounting department, while others choose to do the reverse, asking assistants or accountants to first ensure that expense reports have been properly completed and supporting documents attached. The two systems are equally effective.

Validating expense reports: best practices to be implemented

If you don’t yet use a paperless process to manage your expense reports, this probably means that your employees print out Excel files and put them in an envelope with their paper receipts. These items will then be transferred from department to department, with an increased risk of document loss.

A clearly defined reimbursement policy must first be put in place, which all employees should be able to consult. The expense policy can take the form of a memo directly pre-recorded in the Excel file. It avoids any conflicts between the manager and the employee, and saves time at all levels.

Standardize expense reports

A first best practice is to adopt a single format for all expense reports. By providing upstream tools to standardize expense reports, you will facilitate the downstream audit work. In companies with no expense report management software, Excel tends to be the solution of choice.

Collect expense reports by team or by project

When employees from different departments are involved in the same project, it might be useful to create a summary by department or by project, so that the department head can approve the expenses as quickly as possible.

Implement dual approval procedures

Depending on the size of the company, it may be advisable to implement a dual approval procedure involving both the manager and the department head. Since each person is responsible for each stage of the validation process, when the expense report exceeds a certain amount, it may also be appropriate to have it validated by a more senior manager.

The power of expense report management software for more efficient validation processes

With an expense report management software such as N2F, you can customize the order of the administrative verification and approval steps. You can then configure and automate the various approval steps according to your organization’s needs.

Validation by project and by team: ensure that each expense report is validated by the right manager

Traditionally, each employee is attached to a department. As soon as an employee submits an expense report, the N2F software detects the employee’s department and sends the expense report to the right manager. However, if the employee submits an expense report that relates to several departments, N2F offers the possibility of splitting the expense report into several parts, depending on the department to which the expense is allocated. The expenses will then go to the right manager for approval. To do this, the employee just has to fill in the department or the name of the project to which the expense report relates when completing the expense report. So, if an employee enters several expenses per project, it is possible to automatically send each expense to the appropriate project manager.

N2F also allows you to set up a second or third approval stage if the expense report exceeds a certain amount. The company can thus decide that all expense reports above 1,000 euros will immediately be sent to the manager’s supervisor for validation, for example.

Exceeding the expense report limit

To ensure that the company’s expense report policy is respected, N2F offers the option of sending expense reports that exceed the agreed limits to a designated person. For example, if the company has decided in its reimbursement policy that restaurant bills should not exceed 25 euros, and an employee enters an expense of 30 euros, the designated manager may decide on a case-by-case basis whether to raise the amount of the ceiling or not.

Reimbursement of expenses depending on the payment method used

To create a smoother validation process, you can configure your system so that:

  • All reimbursable expenses, paid using a personal payment method, are sent to a specific manager.
  • All non-reimbursable expenses, paid using a professional payment method, are sent to another manager.

Expense reports re-invoiceable to the client

Some expenses may be re-invoiced to the client. In this case, the employee just needs to check the “re-invoiceable” box when completing the expense report. At the end of the project, N2F then allows you to export a summary of the expenses re-invoiceable to the client, which can be attached to the invoice. By using a workflow adapted to this notion of re-invoicing, all the expense reports concerned can be forwarded to a designated manager, in order to ensure an additional control.

Accounting for expense reports

The validation process ends when the accounting department records the expense reports in the accounting system. This involves generating the accounting entry files – which can be injected directly into the accounting system – as well as the SEPA transfer files for reimbursing employees. N2F thus provides a complete circuit ending with the reimbursement of the expense report.

4 good reasons to adopt the N2F expense report management solution

  • Zero paper: thanks to the paperless system, there is no need to manually transfer paper from one department to another, everything is done automatically from your employees’ smartphones. You are no longer at risk of losing receipts, as everything is stored in secure data centers.
  • Real-time information on expense report processing: synchronized with each employee’s smartphone, N2F allows you to check the status of an expense report at any time. Employees know whether their manager has approved their expense or not, and are notified if an expense is rejected.
  • Time savings at each validation step: thanks to N2F’s smart scan, important information is automatically highlighted on the receipt. There’s no need to waste time searching for the amount, date, or VAT. Verification is completed in a flash.
  • Shorter repayment times: managers can give their approval in a few clicks from their smartphone. So, even if they are often on the road, the time required to process expense reports is not affected. Managers are notified when they have an expense report pending approval. They just need to log in from their mobile app to promptly check the expenses and approve the report.

From the mobile app through to the accounting software, N2F saves precious time in the expense report validation process. You can also make use of the advanced options to configure a personalized validation workflow, for even greater efficiency. Still not convinced? Request a free demo of our software!