What is an expense claim? Examples, common challenges, and best practices

What is an expense claim?

An expense claim is a formal request made by an employee to their employer to be reimbursed for business-related expenses paid out of pocket. The employee must submit receipts and invoices to support their claims. Apart from including supporting documents, an expense claim must also include a description of the product or service purchased, the date of the purchase, and the amount paid.

Expense claims help businesses track and control spending, stay within budget, maintain accurate and audit-ready financial documents, and make timely reimbursements to employees.

To qualify for reimbursement, an expense must meet the following conditions:

• It must be necessary to the employee's work
  
• It must have a clear business purpose and contribute to company operations or projects
  
• It must fall within the company's approved expenditure categories
  
• It must be within company-approved spending limits
  
• It must adhere to company policy
  
• It must be reasonable and close to the market value of the goods or services acquired
  
• It must be accurate and submitted on time
  

Expense claim vs expense report

Expense claims and expense reports are often used interchangeably in business conversations. However, the two are not the same.

An expense claim is a single reimbursement request while an expense report is a consolidated document containing multiple expense claims. An employee submits an expense claim as they incur an out-of-pocket expense. In contrast, expense reports are submitted periodically – weekly, monthly, or at the end of a project.

The two also have different functions. An expense claim ensures an employee is reimbursed for work expenses funded by them. The purpose of an expense report is to give company finance teams an accurate and comprehensive account of the total expenses incurred in a given time.

Business expenses that can be claimed in Singapore

The following expense categories are eligible for reimbursement:

Travel and accommodation

Business travel-related costs such as hotel bills, airfare, train, bus, and taxi fares, car rentals, parking fees, and mileage claims are eligible for reimbursement.

Meals and entertainment

This expense category includes client dinners, team dinners, and working lunches, which can be claimed as long as they are reasonable and incurred for a legitimate business purpose. Such expenses are typically capped under applicable company policy.

Equipment and office supplies

This includes computers and accessories, software subscriptions, stationery, home office supplies, and various other consumables used to support daily work activities.

Other business expenses

Expenses incurred on conducting client meetings and conferences, educational courses to train employees or undertaken for one's own professional development, phone and internet bills, postage and courier charges, and industry memberships are examples of business expenses that are also eligible for reimbursement subject to prior approval.

Business expenses that cannot be claimed in Singapore

Expenses that do not qualify include:

• Personal expenses not related to work
  
• Daily commute expenses
  
• Expenses without proper supporting documents
  
• Fines and penalties, such as speeding tickets and late payment fees on corporate cards
  
• Expenses exceeding company limits and unauthorised upgrades
  

Reimbursable expenses vs non-reimbursable expenses

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Why expense claims get rejected

Employee expense claims are often rejected due to these common errors:

• Inaccurate or incomplete information
  
• Missing receipts
  
• Expenses exceeding company spending limits
  
• Expenses that fall outside approved expense categories
  
• Expenses with unclear business purpose
  
• Personal expenses not related to work
  
• Late submission of expense claim
  
• Expenses with unauthorised approval (not approved by the right reviewer)
  

How the expense claim process works

Here's how the expense claim system works, from submission to reimbursement, in a traditional (manual) set-up:

• An employee covers a work-related expense with their own money
  
• To support their claim, the employee collects evidence of the purchase in the form of a paper receipt or digital receipt, invoice, etc. The receipt includes vendor details, the item/s purchased, the date of purchase, the total amount, etc
  
• The employee fills an expense claim form adding in their name, department, employee ID number, purchase details, expense category, business purpose of the purchase, and signature. They attach supporting documents to the form
  
• The employee submits the expense claim form and supporting documents to the relevant approving authority, finance team, or HR department as per company policy
  
• During the approval process, the expense claim typically goes to the employee's direct supervisor first. Once it passes this initial approval, the claim is routed to the finance team for verification and final approval
  
• The employee is then reimbursed as per the company's reimbursement policy
  

Challenges of expense claim process

Manual expense claim management, as described in the section above, posts challenges that cause significant hassles for both employees and their companies:

• Manual expense claim processes rely on manual data entry, which is not only time-intensive but also prone to errors and inaccuracies
  
• Missing receipts are a common expense claim issue, leaving employees with no way to back up their purchases and confidently seek reimbursement
  
• Expense claims often stay stuck in the approval queue, leading to reimbursement delays
  
• There is no way for managers or finance teams to track expenses in real time and control overspending
  
• Reimbursement delays can lead to employee dissatisfaction, loss of morale and trust in their company
  

Why automated expense management is better

To overcome the challenges of manual expense claims, many businesses have automated processes with the use of expense management software. Here are 5 benefits of an automated expense claim system:

Real-time visibility

Team leaders and finance departments can track expenses in real time on a centralised dashboard, helping them monitor budgets, nip unauthorised spending in the bud, and maintain tight control over overall finances. The visibility also ensures compliance with company policy at all times.

Easy receipt capture

Employees can upload their receipts to the automated expense management system on the go, which means there is less of a chance of them losing the documents. With no manual reconciliation to be carried out at each step of the expense claim process, reimbursements get expedited.

Automated approvals

The expense management software automatically routes expense claims to the right approvers, eliminating confusion and preventing delays.

Reduced administrative workload

Automating labour-intensive activities such as data entry, expense categorisation, and receipt tracking saves time and frees employees to focus on business activities that add more value.

Audit-readiness

Automated expense management systems keep clear and accurate records of expenses, approvals, and documents, ensuring the company remains financially compliant and audit-ready.

Other best practices

Apart from using expense management software, here are more best practices businesses can follow to enhance their expense claim process:

• Set clear expense policies that define expenses that can be reimbursed, required approvals, spending limits, and submission deadlines
  
• Train employees on expense claim submission, making sure they understand how to categorise expenses, how and when to submit claims, etc
  
• Hold periodic audits of expense claims. This is useful for spotting policy violations and process inefficiencies, detecting misuse and potential fraud, and gaining spending insights that contribute to informed decisions
  
• Use corporate cards with custom spend limits, merchant categories, and in-built approvals. This frees up cash flow, ensures employees are not left out of pocket, and promotes financial transparency
  

Expense management done right with Aspire

While manual expense claims are often error-ridden, prone to delays, and offer limited financial visibility, Singapore businesses can overcome these challenges by adopting an automated expense management solution, such as the one offered by Aspire. With Aspire, you can automate expense claims, approvals, and reimbursements from one centralised dashboard while gaining real-time visibility into spending across your organisation.

In addition, Aspire issues virtual corporate cards with customisable spending limits and merchant controls, allowing businesses to manage expenses with greater precision. Our cards can be assigned to specific budgets, helping keep expenses organised, trackable, and aligned with company policy.

Conclusion

As businesses scale, managing expense claims efficiently becomes increasingly important. Establishing clear expense policies and leveraging automation can simplify the process, giving companies greater control over spending while accelerating approvals and employee reimbursements. Modern expense management solutions like Aspire streamline workflows, provide real-time visibility into company-wide spend, and bring about enhanced accountability and policy compliance.

FAQs

What is an expense claim?

An expense claim is a formal request for reimbursement made by an employee for work-related expenses paid from personal funds.

What is an example of an expense claim?

Business travel expenses are a typical example. They include hotel stays and transportation costs such as flights, trains, and taxis.

What is the expense claim process?

The expense claim process comprises multiple steps starting with submission of the claim, followed by their review and then approval, and finally disbursal of reimbursement.

What expenses are allowed?

Expenses that employees can claim must be necessary to their work, have a clear business purpose, fall within the company's approved expense categories, and adhere to its spending limits. Some examples of reimbursable expenses are business travel, work-related meals and entertainment, and office equipment.

Can I claim expenses without a receipt?

In Singapore, employees may claim expenses without receipts in some instances. When making mileage claims, for instance, they can claim a standard per-km rate and maintain a mileage log instead of saving fuel receipts, if this is permitted under their company policy. Similarly, expenses backed by alternative documentation such as digital invoices and bank statements can also be claimed if the original receipts are lost.