Effortless Expenses Claim: Your Guide to Streamlined Reimbursements

What is an Expense Claim

It is a request submitted by the employee to the business to be reimbursed for any expenses incurred while performing their job duties. This applies to all business expenses they paid for using their personal funds.

Expense claims are the basis for creating a more comprehensive document known as an expense report, which businesses use to track, approve, and reimburse employee expense claims. For instance, if your employee paid for a printer for the workplace, then they can submit a claim for reimbursement.

• Understanding and properly handling employee claims is needed for:
• Maintaining the financial accuracy of the business’s financial records.
• It helps track, monitor, and control expenses.
• Timely reimbursement of these claims improves employee satisfaction.
• It is also necessary to adhere to Singapore’s tax laws because certain expenses can be claimed as tax deductions.  

Understanding Business Expenses

Any costs incurred during the course of business that are directly related to daily operations are known as business expenses. Certain employee expenses can be categorised as business expenses.

For instance, the cost of any office supplies or utility bills paid qualifies as a business expense and can be claimed as a tax deduction. However, if an employee paid for the same expense, your finance team must reimburse the employee and later claim it as a tax deduction.

Allowable Expense Claims

Certain expenses the employee bears are allowed and can be claimed from the business. The rules regarding allowable and disallowable business expenses that a business can use to claim tax deductions are set forth by the Inland Revenue Authority of Singapore (IRAS).

Allowable expense claims include employee claims and travel claims. Though they are not the same, employee claims refer to any expense incurred by an employee during the course of their work and are eligible for reimbursement by the business.

Here are some allowable expenses that an employee can claim:

• If an employee purchases office supplies such as printers, stationery, and other essential items to fulfil their job duties, they can claim a reimbursement.
• Any professional development courses or workshops that employees take to improve their professional skills might be reimbursable, provided they directly relate to their job and prior approval was sought.
• Similarly, employees can also claim reimbursement for medical bills related to any work-related injuries or prescribed treatments up to a certain amount.
• If an employee uses their personal phone to conduct business-related work, a portion of their mobile bill might be reimbursed.

This also includes a specific set of expenses known as travel expenses. Any travel expenses incurred by the employee for business-related purposes can also be claimed for reimbursement. Claimable travel expenses include:

• Any transportation costs for business purposes, such as airfare, taxi rides, car rentals, or any other travel means used by an employee to reach the business destination.
• Accommodation expenses are incurred when an employee travels for business purposes.
• Meal allowances or reimbursements for food during business trips.
• Local transportation costs are incurred when employees travel on business trips.

Another category of employee expense claims includes entertainment expenses, such as meal expenses, that can be claimed as a business expense. This includes expenses such as taking clients out for a meal or hosting business events.

Disallowable Expense Claims

Disallowable business expenses are those that a business cannot deduct from its taxable income. Certain expenses incurred by an employee also don’t qualify for reimbursement. For instance, any fixed asset renovation costs don’t qualify for a tax deduction. Likewise, not all personal expenses can be claimed for reimbursement. For instance, the fuel used by an employee to reach their workplace doesn’t qualify for a deduction.

Here are some disallowable expense claims:

• Transport expense incurred on your private vehicle for personal use.
• Any expenses incurred for meeting any potential client and entertaining them.
• Expenses that are incurred for maintaining the business’s goodwill and for social purposes, such as meals with colleagues.
• Any travelling expenses incurred to reach the office from home and home from the office.

One rule that must be followed before an expense can be claimed by an employee is it must occur in the course of performing their professional duties and must not be a personal expense. The expenses must be necessary, reasonable, supported by receipts and documentation, and must adhere to the business’s policy about claims.

It is important to understand the expenses that can be claimed and the documentation needed to support the said claim. This should be submitted to the finance team. A detailed list of information about allowable and disallowable business expenses can be found on the IRAS website.

The Expense Claim Process

Step 1: Expense Incurrence

The process of reimbursing an employee expense claim begins when your employees pay for a legitimate expense. Regardless of the mode of payment, the expense must be for a business-related activity that’s needed for them to perform their job duties.

Step 2: Documentation

Before an expense can be claimed, the related documents and receipts must be presented with it. Ensure your employees save all the receipts and invoices for accurate tracking and reporting. A variety of receipt-scanning apps can also be used for this purpose.

Step 3: Expense report preparation

There is no one-size-fits-all approach when it comes to creating an expense report. The format can vary, but it must include the following details to comply with Singapore’s tax regulations:

• Employee information, including name, department, and employee ID
• Receipts and supporting documents
• Business intent of the expense, or a brief description of the expense’s purpose
• Purchase information, such as the type of expense, date, and amount
• Employee signature (either physical or digital)
• Total amount spent

Consider investing in expense reimbursement software to ensure compliance, simplify expense management, and maintain accurate records.

Step 4: Submission

Once the expense report is prepared, it must be submitted for approval. Encourage timely submissions to ensure timely reimbursement. To streamline this process, ensure there’s a time limit for submission too.

Step 5: Verification, approval, and reimbursement

The submitted expense report will be first verified, usually by the finance team or the HR. The expenses will be reviewed and upon approval, it will be reimbursed to the employee. The method of reimbursement will depend on your business’s reimbursement policy.

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Managing Expense Claims

The process of expense claim management involves the above-mentioned steps of submitting, reviewing, and approving the employee’s expense reports. This is needed to ensure proper documentation and timely reimbursement of claims. Apart from this, expense claim management is needed to adhere to your business policies and statutory compliance, too. Once this management is efficient, it results in efficient business operations along with financial reporting. These days, a variety of expense management software can also be used to streamline this process.

Best Practices for Managing Expense Claims

Streamlining these claim process helps improve accuracy, reduce errors, and offers better financial data to obtain insights into your business’s spending. To master employee expense claims, you must not only understand what expenses are claimable but also understand the process thoroughly. Businesses can implement the following practices to optimise and streamline the expense claim process.

Establish clear guidelines

The first thing you must do is ensure there are clear guidelines about expense claims for employees. Ensure these guidelines are not only easy to understand but readily available in the form of a user-friendly document. To ensure everyone is aware of these guidelines, including infographics and explainer videos might help. The guidelines must also include information about any predefined budgets. This further helps regulate expenses and prevents overspending.

Timely submission and approval

To improve the process of expense claims, it’s important to establish clear deadlines for submission of expense reports. Failure to make timely submissions can result in delays in reimbursements.

Offer support

Provide the required support and resources that employees will need to understand the expense claim process. For instance, you can hold regular training or refresher sessions about this. Similarly, you can use a standardised expense claim form for employees. This must include fields to input information about the expenses incurred and valid receipts and documents needed to initiate the reimbursement process. In turn, this helps streamline and optimise the process.

Regularly update the policies and procedures.

Ensure your business’s claim policies and procedures are in sync with the guidelines issues by the IRAS. Keep a track of any updates or changes issued by the IRAS and update your business’s policies accordingly. Any changes should also be communicated to your team.

Streamlining and Optimising the Expense Claim Process

Without having a proper approval process in place, all the energy put by employees into submitted expense claims is meaningless. It’s important to streamline the claim process to achieve success and transparency.

Use corporate cards

An effective means to keep track of employee expenses is by issuing a corporate card to your team. This is especially helpful if there’s regular business travel. The corporate card can be integrated into the expense management system by establishing spending limits and transaction can be authenticated.

Use a claim management software

A simple way to do this is by considering an expense claim software. Such software helps track business expenses, control and optimise the claim process, and can keep a digital record of all the supporting receipts and documents. This helps automate the process and reduce issues such as lost receipts, delayed submissions, fraudulent claims, or processing delays.

Conduct regular audits

Apart from implementing clear policies and communicating with employees, you must also conduct regular audits. Conducting periodic audits is a great way to minimise any errors, create a better understanding of expense claim policies, and helps weed out any fraudulent claims.

Organise receipts

To ensure timely reimbursement and management of expense receipts, you need a robust organising system that will help file expenses into different categories for easy classification and quick retrieval.

For instance, the expense receipts and documents can be organised according to specific categories such as business travel expenses, meals, operating costs, entertainment expenses, etc. Similarly, receipt-scanning apps can also be used to obtain real-time visibility through notifications and automated receipt extraction.

Conclusion

To create a culture within your business based on accountability and precision, having a clear and fair claim process is needed. It is not just about fulfilling your administrative duties as a business owner and following compliance requirements. Instead, it is about gaining a strategic advantage as a business owner.

By understanding the expense claim process and implementing user-friendly management, you can promote transparency within the business and save on valuable time. All this helps foster a work culture where employees feel empowered and supported. This results in stronger trust, a healthier workplace environment, and a smoother workflow.

If you want to simplify and automate the entire process of claim management and make it less time consuming. Consider partnering with a seasoned platform such as Aspire. Aspire is an all-in-one platform that can handle all your business needs. With Aspire, your finance team can manage your business finances with greater clarity, confidence, and efficiency and avoid all the manual data entry slip-ups.