How to Automate and Streamify Your Expense Approval Process

Is your expense approval process causing delays and frustration? Many businesses still rely on manual methods, which can lead to slow approvals, lost receipts, and policy violations. Employees waste time chasing approvals, while finance teams struggle to track spending.

On average, employees spend 360 hours a year searching for information within their business. Nintex reports that 49% of respondents have trouble finding records, while 43% struggle with approval requests. Slow approvals frustrate employees, hurt cash flow, and increase fraud risks.

Automating the expense approval process speeds up approvals, reduces errors, and controls spending. It also ensures policy compliance and provides real-time tracking for finance teams.

This guide explains how automation can improve expense approvals and how, with the right tool, you can set up a smooth workflow.

What Is the Expense Approval Process?

The expense approval process is the series of steps a company follows to review and approve employee expenses. A well-structured process ensures spending follows company policies and employees get reimbursed on time. Without clear approval workflows, businesses risk overspending, delayed reimbursements, and even fraud.

For example, an employee attending a client meeting might submit a travel expense. If approvals take too long, they may hesitate to pay out-of-pocket next time. Similarly, unclear policies can lead to duplicate claims or inflated receipts. A smooth approval process keeps spending in check and builds trust with employees.

Businesses need a clear structure to create an efficient approval system. Let’s look at the key steps involved in managing expense approvals.

Steps in the Expense Approval Process

The expense approval process follows a standard workflow in most companies. Here’s how it works:

• An employee makes a purchase: The process begins when an employee incurs a business expense, such as travel, meals, or office supplies.
• The employee submits the expense for approval: compile expenses into a report, including the amount, date, business purpose, and receipts.
• The expense undergoes review: A manager or finance team checks the report for accuracy, required documentation, and policy compliance.
• The expense is approved or denied: If it is valid, the manager approves it. If not, it is returned for clarification or rejected.
• The employee gets reimbursed: If the employee pays out of pocket, the reimbursement is sent via direct deposit or check.

With a clear process in place, businesses can ensure faster approvals and accurate reimbursements. However, not all expenses are created equal. 

Types of Expenses That Require Approval

Every business expense, unless pre-approved or covered by a cash advance, should go through the approval process. Some common expenses requiring approval include:

• Travel expenses: Airfare, hotels, car rentals, and transportation for business trips.
• Business meals: Meal costs incurred during business travel or meetings.
• Business mileage: Reimbursement for travel expenses using a personal vehicle.
• Customer entertainment: Expenses related to client meetings or events.
• Office supplies: Items like pens, paper, or any other office necessities.
• Equipment purchases or rentals: Any necessary business equipment, from laptops to machinery.
• Professional dues and licensing fees: Memberships or licenses are required for industry professionals.
• SaaS subscriptions: Software tools and platforms needed for business operations.

While these expenses are commonly approved, it’s important to review every expenditure carefully. 

Now that we know what needs approval, let’s look at how to automate your expense report approval process for better efficiency and control.

How to Automate Your Expense Approval Process

As you assess ways to simplify your expense approval process, it’s essential to identify where your team spends the most time and where technology can make a difference. Automating tiresome tasks reduces delays, minimizes errors, and frees up your team’s time for more strategic work. 

Here are effective ways to automate and optimize your expense approval process:

1. Define a Clear and Thorough Expense Policy

A well-defined expense policy helps employees understand what’s acceptable, reducing the need for constant clarifications. By clearly outlining spending limits, pre-approval rules, and required documentation, you eliminate confusion during the submission phase.

For instance, specifying that only expenses over $100 require manager approval simplifies the review process. An up-to-date policy also ensures consistency, making automation tools more effective in processing expense reports quickly and accurately.

2. Use Corporate Cards to Automate Pre-Approved Expenses

Corporate cards refine the approval process by automating expense approvals within set parameters. By setting monthly budgets and approved categories for each employee, you can instantly approve transactions that fall within these limits.

For instance, if an employee books a hotel room for a business trip, it can be automatically approved if it falls within the budget. Expenses exceeding set limits or falling outside approved categories can be instantly flagged for review, speeding up the approval process and minimizing bottlenecks.

3. Collect Digital Receipts Instead of Paper Receipts

Tracking paper receipts can be time-consuming and error-prone. By digitizing receipts during expense submissions, employees reduce the chances of losing important documentation. When a digital receipt is submitted, it’s automatically matched with the corresponding expense in your system, simplifying audit trails and increasing transparency.

If an employee purchases office supplies, the system can auto-match the digital receipt with the corresponding expense category, eliminating manual verification and reducing processing time.

4. Use Software to Automatically Categorize Expenses

Expense categorization is necessary for accurate reporting and tax deduction. Automating this task ensures that expenses are accurately classified, reducing human error. With AI-driven platforms, expenses such as business meals, travel, or office supplies can be categorized as they are submitted.

For instance, an employee’s purchase for client lunch will be instantly categorized under “business meals,” eliminating the need for managers to manually sort through each report. This automation saves time and improves reporting accuracy, making it easier to spot trends and discrepancies.

5. Replace Paper Mileage Logs with Digital Trackers

Manual mileage tracking is often inaccurate, but digital trackers remove that uncertainty. A digital app that logs mileage automatically based on GPS data can ensure precise reimbursements.

Suppose an employee drives from one client meeting to the next and can simply use a digital tracker. This tracker automatically calculates the mileage and logs it for reimbursement. This approach eliminates the need for employees to record odometer readings manually, leading to more accurate reports and reducing errors in the reimbursement process.

6. Generate Reports Automatically on a Preset Schedule

Reporting is crucial for managing expenses, but it doesn’t have to be a manual task. Automated report generation helps you stay on top of your expense approval process with minimal effort.

By setting a schedule, whether daily, weekly, or monthly, you can have reports generated automatically and sync with your accounting software. It allows managers to focus on analyzing data rather than creating it, improving decision-making and ensuring timely expense reconciliation. Automated reports also make it easier to spot trends and discrepancies, leading to better budgeting and cost control.

Automating the expense approval process can significantly enhance your workflow, reduce errors, and ensure compliance. With the right tools, you can ensure that your team’s time is spent on value-adding tasks instead of manual administrative work.

Tools like Peakflo can help you flawlessly implement automation in your expense approval process. Continue reading to learn how. 

Why Choose Peakflo for Expense Automation?

Peakflo offers an intuitive platform designed to automate and streamline your expense management, ensuring faster approvals, better compliance, and reduced manual effort. 

Here’s how Peakflo can elevate your expense approval workflow:

• Configurable Policies: Set clear expense rules that align with your company’s spending guidelines, ensuring employees understand what is reimbursable and what is not. Peakflo makes it easy to enforce your policies by automatically flagging any non-compliant expenses.
• Dynamic Expense Categories: The tool offers flexible categorization, allowing businesses to sort expenses based on specific needs. It ensures that your reports are organized, making it easier to track spending patterns and prepare for audits.
• Per Diem Rules: Location-based daily allowances automatically enforce per diem limits. This feature helps keep travel expenses within budget and ensures that employees adhere to company-set spending caps without manual intervention.
• Manage Travel Requests: Before approval, simplify travel request creation and submission by ensuring they align with company guidelines. Employees can easily submit requests, and managers can review them for compliance before the trip takes place.
• Expense Automation: Peakflo automates the submission and reimbursement of travel expenses, reducing manual tasks for both employees and finance teams. This automation speeds up the entire process, ensuring employees are reimbursed on time.
• Integrations with ERPs: Smoothly integrate with popular ERP and accounting software, ensuring that financial workflows are smooth and consistent. This connection eliminates the need for manual data entry, reducing errors and saving time.
• Real-Time Expense Monitoring: You can track travel expenses in real-time, helping managers stay on top of the budget and ensure expenses stay within approved limits.
• Customizable Approval Flows: Custom approval workflows to suit your company’s unique needs. It ensures that travel expenses are reviewed and approved swiftly, with the correct individuals involved in the decision-making process.
• Policy Adherence: Peakflo automatically flags non-compliant expenses, making sure your team follows company policies. It eliminates human error and ensures that expenses comply with established guidelines.
• Anomaly Detection: Quickly identify unusual expenses with automatic alerts for out-of-policy spending or duplicate claims. This helps reduce fraudulent or erroneous submissions, ensuring only valid expenses are reimbursed.

Conclusion

Managing expenses efficiently starts with a structured expense approval process. Without clear guidelines, businesses risk overspending, delays, and compliance issues. A well-defined process ensures every expense is reviewed, approved, and reimbursed without unnecessary delays.

Different types of expenses, such as travel, office supplies, and software subscriptions, must go through approvals to prevent policy violations. Automating the process helps eliminate errors, reduce paperwork, and speed up reimbursements. Businesses can achieve this by setting clear policies, using corporate cards, collecting digital receipts, and leveraging expense management software.

With the right tools, companies can improve compliance, gain better visibility into spending, and reduce manual work. Book a demo with Peakflo today to see how automation can simplify your expense approval workflow!