An expense claim is how employees get back money they paid out of their own pocket for work. Typical examples are travel, a client lunch, office supplies or parking. The employee submits the receipt, a manager or HR approves it and finance pays it back. With an expenses app, that takes minutes instead of weeks. For SMEs with 10 to 500 employees, a simple claims process saves HR and finance hours every month.
What is an expense claim?
An expense claim is a request from an employee to be reimbursed for work-related costs they paid personally. You will also hear expense reimbursement or out-of-pocket expenses. Every claim comes with proof, such as a receipt or invoice, so finance can record the cost correctly.
Expense claims, travel expenses and reimbursement: the difference
The three terms overlap, but differ in scope.
Expense claims, travel expenses and reimbursement compared
| Term | What does it cover? | Example |
|---|---|---|
| Expense claim | Any work-related cost an employee pays upfront | Client lunch, office supplies, parking |
| Travel expenses | Costs of a business trip, often including meals and accommodation | Train ticket, hotel, meals at a trade fair |
| Reimbursement | The actual repayment of those costs to the employee | Refund of a software licence the employee paid for |
Which costs can employees claim?
Employees can claim costs that are work-related and that the company has agreed to reimburse. Which costs exactly is best set out in an internal expense policy. Common examples:
- Mileage in a private car, train, taxi or rental car on business trips
- Accommodation and meals during business travel
- Meals or drinks with clients or business partners
- Office supplies, books or small work equipment
- Parking, tolls and fees for trade fairs or training courses
How these costs are treated for tax purposes depends on the type of cost and the country you operate in. Check the current rules with your local tax authority, and ask your accountant about your specific situation.
How does the expense claim process work?
The expense claim process has four steps: keep the receipt, submit, approve and reimburse. The less paper and email in between, the faster employees get their money back.
- Step 1: The employee pays the cost and keeps the receipt
- Step 2: They submit the receipt with the date, amount and reason
- Step 3: The manager or HR checks that the cost fits the expense policy and approves it
- Step 4: Finance records the cost and pays it back, often with the next salary
What goes into an expense policy?
An expense policy sets out which costs are reimbursed, up to what limit, which receipts are needed and by when employees must submit them. It prevents discussions afterwards and makes sure everyone is treated the same. Keep it short and clear, and make it easy for every employee to find, for example in the personnel file or with your shared documents.
Example: expenses after a client visit
An account manager drives to a client, pays for parking and takes the client to lunch. On paper, she collects the receipts, fills in a spreadsheet at the end of the month and emails it all to HR, where someone types it out again. Digitally, she photographs both receipts in the app right after the meeting, her manager approves the same day and finance sees the cost straight away in the monthly overview. Our article on HR administration in Excel shows where spreadsheets typically fall short.
What are the pros and cons of digital expense claims?
Digital expense claims save everyone time and make spending transparent, but they need clear rules and a short switch-over.
Advantages of digital expense claims
- Employees submit receipts right away instead of collecting them for weeks
- Managers approve on the go, without a pile of paper on their desk
- Fewer typing errors, because nobody copies amounts from spreadsheets
- Finance gets a clear overview of all costs per month
- Faster reimbursement, which makes employees happier
Disadvantages of digital expense claims
- You need a clear expense policy and a short explanation for everyone
- Without an integration with your accounting software, part of the work stays manual
- Anyone who still hands in only paper receipts slows the process down
How expense claims work in HoorayHR
HoorayHR is all-in-one HR software for SMEs that lets employees handle expense claims straight from the app. In the HR self-service app, they take a photo of the receipt, add the amount and reason and submit the claim. You decide who can view and approve claims, for example the team lead or HR.
Approved claims appear in a monthly overview, and through our integrations with accounting software they reach finance without double entry. We also calculate travel costs automatically. That spares HR the paperwork and gets employees their money back faster, all within the same HR software you use for leave, documents and onboarding.
A simple expense claim process is a small change with a big effect: people who get reimbursed quickly submit their receipts on time, and finance closes every month cleanly.
How long do employees have to submit an expense claim?
The deadline for internal expense claims is best set in your own expense policy, for example by the fifth working day of the following month. Many companies collect claims monthly so finance can close the month cleanly.
What happens if a receipt is missing?
Without proof, finance usually cannot record a cost correctly. Set out in your expense policy how employees should handle a lost receipt. Whether a replacement document is accepted for tax purposes is best checked with your accountant.
Do expense claims have to be submitted on paper?
No, many companies work with digital receipts that employees photograph in an app. What matters is that receipts are complete, legible and stored so you can find them again. Your local tax authority sets the exact rules for keeping records.
Who approves employee expense claims?
Usually the direct manager approves expense claims, because they know whether the cost was needed for the job. In smaller companies, HR or the managing director often does this. After approval, the claim goes to finance for payment.
Are expense claims paid out with the salary?
Many companies pay approved expense claims together with the next salary, others transfer them separately. What matters is that the reimbursement is recorded correctly as a repayment of costs. How to process it in payroll is best checked with your accountant or payroll provider.
Written by
Ramon Glebbeek
Expert in HR
Ramon is a true expert in HR, thanks in part to his many years of experience at HoorayHR. With a passion for writing relevant blog posts and knowledge articles about HR, onboarding, performance management, and more, he offers a unique perspective on challenges and opportunities in the field. As an experienced human resources professional and content writer, Ramon is happy to share tips to help you save time on HR tasks and build a Great Place to Work.
