How expense report works
Employees typically log expenses as they occur, attaching a receipt image to each line and coding it to a category such as travel, meals or supplies. Most companies set a policy on what is reimbursable and require reports to be submitted within a set window, often 30 to 60 days after the expense.
A manager or the accounting team reviews each report against the expense policy before approving it for payment, checking for missing receipts, personal items or amounts over a spending limit. Approved reports are paid through payroll, a separate reimbursement run, or accounts payable, and posted to the correct expense accounts in the general ledger. Companies that reimburse through payroll rather than accounts payable need to code the reimbursement carefully so it is not mistakenly treated as taxable wages, since properly substantiated business expense reimbursements are not subject to income or payroll tax.
Example
A sales employee submits an expense report for a client trip: $320 in airfare, $180 in hotel, $95 in meals and $40 in parking, totaling $635, each line backed by a receipt. The manager approves it, and the company reimburses the $635 through the next accounts payable run, coding the amounts to travel, lodging, meals and parking expense accounts. If a line item, such as a $60 in-room movie charge, falls outside the company's travel policy, the manager can approve the report with that single line deducted rather than rejecting the whole submission.
Expense report in QuickBooks Online vs Xero
QuickBooks Online handles simple expense reimbursement through bills or expenses coded to the employee as a vendor, though it has no dedicated mobile receipt-capture expense app built in. Xero integrates with dedicated tools like Dext or Expensify for receipt capture and approval workflows, then syncs the approved report into Xero as a bill for payment.
Related terms
How LedgerBPO handles expense report
We review submitted expense reports against your policy, code approved amounts to the right expense accounts, and route them through your regular accounts payable run for reimbursement. This keeps employee expenses categorized correctly in your reporting instead of sitting in a miscellaneous account waiting to be sorted out later.