During the course of their work, the employee may be required to incur expenses. When these are part of the professional context and are therefore covered by the employer, they become expense reports. In other words, it is the expense reports that will allow the employee to be reimbursed by his employer.
What is an expense report?
As mentioned above, an employee may incur professional expenses that the employer is obligated to reimburse. This reimbursement is defined, regulated and governed by the company’s internal regulations.
That said, it is customary for the employee to complete a document, which will therefore be called an expense report, allowing them to claim reimbursement for expenses.
In other words, it is a legal document that justifies the reimbursement.
Refund methods
As for the refund, it can be made in the following three ways:
- The lump-sum method; the employee receives a fixed and recurring lump sum. It can cover accommodation or travel expenses.
- The specific lump-sum method; this is often used by journalists and applies to gross salary.
- The actual expense method; this is when the employer reimburses actual expenses incurred that are mandatory and necessary for work. These are therefore predefined expenses.
Companies commonly consider any travel-related expense to be an expense report, such as the costs of:
- Business travel (mileage, type of trips)
- Transport (use of personal vehicle with specific mileage scale, public transport)
- Fuel (pro-rata expense compensation based on the number of kilometres driven)
- Catering
- Accommodation
- Meals
- Toll
The Expense Report module of the eBrigade software offers an efficient and comprehensive solution that simplifies expense report management.
Conditions and framework for an expense report
Expense reports are subject to conditions, such as the requirement that the expenses listed in them must be professional in nature and in the employer’s interest.
They therefore require predefined regulations and limits. Consequently, the employee must provide supporting documents, such as expense invoices.
Expense management and rules to follow
As it is subject to conditions, an expense report must be as complete as possible.
Therefore, various pieces of information must be included, such as the name, date, amount, and nature of the expense.
Supporting documents
In addition to this information, other supporting documents may be attached to an expense report. Indeed, since the reimbursement of these expense reports is exempt from social security contributions, URSSAF must filter abuses, and employers must therefore ensure that an expense remains within the scope of a professional activity and that its amount does not exceed a predefined limit.
Here are some examples of supporting documents that may accompany an expense report:
- The meal amount, the names of guests, and the reason for the invitation for meal allowances.
- The journey made, the number of kilometers traveled (if mileage allowance), the vehicle’s horsepower, and the reason for the trip for travel expenses.
- For accommodation expenses, supporting documents will be added, including the reason and location of the trip, proof that the trip exceeded 50 kilometers from their place of residence, and that, consequently, the employee could not return home.
Please note: No contract clause can exempt an employer from their duty to reimburse an employee’s expense reports.
An employee then receives monthly reimbursement for their expense reports, which is why they must carefully keep all purchase receipts (detailed notes, invoices, etc.) that will subsequently be supplemented with various information such as the name of the invited client, the company name, or their position.
This is particularly relevant when an employee lives more than 50 kilometers from the workplace or when the travel time between their home and the workplace exceeds 1 hour 30 minutes by public transport.
VAT: how to recover it?
It should be noted that a majority of the notes sent to employers include an integrated VAT.
In order to be able to recover the latter, it will therefore be necessary to comply with a few conditions…
- The expense must be made in the interest of the company.
- The company must carefully keep an original copy of the invoice that can justify the reality of the expense.
- On the invoice, the name of the company must appear as well as that of the employee and the actual amount to be paid.
- VAT must be payable to the supplier.
VAT cannot be recovered on any type of fees. This is the case for travel expenses (train, etc.) or mileage allowances. Tax adjustments could then be avoided through consultation with accountants.
Mileage expense reports
An employee who uses his or her personal vehicle as part of his or her employment is generally compensated by his or her company. On the expense report, this expense is called mileage expenses or mileage allowances. The reimbursement scales are staggered according to the model of the vehicle. The power of the vehicle is what will determine the reimbursement rate in the sense that it is the key element for the calculation.
Thanks to this scale, mileage allowances cover the majority of transport-related costs: fuel, insurance, vehicle maintenance, wear and tear, etc.
That said, any parking or toll expenses do not fall into this category and must be the subject of a different expense report.
For a home-work journey, you cannot use the scale. Except in the case where the employee is obliged to use his personal vehicle to get to work.
Optimize and simplify the management of your expense reports
The management of expense reports is a major challenge for any company, especially for SMEs or VSEs that do not have a sufficiently experienced accountant among their workforce.
Nevertheless, expense reports remain key elements of your accounting and should therefore not be neglected at any time.
Fortunately, there are digital solutions to overcome this difficulty, such as the eBrigade software.
Our web app allows each of your employees to be autonomous in filling in expense reports very quickly (less than 2 minutes). The receipts are secure and you will be able to get rid of the various tools where your invoices and various tickets are stored. Your managers are then alerted when an employee records an expense before validating/denying the claim. At the same time, automatic control rules will allow you to account for expenses reliably, with employees quickly reimbursed.
So don’t waste any more time and choose eBrigade!
