What Is Expense Approval Process? Best Practices to Implement

October 23, 2025

5 min read

Managing company expenses can sometimes feel challenging, especially when several employees are involved in day-to-day business spending. From travel expenses and meals to office supplies and software subscriptions, every expense matters.

This is where the expense approval process becomes valuable. It provides a clear system for reviewing, validating, and approving all business-related expenses before they are reimbursed or recorded.
With the best expense approval software in place, companies can maintain transparency, prevent unnecessary spending, and keep budgets on track.

An efficient expense approval process also helps employees feel more confident when submitting claims, as they know exactly what steps to follow and how quickly reimbursements will be processed.

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Quick Read

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Speed up your expense approval process with Expense Tracker 365. Using AI and automated workflows, it makes reviewing and approving expenses quick and accurate. Keep track of every expense in real time, follow company policies easily, and manage your finances without extra manual work.

What Is the Expense Approval Process?

The expense approval process is the method through which businesses review, approve, or reject expense claims submitted by employees. These expenses could include travel, meals, office supplies, software, or any other business-related costs.

The process ensures that every expense is valid, within budget, and follows company rules. It also helps manage finance accurately and available for audits.

A clear expenses approval process reduces mistakes, saves time, and provides employees and managers with a simple way to manage claims.

How Does Expense Approval Process Work?

Managing expenses effectively is essential for every company. A well-organized expenses approval process allows teams to submit, review, and approve expenses quickly while maintaining transparency and financial control. Here’s a step-by-step guide to how it works:

Step 1: Create an Expense Request
Employees start by creating a new expense or purchase request. They add key details such as the expense type, purpose, vendor, department, and the amount involved.

Step 2: Upload Supporting Documents
Receipts, invoices, or any other proof of payment are attached to ensure transparency and make verification easier.

Step 3: Submit for Approval
Once completed, the request is sent to the appropriate approver automatically, following the company’s approval hierarchy.

Step 4: Approver Receives Notification
Approvers get instant email alerts. They can review and take action approve or reject directly from their inbox.

Step 5: Review and Decide
Approvers check the request, ask for clarification if needed, and then approve, reject, or send it back with comments for revision.

Step 6: Delegate Approvals if Needed
If an approver is unavailable, they can delegate their approval rights to a colleague, preventing delays in the workflow.

Step 7: Update Employees
Employees are automatically notified whenever their expense request is approved, rejected, or sent back for changes.

Step 8: Finance Team Review
The finance team checks the approved expenses and processes payments or reimbursements promptly.

Step 9: Monitor Expenses in Real-Time
All expense requests approved, pending, or rejected are tracked on a single dashboard. This makes it easy for teams to manage budgets and monitor spending effectively.

Difference Between Manual and Automated Expense Approval Process

Expense approval can be done manually using papers or spreadsheets or automatically using software. Here’s a simple comparison.

Feature	Manual Expense Approval	Automated Expense Approval
Time Taken	Can take days to process each expense	Processes expenses in minutes
Tracking	Hard to track status and history	Easy to see the status of every request
Accuracy	More chance of missing details	Reduces mistakes by checking rules automatically
Employee Effort	Employees fill forms and attach receipts manually	Employees upload receipts digitally, and the system reads details
Management Visibility	Managers need to check emails or files	Managers get clear dashboards with approvals pending

Key Features That Help During the Process

A strong expense approval workflow depends on features that make the process simple, fast, and clear. Here’s a detailed look at eight important features.

Digital Expense Submission
Employees can submit expense reports online from any device desktop, tablet, or smartphone.
Digital submission keeps everything organized in one place, avoids the need for printing receipts, and allows employees to record expenses as soon as they happen.
This not only saves time but also makes it easy for managers to access and review requests anytime.
Receipt Auto Scan
Receipt auto scan is a feature that reads uploaded receipts automatically. It can detect the vendor, date, amount, and expense category, then populate the report fields instantly.
For instance, if an employee uploads a restaurant receipt for a business lunch, the system can extract the total amount, date, and vendor name without manual entry.
This receipt scanning speeds up the expenses approval process, and allows approvers to see all essential details immediately. It also keeps records uniform, so reports and audits are easier to handle.
Multi-Level Approval
Some expenses need approval from more than one person. A team lead, department head, and finance manager may all need to sign off on certain requests.
Multi-level approval makes sure that each expense is checked carefully at every step. For example, travel expenses over a set amount may require both the department head and finance manager’s approval.
This feature provides clarity on who is responsible for expense approval process and helps managers monitor spending within their teams.
Automatic Alerts and Notifications
The system automatically sends reminders to employees and managers about pending approvals, missing receipts, or approaching deadlines.
Similarly, managers receive alerts about requests waiting for their approval. These notifications keep the process moving, help avoid delays, and make it easy for everyone to stay up to date on the status of expenses.
Custom Approval Rules
Companies can set rules based on budgets, departments, or expense groups. For example, small office supply purchases may only need approval from a team lead, while travel or equipment costs above a certain threshold may need senior manager approval.
Custom rules help clarify which expenses require which approvals, saving time and reducing unnecessary waiting.
Employees know exactly who will review their request, and managers know what to expect in their inbox.
Expense Approval Delegation
If a manager is unavailable due to leave or business trips, they can delegate their approval rights to another authorized team member. For example, if the finance manager is away, the department head can temporarily approve pending expenses.
This prevents delays in reimbursement and payments, allowing employees to continue submitting requests without waiting.
Delegation also keeps the workflow moving efficiently, maintaining accountability and visibility in the approval process.
Detailed Reporting
Expense management software can generate detailed reports showing approved, pending, and rejected requests.
Managers can analyse these expense reports to understand team spending, identify trends, and plan budgets more effectively.
Detailed reporting also helps the finance team prepare for audits, reconcile accounts, and track overall financial health.
Integration with Accounting Systems
Approved expenses can be automatically sent to accounting or payroll software.
Integration with tools like expense reporting and QuickBooks helps avoid manual entry, reduces administrative work, and keeps financial records accurate.
It also helps payments get processed faster, giving employees their reimbursements on time and keeping the company’s financial data up to date.

Benefits of Good Expense Approval Process

A well-managed expense approval workflow provides advantages for the entire organization. Here’s an expanded look at seven key benefits.

Saves Time for Everyone
Traditional manual expense management can take hours or even days to process. With a structured workflow and automation, submitting, reviewing, and approving expenses becomes much faster.
Employees can upload receipts and enter details in minutes from any device, and managers can approve requests.
This saves time across the organization, allowing teams to focus on important tasks rather than administrative work.
Increases Accuracy
Automated expense management help capture all necessary details correctly, such as receipt amounts, dates, and vendors. By reducing manual entry, the chance of mistakes is minimized.
For example, a travel expense uploaded via a mobile app will automatically record the date and amount, reducing the need for corrections later.
Accurate data helps finance teams generate precise reports, making planning and decision-making more reliable.

Enhances Transparency
Employees and managers can track the status of every expense request in real time.
Employees can see whether their request is pending, approved, or sent for additional details, while managers can view all pending approvals immediately.
This visibility keeps everyone informed and builds trust, as employees know exactly where their requests stand and managers have a clear analysis of spending.

Strengthens Budget Control
Real-time expense tracking and detailed reporting give finance teams the information they need to monitor budgets effectively.
For instance, if a department is nearing its monthly budget, managers can review expenses and make adjustments before overspending occurs.
Detailed insights also help plan future projects, allocate resources wisely, and maintain financial stability across the organization.
Speeds Up Reimbursements
A clear expense approval process helps employees receive reimbursements quickly. When approvals move without delay, employees get paid back faster for travel, meals, or office supplies.
This improves employee satisfaction, especially for staff who frequently incur expenses for business activities.
Quick expense reimbursement also reflects well on the organization, showing that it values employees’ time and effort.

Supports Compliance and Record-Keeping
Organized expense records make it easy to follow company policies and meet audit or tax requirements.
Every receipt, approval, and payment is recorded in one system, which keeps financial documentation complete and accessible.
This simplifies compliance, reduces administrative stress, and provides a reliable reference for future audits or reviews.

Encourages Smart Spending
A structured expense approval process helps employees understand spending limits and guidelines. When employees are aware of policies, they make informed decisions and prioritize necessary expenses.
Managers can also guide teams to spend resources wisely, leading to thoughtful budgeting and responsible use of company funds.
Over time, this creates a culture of accountability and financial awareness across the organization.

Why Expense Tracker 365 is Good for Expense Approval Process?

Expense Tracker 365 is a robust expense management solution designed on the Microsoft platform. It works seamlessly with SharePoint, MS Teams, Outlook, and QuickBooks, simplifying the approval process and saving time for employees and managers.

Equipped with AI-powered automation and multi-level approval capabilities, the software delivers secure, intuitive workflows and real-time expense tracking.

By integrating advanced technology with a user-friendly interface, Expense Tracker 365 enables organizations to handle expenses efficiently while keeping full visibility and control over spending.

Best Practices to Improve the Expense Approval Workflow

Even the best expense approval workflows can be refined to work more efficiently. Here’s a practical guide with steps that help make the process smoother for everyone:

Define Clear Policies for All Employees
Set simple and clear rules about which expenses are allowed, spending limits, and how quickly reports should be submitted. Including examples, like what qualifies as a travel or office supply expense, helps employees understand expectations and prevents confusion.

Monitor Workflows Regularly
Managers and finance teams should review expense reports on a regular basis. This helps spot delays, unusual spending patterns, or areas that need improvement. Regular monitoring also keeps the process consistent and ensures approvals happen on time.

Encourage Early Submission
Ask employees to submit expenses as soon as they occur. Early submission allows managers to review and approve requests quickly, keeps financial records up to date, and avoids a backlog of pending reports at the end of the month or quarter.

Use Reporting to Spot Trends
Analyse expense reports to understand spending habits across departments or projects. For example, if travel expenses are higher than usual, management can adjust budgets or plan more carefully for future trips. Reports also help identify opportunities to optimize spending and make informed financial decisions.

Involve All Stakeholders
Collect feedback from employees, managers, and the finance team about the workflow. Understanding their experiences and suggestions helps create a process that is efficient, practical, and suitable for all departments. Engaging everyone ensures the workflow is easy to follow and works well in day-to-day operations.

Conclusion

A strong expense approval process benefits employees, managers, and finance teams. By adopting a clear workflow, companies can save time, improve accuracy, and maintain better control over spending.

Get started with Expense Tracker 365 today and take full control of your company’s expenses with smart, real-time tracking and approvals.

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Frequently Asked Questions

What is an expense approval workflow?

An expense approval workflow is a structured, step-by-step process that companies use to review, approve, and reimburse employee expenses. It ensures that all expenses are tracked, verified, and processed in an organized manner, helping maintain transparency and financial control.

Submit an expense request through the expense management system.
Include the following details in your request:
- Expense type
- Purpose of the expense
- Amount
- Vendor name
Attach supporting documents, such as receipts or invoices.
Once submitted, the request will be sent to the designated approver(s) for review and approval.