How much do expense reports really cost a company?

If you’ve ever asked yourself this question, you might answer that the time and effort required to submit and process expense reports tell the whole story. But the truth is that manual expense management takes a toll far beyond what’s immediately visible.

Hidden factors are also at play—each quietly chipping away at your bottom line in ways that aren’t always obvious at first glance. 

In this blog, I’ll break down these hidden costs, reveal what manual expense management is truly costing your business, and share how you can make the process easier, more accurate, and less of a burden.

Determining your base cost

Understanding the cost of expense reporting starts with breaking down how much time and money your current process requires. 

Start by asking yourself these questions:‍

1. How long does it take to complete an expense report?
Consider the time employees spend gathering receipts, entering data, submitting reports, and waiting for approvals. Don’t overlook the time your finance team dedicates to reviewing and processing these reports—it all adds up. ‍

(According to GBTA, on average, expense reports take 20 minutes to complete. However, some employees report spending up to 30-45 minutes, especially when dealing with complex expenses, missing receipts, or unclear reimbursement policies.)‍

2. What is the hourly cost of the employees involved?
Multiply the hours spent by the hourly wage or salary of everyone involved, from the employee submitting the report to the finance team handling approvals and reconciliation. 

(Studies show that, on average, this totals around $58 per report.)

3. How many reports are processed each month?
The number of reports your team processes plays a big role in determining the overall cost.

But the actual cost doesn’t stop there. 

Studies also show that 19% of expense reports contain errors, each requiring an additional 18 minutes to rectify, costing $52 per corrected report. If your business processes a large volume of reports, these added costs will quickly add up.

Let’s walk through a hypothetical example. 

If your team processes 50 reports a month at $58 per report, that’s $2,900 in base processing costs. Now, factor in error correction costs for 19% of those reports—10 reports at $52 each—and you’re adding another $520. 

Combined, you’re looking at $3.4K in expense reporting costs every month—or over $41K per year—just to manage and fix expense reports.

And that’s just the financial impact. The time cost is equally important. In this example, employees would spend over 19 hours a month on tedious processes. 

Time that could be better spent on projects and initiatives that drive real results for your business. That’s why streamlining expense management is crucial for any company looking to scale. 

The hidden costs of manual expense management

While the time and effort spent processing reports is significant, hidden factors will also make an impact.  These inefficiencies go beyond time lost, affecting accuracy, security, and even employee morale. 

Here’s how manual expense management processes can hold your business back.

Time consumption

As addressed above, manual expense reporting is a time-intensive process that drains hours across your organization. Employees spend time gathering receipts, entering data, waiting for approvals, and resubmitting when mistakes arise. Every step takes time that could be better spent on higher-value tasks. And let’s not forget your finance team—when they’re buried in tedious workflows, their productivity takes a hit. Instead of acting as strategic partners to the business, lean finance teams are left handling repetitive processes that slow growth. This means delayed reporting, stalled analyses, and constantly shifting deadlines, all of which create unnecessary bottlenecks for the business.

Human error

Mistakes are unavoidable when employees manage expenses manually. A missed receipt, an incorrect entry, or a miscalculated total can quickly lead to inaccuracies that ripple through financial records. One misplaced decimal can lead to hours of stressful deep dives into your data. Fixing these errors will be frustrating and costly, creating unnecessary headaches and extra work for employees and finance teams.

Vulnerability to fraud

Manual processes also increase the risk of fraud. Without automated checks and controls, it’s easier for fraudulent expenses to slip through the cracks, putting your company at financial and compliance risk. Beyond the monetary loss, undetected fraud can erode trust and create long-term issues for your company.

Low visibility on company expenses

Relying on manual reports makes tracking business expenses a challenge. Even with the strictest expense reporting policies, there will always be employees who push the limits—submitting expenses late and creating gaps in financial records. Without real-time insights, you’re left with limited visibility into spending patterns and inefficiencies. This lack of oversight will not allow you to fully control the business budget or plan for the future effectively. 

Inaccurate financial reporting 

Slow expense reporting doesn’t just create headaches at the moment—it also delays critical financial insights. When finance teams spend weeks chasing down missing reports, reconciling expenses, and correcting errors, it pushes out financial close processes. That means budgets, forecasts, and spending adjustments are often based on outdated data, making it harder to respond to cost overruns or reallocate funds efficiently. If expense reports aren’t finalized until long after the month or quarter ends, businesses risk missing key opportunities to optimize spending and improve financial performance.

Delayed reimbursements and employee dissatisfaction

Slow processes mean slower reimbursements for employees. For employees continually footing the bill, these delays can feel frustrating and demotivating. Over time, dissatisfaction with the process can impact morale and how employees perceive the company’s support for their financial needs.

Eliminate hidden costs with Extend

The inefficiencies of manual expense management don’t have to weigh your business down. By switching to a modern expense management solution, you can simplify the entire process, improve accuracy, and regain valuable time for your team.

Extend makes it easy to manage expenses by creating and controlling virtual cards tied to your existing business credit card—no need to overhaul current systems or open new lines of credit. Plus, with built-in automation and controls, businesses get full visibility into spending while reducing errors and fraud risks.

Here are some of the key features:

• Virtual cards: Instantly generate virtual cards for employees, vendors, or recurring expenses while maintaining full control over limits, expiration dates, and spending rules.
• Receipt rules & reminders: Ensure every transaction is properly documented with automated receipt collection and reminders for missing receipts.
• Expense category codes: Assign custom labels to transactions, making it easier to track spending and streamline reconciliation with your accounting system.
• Automated expense reports: Reduce manual data entry with reports that automatically categorize, consolidate, and organize transactions for easy review.
• Out-of-pocket expense reporting: Allow employees to submit and get reimbursed for out-of-pocket expenses within the same platform, keeping all business spending in one place.
• Approval workflows: Customize approval processes to ensure expenses are reviewed and approved before they take place, improving oversight and control.

Ready to see how Extend can help you eliminate hidden costs and streamline expense management? 

Learn more about the platform and how it works.