How can you handle expenses that are split between multiple categories in your expense report?

If you work in corporate accounting, you may have to deal with expenses that are split between multiple categories in your expense report. For example, you may have a hotel bill that includes room, taxes, parking, and meals. How can you allocate these costs accurately and efficiently to the right accounts? In this article, you will learn some tips and best practices to handle split expenses in your expense report.

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1 Why split expenses matter

Splitting expenses is important for several reasons. First, it helps you comply with your company's expense policy and avoid reimbursement delays or disputes. Second, it helps your company track and manage its spending and budgeting more effectively. Third, it helps you avoid tax issues and audit risks by reporting your expenses correctly and consistently.

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Tomi Akinwale ACCA, ACA, ACTI, B.TECH, FMVA, AAT.

Tax | Deloitte | Financial Reporting & Modelling |
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This is in line with matching principles which states that expenses must match the income used to generate it. Expense matching is a basic requirement in financial reporting.

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Aditya Rastogi

DAS Intern at KPMG Global Services | CFA RC - Zonal Finalist | PGDM Finance | Valuation | 6Ïƒ Green Belt |
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Split expenses offer nuanced insights into financial allocations, ensuring accurate budgeting and resource optimization. This practice enhances financial transparency and accountability, vital for both personal and organizational fiscal health. While the Matching Principle is the prima facie but keep don't ignore the Principle of Substance over Form and Conservatism.

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2 How to split expenses manually

One way to handle split expenses is to do it manually. This means that you have to calculate the percentage or amount of each expense category and enter it separately in your expense report. For example, if your hotel bill is $200 and it includes $100 for room, $20 for taxes, $30 for parking, and $50 for meals, you have to enter four different lines in your expense report, each with its own category and amount. This method can be time-consuming and error-prone, especially if you have many split expenses or complex calculations.

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Aditya Rastogi

DAS Intern at KPMG Global Services | CFA RC - Zonal Finalist | PGDM Finance | Valuation | 6Ïƒ Green Belt |
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For meticulous control, manual expense splitting involves categorizing costs accurately. Utilizing tools like Tally and Excel, I personally allocate expenditures across relevant categories, ensuring precision in financial records. This hands-on approach guarantees a comprehensive understanding of resource distribution.

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3 How to split expenses automatically

Another way to handle split expenses is to use a software tool or app that can do it automatically for you. This means that you can scan or upload your receipts and the tool will recognize and categorize the different expense items for you. For example, if you use Expensify, you can use the SmartScan feature to capture your hotel bill and it will split it into room, taxes, parking, and meals for you. You can also adjust or edit the categories and amounts if needed. This method can save you time and hassle, as well as reduce errors and inconsistencies.

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Aditya Rastogi

DAS Intern at KPMG Global Services | CFA RC - Zonal Finalist | PGDM Finance | Valuation | 6Ïƒ Green Belt |
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Leveraging automated tools, such as Tally and SAP S4 HANA, streamlines expense splitting. Through predefined rules and algorithms, these systems facilitate swift and error-free allocation, saving time and minimizing the margin for human error. This automation significantly enhances efficiency in financial operations.

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4 How to split expenses by project or client

Sometimes, you may have to split your expenses not only by category, but also by project or client. For example, you may have a flight that covers two different business trips or a meal that involves two different customers. In this case, you have to allocate your expenses proportionally to the relevant project or client codes. For example, if your flight is $500 and it covers a trip to New York for project A and a trip to Chicago for project B, you have to split the flight cost according to the distance or time of each trip. You can use a spreadsheet or a calculator to do this, or you can use a software tool or app that can do it automatically for you.

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5 How to document and justify split expenses

Regardless of how you split your expenses, you have to document and justify them properly. This means that you have to keep your receipts and invoices, as well as any supporting information or evidence that explains why and how you split your expenses. For example, you may have to attach a copy of your itinerary, a map of your route, or a note of your meeting agenda. You also have to follow your company's expense policy and guidelines, as well as any specific requirements or instructions from your manager or accountant.

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6 How to review and submit split expenses

Finally, you have to review and submit your split expenses in a timely and accurate manner. This means that you have to check your expense report for any errors or discrepancies, such as missing or duplicate entries, wrong categories or amounts, or mismatched receipts and invoices. You also have to ensure that your expense report is complete and consistent, and that it matches your bank or credit card statements. You also have to submit your expense report by the deadline and follow up with your manager or accountant if you have any questions or issues.

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7 Hereâ€™s what else to consider

This is a space to share examples, stories, or insights that donâ€™t fit into any of the previous sections. What else would you like to add?

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Directory

How can you handle expenses that are split between multiple categories in your expense report?

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1 Why split expenses matter

2 How to split expenses manually

3 How to split expenses automatically

4 How to split expenses by project or client

5 How to document and justify split expenses

6 How to review and submit split expenses

7 Hereâ€™s what else to consider

Corporate Accounting

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