What patterns and trends can you identify in business spending using expense reports?

Expense reports are not just a tedious task for employees and managers. They can also reveal valuable insights into how a business spends its money, what drives its performance, and where it can improve its efficiency and profitability. In this article, you will learn how to identify patterns and trends in business spending using expense reports, and how to use them to make smarter decisions.

1 The benefits of analyzing expense reports

Analyzing expense reports can help you understand how your business operates, what your costs are, and how you can optimize your budget. Through examining the data from expense reports, you can uncover the main categories of spending, such as travel, entertainment, supplies, and utilities. Additionally, you can compare the spending patterns across different departments, teams, projects, and locations. You may also track any changes in spending over time and observe their correlation with your revenue, goals, and performance indicators. Moreover, analyzing expense reports can help detect any anomalies, errors, or frauds in the reports and take corrective actions. Finally, it can be used to find opportunities to reduce costs, negotiate better deals, or streamline processes.

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Effiong Lesley Akpan

Data Analyst
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In a sample expense report analysis, a notable pattern may reveal that travel and entertainment expenses spike during the fourth quarter, aligning with year-end client meetings and conferences. Vendor analysis may indicate a consistent overspending with a particular supplier, suggesting a need for renegotiation or exploring alternative options. Employee spending patterns might show a few individuals consistently exceeding meal allowances, highlighting the importance of reinforcing spending policies or providing additional guidance. Such insights enable businesses to optimize budgets, negotiate better deals, and enhance spending efficiency.

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2 The tools and methods for analyzing expense reports

To analyze expense reports, you need a system that can collect, organize, and process data from different sources, such as receipts, invoices, credit cards, and bank statements. To do this, you can use software applications to automate the creation, submission, approval, and reimbursement of expense reports. Spreadsheets allow you to import, manipulate, and visualize the data from expense reports. Additionally, data analysis techniques can help you explore, summarize, and interpret the data from expense reports. Lastly, data visualization techniques present and communicate the findings from the data analysis.

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3 The best practices for analyzing expense reports

To get the most out of your expense report analysis, you should define the purpose and scope of your analysis, as well as the questions you want to answer. Select the right tools and methods for your analysis and ensure data quality and accuracy. Segmenting the data into meaningful groups such as categories, periods, or units can help you look for patterns and trends in the data. Comparing them to your benchmarks, targets, or expectations can help explain the causes and effects of these patterns and trends. Finally, make recommendations and action plans based on the analysis, then monitor the results and outcomes.

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4 The examples of patterns and trends in expense reports

To illustrate how you can identify patterns and trends in expense reports, here are some examples of what you can look for and what they can tell you. For instance, you can see the seasonality of spending in certain months, or the correlation between spending and revenue. Additionally, you can spot outliers in spending, such as unusually high or low expenses in a category, department, or project. Furthermore, you can examine the distribution of spending by looking at the average, median, or range of expenses in a category, department, or project. Lastly, you can monitor the growth or decline of spending by examining the percentage change, rate, or slope of expenses over time.

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Mark Cleland

Owner - Mortgage Choice Maroondah/Eastern Suburbs, Melbourne
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In Aust I have found that many owners of SME’s don’t even budget and ignore revenue and expenses expecting sales to exceed outgoings. By the time they realise they aren’t they are insolvent and owing suppliers and the ATO. I implore startups to engage a business coach as soon as they start and put business plans and reporting in place. If they did our rate of business failures would fall dramatically

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5 The challenges and limitations of analyzing expense reports

Analyzing expense reports can also have some challenges and limitations, such as the complexity and diversity of the data making it difficult to collect, integrate, and standardize; the timeliness and completeness of the data affecting the reliability and validity of the analysis; the subjectivity and bias of the data influencing interpretation and presentation; the compliance and security of the data requiring adherence to rules, regulations, and policies; and the skills and resources of the analyst determining quality and effectiveness.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What patterns and trends can you identify in business spending using expense reports?

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1 The benefits of analyzing expense reports

2 The tools and methods for analyzing expense reports

3 The best practices for analyzing expense reports

4 The examples of patterns and trends in expense reports

5 The challenges and limitations of analyzing expense reports

6 Here’s what else to consider

Business Reporting

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