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Expense Accrual

What is Expense Accrual?

Expense accrual is a key component of the accrual basis of accounting. It involves recording expenses in the financial books as soon as they are incurred—even if the payment hasn’t been made yet. This approach provides a more accurate picture of a company’s financial health during a specific reporting period. In corporate travel, expense accruals help finance teams track costs such as flights, hotel bookings, and meals that have been consumed but not yet reimbursed or invoiced. For example, if an employee travels at the end of the month but submits their expenses in the next, the finance team still needs to record that liability in the current month’s books. Using an automated travel and expense management platform like TripGain simplifies the accrual process by providing real-time visibility into bookings, travel dates, and pending reimbursements—helping businesses maintain accurate records and meet compliance standards.

Examples Of Expense Accrual In Corporate Travel And Expense
1.
Flight Booking Accrual
An Employee Books A Flight In March For A Trip In April; The Expense Is Accrued In March When The Booking Occurs.
2.
Quarter-End Hotel Stay
A Hotel Stay Completed In The Last Week Of The Quarter Is Recorded As An Accrual Before The Employee Submits The Receipt In The Next Month.
3.
Automated Month-End Closing
Tripgain’S Reporting Tool Automatically Flags Pending Expenses To Be Accrued For Accurate Month-End Closing.
Frequently Asked Questions About Expense Accrual
1.
Why is expense accrual important in corporate travel?
It ensures that all incurred travel costs are reflected in the correct accounting period, giving finance teams accurate financial statements.
2.
How does TripGain assist with expense accrual?
TripGain tracks travel dates and unsubmitted expenses, helping finance teams flag and accrue costs automatically.
3.
Is expense accrual mandatory for all businesses?
It is mandatory for companies using accrual accounting, which is standard for most mid-to-large businesses for compliance and accuracy.
4.
What types of expenses are typically accrued in business travel?
Common accrued expenses include flights, hotels, transportation, and meals that have occurred but not yet been reimbursed or invoiced.
5.
How does expense accrual differ from expense reimbursement?
Accrual records the obligation to pay, while reimbursement is the actual payment made to the employee or vendor.