Keeping track of expenses ensures that you claim all deductible costs and maintain accurate records. This article shows you how to submit and approve expense claims in Xero, use the mobile app to scan receipts, set expense categories and reimburse employees. It also covers how to handle expenses paid with personal funds.

Stuart Kerr | Published 04/11/25 | Updated 04/11/25

Expenses are a significant part of running a business, but poorly tracked spending can erode profits and create tax headaches. Xero’s Expense module and mobile app streamline the process of capturing, approving and reimbursing costs. Here’s how to make the most of them.

Capture receipts and mileage on the go

Xero’s mobile app lets you snap photos of receipts and upload them directly to your accounting software. The app extracts key data such as vendor, date and amount, reducing manual data entryvintti.com. You can also record mileage by entering the distance travelled and the purpose of the trip; Xero calculates reimbursement based on HMRC’s mileage ratesvintti.com.

Create and submit expense claims

To record an expense in Xero, go to Business → Expenses → New Expense. Enter or upload receipts, assign a contact (customer or supplier), select a category (such as travel, meals or office supplies) and specify whether the expense is billable to a customer. Add notes or a project reference if neededvintti.com. After submitting, managers can review and approve claims. Xero’s workflows notify approvers and allow them to request more information.

Set categories and assign expenses to projects

Customise your expense categories to match your chart of accounts. For job costing, assign expenses to specific projects or customers so you can bill them later. Vintti notes that you can track expense trends, view duplicate claims and analyse spending by employee or projectvintti.com.

Reimburse employees and batch payments

Once expenses are approved, reimburse your employees via payroll or bank transfer. Xero allows you to group multiple claims into one payment file, reducing bank feesvintti.com. If employees pay for business expenses out of personal funds, record a Spend Money transaction from the Funds Introduced account and mark it as reimbursablevintti.com. This keeps your business expenses separate from personal spending.

Advanced tips

• Use the mobile app for efficiency. Employees can snap receipts and submit claims immediately, reducing lost receipts.

• Set up approval tiers. Assign different approvers based on claim size or department so that larger expenses receive additional scrutiny.

• Analyse expense patterns. Review expense reports to identify overspending or cost‑saving opportunities. Xero’s reports can highlight unusual trends and duplicate submissionsvintti.com.

• Record VAT correctly. Choose the correct tax rate when entering expenses to ensure you reclaim the right amount of input VAT.

With the right processes and tools, tracking expenses in Xero becomes simple. By capturing receipts immediately, categorising expenses accurately and reimbursing employees promptly, you’ll maintain accurate records and improve cash flow.

About the Author

Stuart Kerr, Partner in Bookkeeping Packages. You can contact him on stuart@bookkeepingpackages.co.uk.