Overview
Paper expense reports are a relic. Xero's expense module lets employees capture receipts on their phone the moment they spend, submit claims with a tap, and receive reimbursement through payroll — all with automatic approval routing to the right manager. This guide covers setup for both the mobile app and the approval workflow.
Before you start
- Xero account with Payroll and Expenses modules
- Employees with smartphones for the Xero Expenses app
- Chart of accounts with expense categories set up
Step-by-step guide (4 steps)
Enable Xero Expenses for your team
In Xero, go to Settings > Expenses. Enable the module and invite your team members. They'll receive an email to download the Xero Expenses mobile app (iOS or Android). Make sure each employee's profile has their reimbursement details.
Configure expense categories and spending policies
Go to Settings > Expenses > Expense categories. Create categories that match your chart of accounts: Travel, Meals & Entertainment, Office Supplies, Equipment, etc. Set per-category spending limits to flag high-value claims for additional review.
Set up the approval workflow
In Xero Expenses, configure approvers per department or employee. When an expense is submitted, the designated approver gets an email with the receipt image, amount, category, and description. They approve or reject with one click from their phone or browser.
Set up two-level approval for expenses over $500: first-level manager approval, then finance approval. This prevents large expenses slipping through without appropriate review.
Schedule automatic reimbursement via payroll
In Xero Payroll, enable 'Reimburse via payroll.' Approved expense claims are batched and included in the next payroll run automatically. Employees see the reimbursement as a separate line item on their payslip.
What you'll get
Employees submit expenses in real time — no forgotten receipts
Managers approve from anywhere via mobile
Reimbursements through payroll eliminates manual payments
Expense data flows directly to bookkeeping — no re-entry
Common mistakes to avoid
Not training employees on the mobile app (adoption is the biggest barrier)
Skipping spending limits on categories (expense amounts can creep without guardrails)
Not connecting expense categories to the correct GL accounts (creates messy books)
Frequently asked questions
Do I need coding experience to set up this Xero automation?
No coding is required. This guide walks you through everything using Xero's built-in features and Zapier's visual interface. If you can follow a recipe, you can follow this guide.
How long does this automation take to set up?
Most users complete this setup in 30–60 minutes on their first try. Once set up, it runs completely automatically with zero ongoing effort.
What happens if the automation fails?
Zapier and Make both have error notifications and task history, so you'll know immediately if something goes wrong. We cover troubleshooting steps in the guide above.
Can I customize this automation for my specific business?
Absolutely. The guide includes notes on common customizations. Most automations have multiple variation points — timing, conditions, notification recipients, and more.