An expense report is a document that tracks the money your business spends on operations. In manufacturing, this can include everything from raw materials to fuel, maintenance, travel, and software.
For small businesses, especially in manufacturing, accurate expense reports help:
In a manufacturing setting, costs can pile up quickly. A missed receipt or miscategorized transaction might not seem like a big deal, but over time, these errors add up.
Solid expense reporting helps you:
Here are the most important categories you should be tracking:
These are the items used to make your product. This includes direct materials (like steel, wood, or plastic) and indirect materials (like glue, thread, or lubricants).
Make sure to track what you buy and how much you use. This helps you calculate your Cost of Goods Sold (COGS) and spot waste or shortages.
forget to include:
Overtime
Temporary or contract workers
Supervisors or managers in the plant
Learn how to calculate labor and overhead cost so you can manage workforce spending better.
Factories use a lot of energy and water. Your report should include costs like:
Electricity for running machines
Heating and cooling
Water and sewer
Waste disposal
These expenses can vary by season, so track them monthly for better cash flow visibility.
When machines break down, production slows or stops. That’s expensive. Keep track of:
Regular maintenance (oil changes, tune-ups)
Emergency repairs
Replacement parts
See how production downtime affects your costs and how to plan for it.
If your team travels for business or you deliver goods yourself, these costs add up fast. Be sure to track:
Gas and mileage
Vehicle maintenance
Flights, hotels, and meals
Freight and shipping
These are often missed in reports, but they matter for accurate forecasting.
6. Professional Services
You may hire outside help for:
These experts help you stay compliant and make smart financial decisions.
Many manufacturers use digital tools to manage work. These tools often have monthly or yearly fees. Be sure to include:
If you're choosing a new system, read this guide on ERP system selection for manufacturing.
Running a manufacturing business comes with risks. That’s why you need the right insurance and legal permits. Track costs like:
General liability insurance
Equipment and property insurance
Workers' compensation
Safety or zoning permits
Learn more about manufacturing insurance types and why they’re essential to protect your business.
Use cloud-based accounting software or ERP tools to digitize and categorize expenses. Avoid manual spreadsheets when possible.
Create a company policy that defines what counts as a business expense, and who can approve it.
Always attach receipts, invoices, or notes to every report for audit readiness.
Don't wait until month-end. Log expenses weekly (or daily if possible) to catch problems early.
This helps in identifying which part of your business is consuming the most resources. Use labor cost strategies to stay efficient.
Expense reports help you:
For manufacturers, knowing your expenses is just as important as knowing your production numbers.
Expense reports might seem like a back-office chore, but they play a frontline role in financial health. If you're a manufacturing business looking to scale, stay lean, or attract investors, organized and detailed expense tracking is non-negotiable.