Mastering Incidental Expenses: Tips and Examples for Better Management

Introduction to Incidental Expenses

Incidental costs refer to minor, often unplanned business expenses that pop up while doing business. They’re not the "headline" costs like salaries or rent, but they’re still real money leaving your bank account.

They might seem harmless, but over time, they can throw your financial planning off course if not properly tracked.

A Few Quick Examples:

• Tips for hotel staff during business travel
• Parking fees during client meetings
• Laundry charges during overseas trips
• Small postage or courier charges
• Minor purchases while on business trip or personal expenses

Unlike major expenses such as rent or salaries, incidental expenses are often small and unpredictable, requiring a separate tracking strategy.

Why should you care? Understanding and managing these whether major or minor costs is crucial for better financial performance. Every dollar counts when you’re trying to grow your business sustainably. Plus, keeping a handle on these costs can improve your profitability and prevent budget leaks.

Understanding Incidental Expenses

Companies often set a per diem rate to simplify how employee travel business expenses are handled. Instead of tracking every single receipt, employees get a fixed daily allowance to cover meals, lodging, and other costs. This not only saves time but also keeps budgets predictable. A clear policy on per diem and business incidental expenses helps ensure transparency and fairness for both the company and its employees.

Types of Incidental Expenses

Let’s break down some of the examples of incidental expenses you might encounter:

Business-Related Incidental Expenses

These are minor costs directly tied to business operations. Think of:

• Meals and entertainment for clients
• Toll fees or ERP charges during business travel
• Tips and service charges at hotels
• Minor office supplies like printer ink or coffee for the pantry

These can often be tax-deductible, depending on how they’re recorded. Understanding the tax implications of these expenses is important—we’ll cover that in a bit.

Discretionary or Unplanned Costs

These include unbudgeted costs that aren’t always directly tied to an activity:

• Emergency cab rides
• Ad hoc design work or consultations
• Last-minute stationery or printing orders

While they may be necessary, they tend to sneak in under the radar. That’s why categorizing and monitoring them is essential.

Travel-Related Incidental Costs

Business trips come with a set of small costs:

• Lodging taxes
• Hotel internet charges
• Meals are not included in a conference or event
• Laundry expenses

These fall under the umbrella of incidental charges, and when planned poorly, can lead to reimbursement chaos later.

Common Incidental Expenses

Here’s a more detailed look at some examples that are considered incidental expenses that are not a part of direct business expenses yet typically show up in business finances:

Remember: Track and deduct incidental expenses so they do not turn into silent profit killers for your business.

Business Incidental Expenses: How They Add Up

Travel is a major source of incidental expenses. If you or your team travel frequently, it's especially important to monitor every detail.

Let’s say you’re sending a salesperson from Singapore to Kuala Lumpur for a client visit. The ticket and hotel might be pre-approved and budgeted. But:

• They might pay S$4 for Wi-Fi
• Add S$10 tip to the concierge
• Rack up S$12 in laundry fees
• Pay S$15 for Grab rides

Incidental costs related to parking fees and courier charges, might seem as minor expenses individually but can accumulate significantly if not properly tracked.

These incidental expenses tend to be tax-deductible, if they are directly related to business activities and are properly documented.

To handle this:

• Create a travel policy that outlines what qualifies as reimbursable
• Use digital tools for real-time tracking
• Educate staff on the importance of capturing receipts

Business Travel Expenses

Yes, this is the classic source of 100 little charges.

You don’t need to be jetting off overseas to rack up travel business expenses. Local client meetings and industry events in Singapore come with their own set of costs.

Examples include:

• Hotel stays for out-of-town conferences
• MRT or Grab fares
• Food and drinks during the day
• Tipping hotel or service staff
• Airport or local transport surcharges

Understanding the tax implications of travel business expenses is crucial. Many incidental expenses are tax-deductible if they are directly related to business activities and are properly documented.

Implementing a travel expense policy helps you manage and cap these costs. For example:

• Limit Grab rides to S$30 per day
• Set per diem allowances for meals
• Require pre-approval for hotel stays

You don’t want to be that boss reviewing a S$72 Starbucks receipt.

Expense Tracking and Management

If you’re serious about improving profitability, tracking incidental expenses is non-negotiable.

Why It Matters:

• Helps avoid over-claiming or under-reporting expenses
• Ensures compliance with IRAS guidelines
• Keeps employees accountable
• Identifies spending patterns and leaks
• Simplify reimbursement process

Tracking incidental expenses with expense management software helps businesses monitor small costs that might otherwise slip through the cracks.

Automating Expense Tracking

Manually tracking receipts is old school and time-consuming. Automating the process saves time and improves accuracy.

Benefits of Automation:

• Real-time data collection
• Mobile uploads of receipts
• Smart categorisation
• Policy compliance alerts

Expense management software can help categorise expenses, track spending, and provide real-time reporting.

Popular Tools in Singapore:

• Aspire (yes, that’s us!)
• Zoho Expense
• Xero Expenses
• SAP Concur

These platforms allow your team to submit claims and your finance team to review and approve them quickly.

Creating an Emergency Fund for Incidental Costs

Even the best-laid plans can go sideways. That’s why a business emergency fund is essential.

Why Have One:

• Covers expenses that fall outside the norm
• Reduces reliance on credit
• Adds flexibility when managing surprise costs

Examples:

• Replacing a lost laptop charger overseas
• Emergency accommodation due to cancelled flights
• Quick legal consultation during a dispute

Allocating even 3-5% of your monthly budget toward an emergency fund can create breathing space when things go awry.

Expense Policies and Procedures

You can’t manage what you don’t define. Having clear expense policies and procedures is essential.

This includes:

• What counts as an incidental expense
• Spend limits (per category or employee)
• Receipt requirements
• Approval workflows

Establishing clear procedures for reporting expenses ensures that all incidental costs are captured accurately and reimbursed appropriately.

For example:

• Meals over S$30 need manager approval
• Grab receipts must be submitted within 3 days
• Claims without proper receipts are non-reimbursable

Set these policies early, communicate them clearly, and reinforce them with your expense tracking system to manage and reduce unnecessary costs.

Pro tip: Keep things simple and digital. Use shared folders, mobile apps, or internal portals for expense submission.

Best Practices for Incidental Expense Management

You don’t have to become an accountant to get this right. Just follow a few smart rules:

1. Define What Counts as an Incidental Expense

Start by being crystal clear about what you consider to be an incidental expense. A lot of confusion (and even unnecessary claims) happens when your team doesn’t know what qualifies.

For example, you might allow:

• Parking charges during work-related client visits
• Grabs to events or pitches
• Courier costs for delivering signed contracts

But not:

• Meal costs even if they talk about work
• Laundry services
• Parking fines or traffic violation fees
• Grabs taken for personal errands on company time

Document this in an internal expense policy or playbook, and make it accessible to everyone. Clarity upfront leads to fewer disputes and cleaner books.

2. Track Expenses in Real Time

One of the biggest mistakes small business owners make is waiting until the end of the month to tally up expenses. By then, receipts are missing, memories are fuzzy, and you're relying on guesswork.

Encourage (or better yet, automate) real-time tracking:

• Ask team members to upload receipts on the spot
• Use mobile expense apps with photo capture
• Send automatic Slack reminders to submit expenses weekly

Real-time tracking also helps you course-correct early. If someone’s spending too much in a certain category, you can act fast, not after the budget’s blown.

3. Review Spending Patterns Regularly

It’s not enough to track expenses — you need to analyze the data too. Small costs have a funny way of becoming big leaks when left unchecked.

Review your incidental expenses at least once a month to:

• Identify categories where spending is increasing (like travel or delivery fees)
• Spot unusual or duplicate charges
• Compare team or department-level spending
• See if your policies need updating

If, for instance, you notice that incidental printing costs have gone up significantly, it might be time to go digital with contracts or marketing materials.

Use dashboards and reports to visualize trends. When you see the data, decision-making becomes less about gut instinct and more about what’s actually happening.

4. Educate and Empower Your Team

Your team isn’t trying to sabotage the budget. Most of the time, they just don’t know what’s expected.

Take time to onboard new employees on your expense policies and tools. Create quick guides or explainer videos showing:

• How to submit incidental expenses
• What receipts are required
• Who to contact if they’re unsure about a claim

Make the process feel like enablement, not enforcement. When people understand the "why" behind the policy, they’re more likely to follow it.

You can even gamify it: reward departments with the cleanest reports or the lowest unclaimed expense rate.

5. Centralize Your Documentation

Receipts, approvals, expense reports — they all need to live in one easily searchable place. Whether it's a cloud folder, an expense dashboard, or an integrated system, centralized documentation helps you:

• Stay audit-ready at all times
• Avoid duplicate reimbursements
• Reconcile books faster

And let’s be honest — it saves everyone from inbox hell when finance asks for “that one courier receipt from three weeks ago.”

Bonus Tip:
Encourage team-wide financial hygiene. Make expense management part of your culture. The more normalized it is to submit clean, timely, and accurate claims, the less time you’ll spend cleaning up messes later.

Are Incidental Expenses Tax-Deductible in Singapore?

Short answer: Yes, if they are wholly and exclusively incurred in the production of income.

IRAS allows deductions for:

• Local transport related to meetings
• Tips and service charges related to business travel
• Small office supplies

You must keep adequate records:

• Receipts (digital or scanned)
• Purpose of the expense
• Date and parties involved

Why Managing Incidental Costs Matters for SMEs in Singapore

Small and mid-sized businesses often don’t have large finance departments or buffers for uncontrolled spending. That makes managing incidental expenses even more important.

Every cent you save through discipline and visibility is a cent that can be reinvested.

For example:

• S$200/month in poorly tracked courier fees = S$2,400/year
• Multiply this across 5 departments and you’re losing S$12,000+ annually

Add automation, policies, and oversight, and you could regain that cash for hiring, marketing, or R&D.

Final Thoughts: Small Costs, Big Impact

So, what are incidental expenses? They’re the hidden costs of doing business—easy to overlook, but dangerous to ignore.

The good news is that with proper systems in place, you can manage them confidently and efficiently.

Let’s recap some smart strategies:

• Know what counts as an incidental expense
• Use software to automate and track
• Set clear policies and educate your team
• Maintain an emergency fund for the truly unexpected
• Regularly review, report, and refine your expense data

By following best practices and implementing effective management strategies, businesses can master incidental expense management and achieve improved financial performance.

How Aspire Can Help You Take Control

Aspire isn’t just another expense management tool—we’re built for businesses like yours. Our all-in-one financial operating system helps you:

• Automate tracking of both major and incidental expenses
• Issue virtual cards to employees with spending limits
• Simplify reimbursement process
• Maintain audit-ready records for tax purposes

With Aspire, managing incidental business expenses becomes effortless—so you can focus on growing your business instead of chasing receipts.

Ready to take control of your spending? Learn more about Aspire's smart business solutions here.