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Purchase
Expenses

Expenses

Lekha’s Expense Management module provides a comprehensive solution for recording and tracking business expenses across various categories and payment methods. Whether you’re managing vendor payments, customer reimbursements, or general business expenditures, the system ensures accurate expense tracking while maintaining compliance with GST regulations.

With detailed line-item tracking, flexible discount options, and automatic tax calculations, you can capture every expense detail for precise financial reporting. The module supports multi-currency transactions, various expense categories, and seamless integration with your chart of accounts.

From petty cash expenses to major vendor payments, Lekha’s expense management enhances financial transparency, ensures regulatory compliance, and provides valuable insights into your business spending patterns.

Creating a New Expense

Recording expenses accurately ensures proper financial tracking and compliance with tax regulations.

Step 1: Access Expenses

  1. Navigate to Purchase in the main menu
  2. Click on Expenses from the submenu
  3. Click the "+ New" button

Step 2: Basic Information

Expense Number (Required)

  • Auto-generated expense reference number
  • Must be unique within the system
  • Note: Read-only for existing expenses

Date (Required)

  • Select the expense date
  • Defaults to current date
  • Important for accounting period accuracy

Description (Optional)

  • Enter detailed description of the expense
  • Use textarea for longer descriptions
  • Helps with expense categorization and reporting

Expense Account (Required)

  • Select the account to categorize this expense
  • Use “Manage Expense Accounts” to add new accounts
  • Examples: “Office Supplies”, “Travel”, “Utilities”
  • Affects financial reporting and tax calculations

Finance Account (Required)

  • Select the account from which payment is made
  • Examples: “Bank Account”, “Cash”, “Credit Card”
  • Used for cash flow tracking and reconciliation

Expense Category (Required, radio buttons)

Expense Category Description
Goods Tangible items purchased, typically for resale or inventory.
Services Intangible services availed such as consulting, maintenance, or subscriptions.
  • Affects GST treatment and compliance

Expensed To (Required, radio buttons)

  • Vendor - Payment to registered vendors
  • Customer - Reimbursement to customers
  • Determines which contact selection appears

Step 3: Contact Selection

When Expensed To is “Vendor”:

Vendor (Required)

  • Select vendor from dropdown with search functionality
  • Start typing to search for existing vendors
  • Auto-populates currency and GST treatment information

When Expensed To is “Customer”:

Customer (Required)

  • Select customer from dropdown with search functionality
  • Start typing to search for existing customers
  • Auto-populates currency and GST treatment information

Step 4: Currency and Exchange Rate

Currency Exchange Rate (Required for multi-currency)

  • Enter exchange rate between contact and finance account currencies
  • Only appears when currencies differ
  • Auto-fetches current exchange rate when contacts change
  • Used for accurate currency conversion

Step 5: Tax Configuration

GST Treatment (Required)

GST Treatment Description
Registered Business A business registered under GST and eligible to claim input tax credit.
Unregistered Business A business not registered under GST. Typically not eligible for input credits.
Consumer End consumer not conducting business; GST not charged on B2C invoices.
Overseas Vendors located outside India. Typically treated as import transactions.
Special Economic Zone Vendors or entities in designated SEZ zones with specific GST exemptions.
  • Auto-filled when vendor/customer is selected
  • Can be overridden if needed
  • Affects tax calculations and compliance
  • Options: Registered Business, Unregistered Business, Consumer, Overseas

Supply Source State (Required for domestic transactions)

  • State from which supply originates
  • Only appears when contact has billing address in same country as organization
  • Auto-sets based on selected vendor’s supply source or customer’s supply place
  • Used for inter-state vs intra-state tax calculations

Supply Destination State (Required)

  • State to which supply is delivered
  • Defaults to organization’s state
  • Used with supply source to determine tax type
  • Affects CGST/SGST vs IGST calculations

Step 6: Discount Configuration

Discount Level (Optional, radio buttons)

  • Line Level - Apply discounts to individual line items
  • Order Level - Apply discount to entire expense total
  • Affects where discount fields appear

Step 7: Expense Line Items

Adding Line Items:

  1. Click "+ Add Line" to add expense items
  2. Fill in details for each expense line

Item Selection (Required per line)

  • Select item or service from dropdown with search
  • Used for expense categorization and reporting
  • Affects default rates and tax calculations

Description (Optional per line)

  • Enter specific description for this line item
  • Provides additional detail beyond item selection
  • Useful for expense documentation

Quantity (Required per line)

  • Enter quantity purchased (minimum: 0.001)
  • Supports decimal quantities for services
  • Uses item’s configured unit of measurement

Rate (Required per line)

  • Enter unit rate/price with currency prefix
  • Can override item’s default rate
  • Used for line amount calculation

Line-Level Discount (Optional, when discount level is “Line Level”)

Discount Amount (Optional per line)

  • Enter discount amount for this line item
  • Only appears when discount level is “Line Level”

Discount Type (Optional per line)

  • Select Percent (%) or Amount (currency)
  • Determines how discount amount is applied

Tax Rate (Optional per line)

  • Select applicable tax rate from dropdown
  • Options filtered based on tax type and states
  • Auto-calculates based on interstate/intrastate transaction

Amount (Auto-calculated per line)

  • Automatically calculated as: (Quantity × Rate) - Discount + Tax
  • Updates in real-time with changes
  • Display-only field

Managing Line Items:

  • Use "×" to remove line items
  • Button disabled if only one line remains
  • Add multiple lines for different expense items

Step 8: Order Summary (When discount level is “Order Level”)

Discount Application (Radio buttons)

  • Before Tax - Apply discount before tax calculation
  • After Tax - Apply discount after tax calculation
  • Only appears when discount level is “Order Level”

Discount Amount (Optional)

  • Enter order-level discount amount
  • Only appears when discount level is “Order Level”
  • Minimum: 0, Maximum: depends on discount type

Discount Type (Radio buttons)

  • Percent (%) - Percentage discount
  • Amount - Fixed currency discount
  • Only appears when discount level is “Order Level”

Adjustment Amount (Optional)

  • Enter final adjustment to total with currency
  • Can be positive or negative
  • Applied after all other calculations
  • Number input with 2 decimal precision

Step 9: Additional Information

Notes (Optional)

  • Enter additional notes about the expense
  • Maximum 1024 characters
  • Used for internal documentation and reference

Step 10: Smart Features and Auto-Calculations

The system provides several automatic calculations:

Currency Auto-detection:

  • Contact selection auto-populates their currency
  • Exchange rate auto-fetches when currencies differ

GST Treatment Auto-fill:

  • Auto-fills based on selected contact’s GST treatment
  • Can be manually overridden if needed

Tax Calculations:

  • Dynamic tax type calculation (inter-state vs intra-state)
  • Tax rate options filtered based on states
  • Real-time tax amount calculations

Amount Calculations:

  • Line amounts auto-calculate with quantity and rate changes
  • Order total updates automatically with all changes
  • All amounts rounded to 2 decimal places

Step 11: Save Expense

  1. Review all entered information
  2. Ensure at least one line item is present
  3. Click “Save” to create the expense
  4. System updates account balances and expense tracking

Editing an Existing Expense

Expenses can be edited to correct information or add additional details.

Step 1: Find the Expense

  1. Go to Expenses list under Purchase
  2. Use search or filters to locate the expense
  3. Click on the expense row to view details

Step 2: Access Edit Mode

  1. Click the “Edit” button
  2. The expense editing form will open

Step 3: Edit Reason (For existing expenses)

Edit Reason (Required for existing expenses)

  • Enter reason for editing the expense
  • Required when editing existing expenses
  • Maintains audit trail for modifications
  • Text input field

Step 4: Editing Limitations

Read-only Fields:

  • Expense Number - Cannot be changed after creation

Editable Fields:

  • Date, description, accounts, and contact information
  • Line items can be added, modified, or removed
  • Tax configurations and discount settings
  • Notes and adjustment amounts

Step 5: Make Changes

Common edits include:

  • Updating expense amounts or quantities
  • Adding or removing line items
  • Correcting vendor/customer information
  • Adjusting tax rates or discount amounts
  • Modifying notes and descriptions

Step 6: Validation During Editing

  • At least one line item must be present
  • All required fields must be completed
  • Currency exchange rates must be valid
  • Amounts must be valid numbers
  • Character limits must be observed

Step 7: Save Changes

  1. Review modifications
  2. Click “Save” to update the expense
  3. System recalculates totals and updates accounts

Deleting an Expense

Expenses can be deleted when necessary to correct records.

Step 1: Find the Expense

  1. Go to Expenses list under Purchase
  2. Locate the expense you want to delete

Step 2: Check Dependencies

Before deleting, consider:

  • Impact on financial reports
  • Account balance adjustments
  • Audit trail requirements

Step 3: Delete Process

  1. Click on the expense to view details
  2. Click the “Delete” button
  3. Confirm deletion when prompted

Step 4: Automatic Adjustments

When an expense is deleted:

  • Account balances are adjusted
  • Expense totals are recalculated
  • Financial reports are updated

Best Practices for Expense Management

Accuracy and Documentation

  • Record expenses promptly after incurrence
  • Use detailed descriptions for easy identification
  • Attach supporting documentation when possible
  • Verify amounts against receipts and invoices

Account Classification

  • Use appropriate expense accounts for categorization
  • Maintain consistent account usage
  • Regular review of expense account structure
  • Proper segregation of goods vs services

Tax Compliance

  • Ensure correct GST treatment selection
  • Verify supply source and destination states
  • Maintain proper tax documentation
  • Regular review of tax calculations

Currency Management

  • Keep exchange rates current and accurate
  • Understand impact of currency fluctuations
  • Document exchange rate sources
  • Monitor multi-currency expense trends

Approval Workflows

  • Implement expense approval processes
  • Set spending limits and authorization levels
  • Regular review of expense patterns
  • Fraud prevention and detection measures

Integration with Other Modules

Expenses integrate seamlessly with:

  • Vendors: Auto-populate vendor details and payment terms
  • Customers: Handle customer reimbursements and adjustments
  • Chart of Accounts: Proper expense categorization and reporting
  • Finance Accounts: Track cash flow and account balances
  • Items: Use item rates and tax configurations
  • Reports: Generate expense analysis and tax reports
  • Accounting: Create journal entries for expense recording

Common Expense Scenarios

Vendor Payments

  • Direct payments to suppliers
  • Service provider bills
  • Utility and maintenance expenses
  • Professional service fees

Customer Reimbursements

  • Travel expense reimbursements
  • Customer advance adjustments
  • Refund processing
  • Credit note applications

Internal Expenses

  • Office supplies and equipment
  • Travel and entertainment
  • Training and development costs
  • Marketing and advertising expenses

Multi-Currency Expenses

  • International vendor payments
  • Foreign currency transactions
  • Exchange rate management
  • Currency conversion tracking

The expense management module provides comprehensive tracking and reporting capabilities while ensuring compliance with tax regulations and accounting standards.

VendorsPurchase Orders