Expense management is a crucial part of a running a business
Regardless of the type of your business, as an entrepreneur, you will also need to deal with finances. Running a company incurs expenses, and expense management is a crucial part of staying operational and profitable.
In this article, we’re offering 6 expense management tips for 2021 any business can benefit from.
Implement Expense Management Software
Did you know that 35% of businesses still use a manual-based expense reporting system? According to reports, these companies have no visibility into employee expenses and constantly face reimbursement delays.
Expense management becomes much easier with the right tools. Automated expense management software helps managers and business owners gain better control of expenses and enables them to control spending.
In addition, a software-based receipt collection will simplify expense reporting and make it easier to submit expense reports and receipts. Expense management tools also reduce the time it takes for your accounting department to process reports and speed up employee reimbursements.
Develop an Expense Management Policy
Set up an expense management policy that contains a list of expenses that the company is willing to cover. It also clearly outlines when employees can expect to be reimbursed for expenses (depending on the company, the timeframe is 30 days or less), as well as any recourse they have in case an expense is rejected.
In addition, this policy helps the accounting department and approvers to quickly decide whether an expense is approvable or not.
Review Your Expenses Regularly
If you don’t have the budget to hire an expert to do your cash-flow analysis, you will need to set some time aside once a year and review your company expenses. Go through every bill you pay, including monthly fees, annual subscriptions, credit cards, and vendors.
Then, ask yourself which of the expenses are necessary and which can be eliminated. In addition, check if there are certain expense categories that are out of hand and think of ways you can reduce them. You should also do some research to ensure that you are getting the best deal or rate available.
While all this may sound daunting and time-consuming, it will definitely help you trim your expenses.
Use Corporate Credit Cards
Using business credit cards will not only help your monitor spending but will also help simplify the reporting process for employees and eliminate the need for them to cover expenses on their own and wait for expense reimbursement.
For employers, corporate credit cards can help increase cash flow by providing terms before payment is required while at the same time centralizing data and making record-keeping easier.
Make Smart Hiring Decisions
When it comes to expense management, we shouldn’t forget about the largest and most important category – payroll.
Hiring the wrong people can be very costly as they are ineffective when it comes to doing their job but can also do significant damage to your brand. So, think about how you can ensure that you’re attracting and hiring skilled and experienced employees. Some employers rely on analytics and objective assessments, while others keep a list of potential candidates who could someday be a good fit for the company.
Whatever hiring practice you decide to employ, be careful when making your decisions and be sure to invest enough time in onboarding and training your staff.
Reduce Your Paper Trail
Try to reduce your business’s use of paper as much as you possibly can. Ditching paper also means ditching printers and ink, which will help you save tons of money. Not to mention, going paperless will help you reduce waste and make your office more organized.
Of course, some documents absolutely need to have hard copies but it is a fact that we use too much paper. You might find that your employees benefit from using mobile apps that replace paper and pen, such as calendar coordination and to-do lists. In addition, consider automating everything you can. An automated expense management system will not only reduce the use of paper but will also simplify your expense reporting process.
A cash-flow analysis isn’t the most exciting part of your job, but it is definitely one of the most important ones. These 6 expense management tips can help you control how your company’s money is spent and make sure you’re on the right track with your Accounts Payable this year.