5 Tips for Expense Management for Small Business

For any business, Expenses management can be a very annoying process. It is particularly true for small businesses. It is a complex and time-consuming process.

Too often, small business owners who are struggling to survive and want to grow are too concentrated on generating direct revenue so that they neglect to manage their business expenses proactively. Given that profits (income after expenses) is ultimately important, small companies can raise their profits by simply changing their expense management process. Business owners absolutely must give appropriate time and attention to their expense management strategy also. 

If you’re looking to save time on expenses management – and maximize the revenues and profits, follow these 5 quick tips.

Have a company expense management policy

Every company should do this first. By defining and sharing a policy document, make every employee know exactly what they can and cannot reimburse for. In order to reduce expenses, it should also highlight preferred suppliers, which are often chosen for their low prices. It should be frequently updated as well. With companies growing bigger, what has worked previously may no longer be appropriate and new suppliers may need to be added. 

Make Expenses Easy To Report And Track

Establish a reporting system where your employees can easily report their business expenses, track their spending, and submit receipts in real time. If you benefit from digital technology such as online or smartphone applications, your employees can update their expense reports in real time and provide things such as receipt images which result in full transparency in the process. This benefit both you and your employees because you quickly notice any cases of fraud, thanks to features such as time stamping and easy expense classification. 

Centralise and automate expense management

You should consider centralizing your expenses for many factors. The first is to ensure that everyone is treated in the same way and that everyone follows the company's expenses policy. Another reason is that those who run the centralized system have a much better overview of the company's total expenses. This means that purchases can be carried out at a larger scale and in a more controlled way. Another advantage of this approach is that companies can see where they stand in liquidity, which helps to manage their expenditure. Once it's established, then automating payments made are perfectly useful for the same department. Not only does automation reduce the risk of error, but it saves time than a manual approach. Employees have a better understanding by automating expense payments, how they get their money back again that helps to maintain morale and motivation. 

Use corporate credit cards

Many small businesses worry that credit cards are a expensive way to acquire credit. That does not have to be the case, however. Credit cards can be a great way to monitor and then control what is spent when, where, and by whom. For example, corporate credit cards can be used to extend your amount of time. You then have at least 30 days before you have to pay for an item after having purchased. This is the time that you can even invoice for the amount spent, for example, if this is a service that you buy for a client. This means you are paid back just as the money leaves your account and you are not out of pocket. Corporate cards can even be individual cards so that a staff member is allowed to purchase only an item or a type of item (if this is a repeated purchase). This adds additional safety to the process as, even when card number is compromised, you know it can not use to purchase anything else. 

Set Up A Routine Audit

Make sure you also incorporate a routine audit process when designing your expense report policies. You should audit expense reports each quarter, every two weeks or every year, depending on how much your employees spend. Audits not only help you to identify cases of fraud, but also help you learn what are the biggest expenses and how they can be reduced. You can further improve your cost reporting process and find better ways of managing and tracking expenditure, based on results from a routine audit. 

These five tips help you ensure that the expenditures of your employee are reported and tracked properly and that you can determine how to save business expenses. These tips also help you reduce fraud in the expense report and ensure that you reimburse your employees for any business costs correctly. Consider including them in the procedures for reporting your expenses.

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