How To Improve Expense Management In Your Business
Whatever kind of business you run, keeping a close eye on your expenses is always going to be hugely important and relevant. Only by doing that can you hope to keep the business running strong, ensure it has a brighter future, and generally take proper care of your finances now and in the future too. If you are wondering what good expense management looks like, there are a few things in particular that might be worth knowing about and bearing in mind, which we will look at below.
We will also discuss in general what you can do to improve your expense management, so that you know more fully what is going out and why, and so you can reduce this wherever possible without harming your business’ prospects or causing trouble for the customer – quite the opposite, in fact. Let’s take a look.
Set Up Your Expense Management Policy
As you may well know from other parts of running your business, it’s often hugely helpful to have a policy in place that dictates how you are going to approach the issue at hand on the whole. And that turns out to be just as true here as anywhere else. When you start to do this, you might find yourself wondering what needs to be involved in an expense management policy. In fact, it is generally pretty simple and straightforward, and something that you should be able to approach simply enough.
Most of all, it needs to have information for all employees to consider and be able to follow, or at least all employees who are going to have anything to do with expenditures of any kind. It needs to outline and detail what the main considerations are regarding spending, and what the primary goals are for improvement too – for this reason, this is a document that will be frequently updated over time too.
And above all, it should have information on any employee-related benefits such as expenses that could be important to your people. If you can do all that, it’s going to be a huge help and you will be most of the way there.
Automate Where Possible & Appropriate
Automation can be a really useful thing as well when it comes to something like this. Of course, it is not always the best approach to something, but it can very often be handy, and you will certainly want to make sure that you are considering it at the very least. Whenever it seems as though it is going to be both possible and appropriate, you should make sure to automate your expense management protocols in whatever way seems useful and appropriate.
Just doing that could make a world of difference, and is the kind of thing that can free up time for so many people across your business. It’s therefore vital that you are doing this and making good use of it. But again, remember that it also needs to be done wherever it is appropriate, and otherwise you should be careful to limit it.
Make Use Of Business Credit Cards
This is something that every business needs to think about, because it can clear a lot of problems up and make things generally easier and simpler, and can also save a lot of money across the board. You will find that it also invariably leads to there being a lot less confusion amongst your employees about how to pay for certain vital expenses, and in general this can just lead to a better relationship between them and you as the company.
So, if you haven’t already, start issuing business credit cards. These will obviously not always be necessary and you won’t have them used all the time. But there are certain instances and situations where they are the perfect solution. For instance, if you have a fleet of vehicles, you need to have a way for your employees to pay for fuel, in a manner which is centralized so you can keep a close eye on it. And for that, credit cards made for fleets are the perfect solution.
Similarly, credit cards are great when you have employees staying in hotels around the world or renting vehicles, and they need to put deposits down. This is the kind of thing you really need to make sure you are thinking about. It could be the best solution of all when it comes to expenses across your business.
Track Expenses Fully
There is also the issue of tracking, which is something you need to do as fully as you can if you want your people and your business in general to have a good approach to expenses across the board. Tracking expenses is actually relatively straightforward, but there are certainly ways in which you can make it even more so by simplifying it and making it as easy as possible. That means finding a way to make expenses easier to track, which is actually a simpler thing to achieve than you might have assumed.
To do this, it’s all about setting up the infrastructure for your employees to make use of. And once you have that in place, the rest will fall into place pretty easily and seamlessly. When your employees have an easy way to submit expenses and run reports, everyone benefits, and it also helps when it comes to audit time too, because the whole system is just a lot cleaner and more appropriate.
Beyond that, focus on using automated software for this kind of reporting. The old way of paper receipts that fade over time is simply not sustainable in a modern day business, so the digital approach is simply a lot more effective overall. Remember you can also use this software for the approval of those expenses, and pretty much every aspect of the expenses process in fact. So that is absolutely something that you should aim to do here if you want to track expenses more fully and easily, and thereby improve the management of those expenses considerably.
Get Ready For Auditing
Audits are of course an unavoidable part of having a business. You will have your expenses audited and you need to make sure that you come out of it as clean as possible. If not, you could end up in serious trouble with the law and the possibility of losing your business or even your freedom.
That all sounds very extreme, but it’s something you need to be aware of and prepared for. And as it happens, the best way to prepare for audits is to put yourself through an audit first. Self-auditing is a way of finding out what kinds of situations you might be in, what you need to work on and improve and of ensuring that there is nothing untoward happening in your expenses process across your business.
It’s a good idea to carry out a self-audit at least once per financial year, more frequently if you have issues that need fixing up. And because you never know when an official audit might happen, you should do it as soon as possible, especially if you have never done so in your business to date.
All in all, audits are hugely important for your expenses management processes.
Consider Going Paperless
We mentioned briefly earlier how so few businesses still rely on paper receipts, because they fade over time and can easily get lost. That is really just a small part of why you might want to try and do away with paper trails in your expenses management. It used to be that getting rid of a paper trail was associated with trying to hide something, but what we mean here is just the opposite: replacing the use of paper systems with more up to date digital systems. As it happens, there are many advantages to doing this.
As well as being clearer and easier to use, it also means that self-auditing is a lot easier, and easier for officials to audit you too, which helps to keep them on your side and for you to prove that you are not doing anything wrong. If you do have any paper trail at all, make sure it is fully organized, but ideally just replace it all together with a digital system. Of course, you will need to take care and choose software that you can trust and which seems user-friendly, so you’ll have to carry out some research here. But it’s a really good idea to make this change as soon as possible.
Once you are paperless, your expenses will be so much easier to look after, and you will find that this benefits your business and your people hugely.
Those are the main ways in which you can improve your expense management across your business. Make sure that you are not overlooking those, and you should find that it really helps you out a great deal. It’s something that is worth revisiting from time to time as well, just to be sure.