As a business owner, it's imperative you use every tool at your disposal to improve your expense tracking strategy. However, it's often easier said than done. Expense tracking or expense management is the process and systems you have in place to request, authorize, and pay expenses.
Whether the expenses are travel-related, entertainment, or any other business-related expense, it's important to track and keep a close handle on these outflows of cash. Fortunately, the team at John F. Dennehy CPA has outlined our top tips for improving and simplifying your expense tracking strategy. Read on for more and don't hesitate to reach out to the team at John F. Dennehy CPA for expense tracking assistance.
Automate Your Expense Tracking Strategy Where Possible
Manually tracking expenses takes a lot of time and effort. While it was very inefficient in the days of yore, it's exponentially more inefficient today with modern technology. An automated expense tracking solution can help simplify the process for you, your employees, your accountant, and everyone else. Ditch the paper and look to streamline your expense tracking with an automated solution.
Is There An App for That?
Yes! There are a number of different budgeting mobile apps, such as Mint, You Need a Budget, Goodbudget, QuickBooks Online, Expensify, and more. These mobile apps are designed for businesses of all sizes and can help you efficiently track expenses.
If you're not too keen on mobile apps, you can always use spreadsheets or purchase software. However you decide, it's best to automate your expense tracking strategy where you can and leverage technology to do so.
Consider Cloud-Based Expense Tracking Software
Cloud-based expense tracking solutions can simplify your expense tracking strategy. With cloud-based expense tracking, you can track expenses from anywhere at any time. And it makes it easier to manage your accounts payable and accounts receivable as well as payroll.
Use Business Credit Cards
Using a corporate credit card can help streamline your ability to monitor spending and simplify the reporting process. Specifically, it can reduce the need for workers to cover certain expenses and wait to be reimbursed. Corporate credit cards can maximize your cash flow by offering favorable terms (typically net 30) prior to the payment being required.
At the same time, using a business credit card can keep centralized spending data that can easily be accessed on-demand. If your company doesn't want to place a credit card with a high spending limit in the hands of employees, you may consider using dollar-amount or single-use cards. On the other hand, if your employees will only be making purchases at certain stores, such as gas stations, it may make the most sense to give them store-specific cards.
Make Expenses Easy to Track
Creating an expense tracking strategy that allows your employees to easily submit their expense reports and receipts is paramount. Empowering your employees to use their mobile devices to capture receipt images can be a step in the right direction.
A growing number of companies are utilizing automated software that supports image uploads, tracking, and submittal of expenses. Equipped with these tools, managers, accounting teams, and approvers can then use their own computers to reject or approve reports and initiate the reimbursement process.
Audit Your Expense Tracking Strategy
Your expense tracking strategy shouldn't be designed to be a "set-it-and-forget-it" solution. Through regular audits, your accounting partner or personnel can track spending, identify possible problems, such as fraudulent receipts and overspending, and find ways to fine-tune the strategy moving forward.
Even the slightest increase in spending for a couple of employees can quickly add up over a period of time. Performing regular audits will help you detect abnormalities early — before they evolve into serious problems.
Audit Recurring and Fixed Expenses
It's very easy to become complacent regarding recurring expenses like phone plans and software licenses. Even so, fixed expenses may offer the opportunity to save money. It's a good practice to audit fixed expenses every so often, do competitive shopping, and negotiate a lower rate with existing vendors.
Educate Employees on Best Practices
Once you have developed an expense tracking strategy that works for your business, make sure to socialize it among your employees. You can amplify the impact of your strategy by getting everyone involved in identifying, establishing, and tracking best practices across your business.
Considering reimbursable employee expenses are a major line item on the balance sheet of most businesses, employee education presents an excellent opportunity to create a cost-conscious culture.
Be Ready to Modify Your Expense Tracking Strategy
One quintessential expense tracking strategy is to take an inventory of all of your accounts, including credit cards and checking accounts. Keeping a close watch on your accounts can help you identify where your money is going. As you actively track and monitor your expenses, you should always be ready to make adjustments.
Contact John F. Dennehy CPA
Developing an expense tracking strategy for your business can seem challenging and overwhelming, but the team at John F. Dennehy CPA can and will help. We are a highly skilled group of CPAs and accountants who specialize in helping business owners streamline all aspects of financial management of the business.
Contact John F. Dennehy today for a tailored expense tracking strategy.