Running a successful business means keeping an eye on every dollar spent. No matter how small, every expense can impact your company’s bottom line. To ensure your costs do not outpace your earnings, keeping a close watch and tracking regular business expenses is essential.
Additionally, you should monitor what you owe employees for things like trips, supplies, or memberships. This practice of closely examining and managing your business expenditures is termed ‘expense management.’
Below, we will explain expense management and examine why using expense software might be the best move for your business. With features like automated tracking and improved accuracy, this tool can change how you handle your company’s finances.
Breaking Down Expense Management
Expense management, also known as expense tracking, is all about monitoring your employees’ spending and figuring out how to pay them back. It ensures your financial records are spot-on and keeps your team happy.
However, repaying employees can be tricky. Companies need to set clear rules on what they will cover. Typically, businesses cover costs like:
◦ Travel (hotels, flights, gas, etc.)
◦ Meals
◦ Work uniforms
◦ Office supplies
◦ Membership dues
Employees who pay these bills can submit a report showing what they spent. This report, with the receipts, goes to HR for review. If everything checks out, they get paid back. But, if something is off or a receipt is missing, it can slow things down.
To simplify things, some businesses give out company credit cards. This lets employees charge expenses directly to the company. But this can come with challenges.
Benefits of Expense Management Software
Let’s examine how automated expense tracking through software can benefit your business.
1. Efficiency
Of course, one of the major benefits of expense management software is time savings. Forbes recently reported that processing a single expense report takes an average of 20 minutes. Now, imagine doing that for multiple employees. That time also doesn’t include how long it takes for employees to gather receipts.
The right software solution makes it easy for employees to upload receipts and for managers to approve expenses without manual data entry. This frees up time. It also reduces mistakes that require even more time to resolve.
2. Cost Reduction
Streamlining the expense claims process also helps to reduce costs. Ensure employees are fully reimbursed, and your company is not overpaying for irrelevant expenses. Better visibility into employee spending can also help your team optimize budgets.
3. Compliance
There are important regulations teams must follow for expense management. Most importantly, you want to prevent unauthorized or out-of-policy expenses from being submitted or approved. This affects your business’s bottom line and can cause trouble regarding taxes.
Expense tracking software can help enforce company policies and ensure compliance.
4. Reporting and Analytics
This solution can provide your team with real-time data forecasting and analytics. A complete view of your employee’s spending empowers your finance team to identify cost-saving opportunities and make budgeting decisions.
5. Improve Employee Experience
Employees who spend their money on business items need to expect to be paid back in full. They want the reimbursement to be timely and accurate.
Expense management software makes it easy for employees to submit expenses online. This is convenient and helps reduce errors and the need to organize paper receipts. It also helps streamline the entire process to help them receive their reimbursements quickly.
6. Fraud Detection and Prevention
Expense fraud can cost your business big time. Employees may unintentionally make mistakes when it comes to submitting receipts. Others may be more malicious and try to get personal expenses reimbursed.
No matter the case, expense tracking software can help flag unusual expenses, duplicate entries, or expenses that don’t match receipts. This all helps minimize the risk of fraud.
7. Integration
Finally, we can’t overlook the importance of how an expense management system can be integrated into your other solutions. Integrating it with your accounting software or other enterprise systems allows data to flow seamlessly between them to reduce the need for manual data transfer.
Parting Words
As you consider the next steps for your business, remember that the tools you adopt can profoundly influence your efficiency and accuracy. Expense management has the potential to revamp the way you handle employee spending. Creating a process will contribute to a more organized and productive operational landscape.
By integrating software into your business, you ensure a reduction in mistakes while also boosting productivity. In turn, this fosters a positive work environment, keeping your employees satisfied and the financial aspects of your business running smoothly.
How FINSYNC Can Help
FINSYNC allows you to run your business on One Platform. You can send and receive payments, process payroll, automate accounting, and manage cash flow. To learn more about how we can help your business start, scale, and succeed, contact us today.