7 Expense Management Best Practices
Are you struggling to gain visibility of your business expenses across banks, mobile money and cash?? What and who are my top spenders? How can I gain more data to optimize my business?? These are intriguing concerns most business owners struggle to address every day.
Effective expense management is vital to any business regardless of size. However, it can be a challenge, especially if your firm does not have the right tools and resources.
Whatever the case may be, business owners, CFOs, management teams, firm finance departments, budget managers, and even the most seasoned financial professionals can benefit from accurate expenditure control tools like Boya. But let’s start with the basics.
What is Expense Management?
Expense management is the process of tracking employee spending and determining how the organization will reimburse them. It also enforces procedures and policies used to control expenses by setting limits and rules.
What’s the Essence of Expense Management?
Using expense management tools makes it easy to detect fraud, generate financial reports, and keep track of expenses and expenditures. It significantly saves time and enhances efficiency, which translates to increased productivity and growth. So generally, for a business with employees to run smoothly, expense management tools are a vital consideration that can determine if the business will thrive or survive.
Expense Management Best Practices
1. Establish a Policy for Managing Expenses
Create an expenditure management platform that everyone must adhere to. Its rules should include a detailed list of the expenses the firm will cover and a list of expenses the company will not cover.
Consider the following:
- You won’t be able to deduct expenses for commuting between an employee’s home and the workplace regularly
- Keep in mind that the IRS per diem rates for meals and eligible mileage rates impact how much you can deduct
- Many employers prohibit employees from using laundry or dry-cleaning services while on the road, although these expenses can be deducted in many circumstances
2. Automate Expense Management
Manual expense management methods necessitate a significant amount of paper and spreadsheets, and this only gets more complex as your business grows. Employees, managers, and accounting teams can benefit from an automated cost management system that streamlines the expense reporting process. Reduce the amount of paper shuffle and file sending.
For instance, Boya expense management tools help you track all payments in one single dashboard with detailed insights on your spending. Access all transaction receipts from your mobile app in real-time and take control of your business finances.
3. Leverage Virtual Expense Cards
Virtual expense cards support the same functionalities as physical cards, allowing you to purchase and make payments online. As the world makes strides towards digital transformation in how we manage our finances, there is an array of reasons why virtual cards will take over their physical counterparts.
- Ease of use especially when managing employees or a team
- Enhanced transparency and lower risks to fraud
- Reclaim your funds from accidental payments such as automatic subsciptions
- Real-time spending statistics
4. Make it as Simple as Possible to Keep Track of your Costs
Create a reporting system that makes it simple for employees to submit receipts and expense reports. Receipt photos are captured using cameras on mobile devices since paper receipts fade, rip, and get misplaced. Many businesses use automated software like Boya that allows for image uploads, spend tracking, and submission.
Accounting teams, managers, and approvers can access and approve or reject reports and initiate the expenditure reimbursement process using these technologies on their own mobile devices or desktops.
5. Regular Auditing
It is not possible to “set it and forget it” regarding travel and spending management. Accounting employees can watch spending over time, identify potential problems such as overspending or false receipts, and make judgments on how to alter policy in the future through frequent audits.
Even a slight increase in spending by one employee overtime might add up. Regular audits will aid in the early detection of anomalies before they become severe problems.
CFOs are aware of factors that make audits more challenging for all parties involved. One example is acquiring software with insufficient capabilities.
Internal and external auditors will find it easier to check the correctness of your data if you have good expense-tracking skills.
6. Go Paperless
Companies that continue to use paper receipts are doing a disservice to themselves and their employees. Using software such as Boya that facilitates digital receipt collecting, submission, and review is one of the most excellent methods to simplify the expense reporting process.
Everyone from the employee to the accounting associate to the approver to the aforementioned auditors can update as needed, raise questions, or send reports for payback once all documentation is stored in a single database.
When all of this can be done from a computer or a mobile device, the procedure becomes even more precise and accessible.
7. Review Your Expenses regularly
Don’t wait until the end of the year to discover that a recurrent charge should never have occurred or that an employee was accruing no allowable entertainment expenses while on the road—or using an unapproved SaaS software at home.
Examine whether each spending was required and permissible if the organization obtains the best price available and if any expense categories have increased significantly since the previous review.
This will help you identify problem areas that require attention in your team. Instruct your personnel on how to keep track of best practices.
Keep your cost management method and policies open to the public. Instead, engage all employees by teaching them how to find, implement, and track best practices across the company.
Because reimbursable employee expenses account for a large portion of most organizations’ balance sheets, this is an ideal time to foster a cost-conscious culture. Make a link between frugality and the ability to invest or save jobs.
Most businesses have been compelled to postpone, scale back, or abandon capital-intensive projects. Right now, cash is king, so any bit of liquidity helps.
Manage Your Business Finances With Boya
Why should you consider Boya? Expense management software like Boya makes it easy to automate financial procedures and processes in your firm. It will be much easier to track employee expenses and business expenditures using this software. Moreover, it increases productivity by reducing the time that could have been spent using manual processes. Not sure how to get started? Give us a call or send us a message, and our team will be happy to help.