Introduction
If you’re running a business, then you know that tracking expenses are a key part of keeping track of your finances. But how do you go about doing this? It can be easy to get overwhelmed by the task of tracking every penny spent on your company’s activities. However, an expense management software can streamline the entire process. With the increased focus on managing company finances and compliance, tracking business expenses has never been more important. At the same time, it’s never been more difficult to do so.
According to a report, 66% of small businesses face financial challenges. Expense tracking can be a time-consuming and complicated process, especially if you have to do it manually.
Some business owners decide to outsource this task, but for those who keep track of their expenditures in-house, the question arises of how to do it effectively.
Spreadsheets or manual handbooks? The good news is that now there are many different business expense management software available. Read this article and get the inside scoop on how you can go about tracking your business expenses.
The Importance of Expense Management
Tracking expenses can help you keep tabs on your cash flow, allowing you to make more informed decisions. When you track it using an expense management software, they become more transparent and manageable. This leads to more accurate financial statements, which allows you to plan for the future and compete in today’s economy.
Here are some key benefits of tracking your expenses.
1. Monitoring the budget
If you want to keep a handle on your finances, it’s essential to establish a budget and stick to the plan. Tracking business expenses helps you not only lower expenses but monitor spending as well. Without one, there is no way of telling how much money you are spending or where exactly it’s being spent.
2. Financial reports
Financial statements are an important part of making better business decisions. Be it in the form of spreadsheets or graphs, you need accurate information to make sound decisions. These data-driven decisions will lead to a sustainable path of growth and profitability.
3. Tax Calculation
There’s no denying it: taxes can be expensive. But the right amount of tax will help you run your business more effectively and efficiently.
It’s important to understand how tax works to ensure the correct amount of tax. When you have a track of all your finances, calculating taxes becomes easy and accurate.
Tips & Tools to Keep Track With an Expense Management Software
Define expense categories
The first step in managing your business expenses is to define your expense categories (or accounts). Most expense management software will have a category for each of the possible categories you can set up in your business, so you’ll want to make sure yours is set up correctly. Here are some examples for defining your business expense categories:
- Business travel expenses can include many categories of expenses. There are different types of business travel, including business trips, conferences, and so on. For this kind of expense, the best mileage tracking app will be the one that allows you to set pick-up & drop-off points.
- Meals (breakfast, lunch, dinner) at restaurants or other places where you meet with clients or vendors; this should include food that was purchased with money from the company’s budget. If you’re paying for an employee’s meals on top of their salary, put these in another category—say “employee benefits.”
- Gifts are given as part of workplace celebrations such as birthdays, anniversaries and holiday parties; don’t forget about those little presents from clients. If you’re giving out bonuses each year at Christmas time but aren’t sure how much money goes into those packages each year then use one category called “Christmas gift wrap/paper bows & bows etc.”
As difficult as it sounds, you can save time when tracking your expenses and make the best use of the software that comes with allGeo.
Set up a record-keeping system
There are many different ways to track expenses. Setting up a record-keeping system is one of the initial steps towards making your finances tracking system work.
By developing a record-keeping system, you will be able to maintain all necessary financial records in one place as well as make it easy for you to access them whenever you need them.
With the right expense management software, you will be able to maintain records quickly, easily and accurately. So, choose a system that works for you. There are many ways to keep track of business expenses, so find one that’s right for your needs and style.
- Keep records of all transactions. It’s important to keep receipts for all business-related purchases, especially if they were made using a credit card or debit card that is tied to your company account.
- Use software solutions like allGeo expense management software or a mileage tracker app, that allows users access anytime anywhere.
Identify fixed and variable costs
Identifying fixed and variable costs to prepare for taxes and budget planning is important for every business owner. This will help guide you on your budgets as well as give you an idea of what you can and cannot afford at any given time.
To identify your fixed costs, think about the things that are required each month to keep your business running. These could include rent, insurance, utilities, salaries, or any other one-time expenses that are required every month.
To identify your variable costs, think about the things that change each month. These could include supplies or inventory.
Once you’ve identified these two types of costs, you can then look at the fixed cost percentage and the variable cost percentage. Comparing these will help you make important business decisions like cutting back on some expenses or identifying expenses that are no longer needed.
Use a Receipt Scanner App
If you’ve been operating a business, you know how messy it can be to round up receipts at tax time. It’s easy to lose track of which receipt goes with which expense.
Scanning receipts is more efficient than writing them down because it allows you to quickly process payments while they’re still fresh in mind—and if they are scanned manually then there won’t be any risk of data loss either.
Receipt scanners allow users to scan their receipts and automatically add them to their expense reports. This is especially useful when you are out of the office and need to quickly calculate your business expenses. You can even share receipts with your accounting team or other employees to ensure accurate reimbursement.
Maintain a backup of your expenses
Maintaining accurate and up-to-date records of your expenses is essential for management, auditors, and investors. But keeping track of all those receipts can be tough work, unless you are using an expense management software.
A robust system for recording and storing expense records can be difficult and time-consuming. You may have to go back through old receipts to find those that need updating or deleting. This takes additional time and effort.
Instead of having to keep everything in your head, using an expense management app makes it much easier to keep track of what you spend—and where every penny goes.
Digital expense tracker solution
There are many different ways to track expenses. Some people prefer pen and paper, while others like the ease of using an expense management software on their phone or computer.
Some people like spreadsheets and other tools that allow them to create custom reports in seconds, while others prefer cloud-based solutions that can be accessed from anywhere with an internet connection.
The best expense-tracking app will help you automate work and optimize redundant processes, allowing you to spend less time on paperwork, and reports, and improve efficiency.
If you’re not sure what type of expense tracking system will work best for your company, consider these factors:
- What do other people in the industry use? This could give an idea of whether or not this type of tool would be useful for your business as well.
- Whether you would want a manual or automated process? If you’re looking at setting up something manually on paper every month or so, then maybe an online tool isn’t right for everyone. But if there aren’t any other concerns besides keeping track of expenses—and having access from anywhere—then a cloud-based app is recommended.
- You will need to decide whether it’s more important to keep track of small amounts of money, or large ones. If it’s the latter, then maybe an Excel spreadsheet will be best for you!
Once you’ve chosen your system and figured out how much time and effort each task requires, stick with it.
Establish a review schedule
Set a time to review your expenses once a week. By setting aside some time each week, you’ll be able to see how many bills are coming in and out of your account. This can help identify any problems with your system or areas where you could save money on supplies.
You can also keep track of recurring expenses by adding them to the same list as one-time expenses so that they don’t get mixed up together when reviewing them later on.
This will also help keep track of how much money is being allocated toward different areas within the business—which could potentially be helpful if there are specific areas where growth should occur but aren’t getting funded regularly enough due to a lack of budgeting practices or oversight from other parties involved in running things smoothly overall.
Conclusion
Whether you use an expense management software or a mileage tracking app like allGeo, a spreadsheet, or good old-fashioned pen and paper, the important thing is that you find a system that works for you and stick to it. Tracking your expenses may not be the most exciting task in the world, but it is essential to keeping your business on track financially.
By following the tips in this article, you can streamline the process and make it much easier to stay on top of your finances. And with the right tools in place, you will be able to track your expenses quickly and easily, so you can always know where your money is going.
Remember to stay organized, set aside some time each week to update your records, and choose a system that works for you. With a little effort, you will be able to keep on top of your business expenses without too much trouble.