Expense management is essential for all businesses, whether you are a multinational company or a start-up. But when your company is new, keeping track of finances is of utmost importance. Initial days can be daunting when it comes to expense tracking, as you’re still getting used to the grind of running a business. Keeping bills consolidated for audits needs extra care, speculation and precision, and faulting them can harm your business and leave you in stress for upcoming financial cycles.
But there’s a messiah.
Smart expense management systems can equip you with the tools you require to be financially sound as a business and keep track of all the employee’s spending so that it is easier to review during audit runs.
If you are a start-up, don’t make the mistake of starting your expense management at a later stage. If you get a system set in place early, it will significantly help with operational efficiency of your business. For example, since most start-ups raise a large sum for their business, they need to keep a record of every penny they spend. Proper expense management can take care of this duty. Here are a few more ways in which expense management can benefit start-ups.
Consolidation of receipts:
The early stages of your start-up will have you incurring a lot of expenses, and sometimes, employees would have to pay out of pocket. Keeping all the receipts from every employee would be a hassle, and you’ll be prone to making errors. Lost or damaged receipts could leave you with gaps in your budgeting, leading to unbalanced expense sheets. Further, paper receipts, even if saved carefully, tend to lose their print after a while, leaving you even more confused as to what the receipt was for. Using software can save you from the hassle. It could be used to collect receipts in one place so that you are ready with your bills during audits.
Avoiding blind-spending:
In the early days of business when there are simultaneous purchases to be made, you might become prone to spending blindly. Money and time are scarce and need to be wisely utilised if you want your company to stay afloat and eventually build a growth trajectory, both quality-wise and monetarily. Expense management will help you stay within your budget by helping you review your expenses in real-time. Some software products even allow you to set limits on company cards to manage spendings.
Taking a microscopic approach to managing expenses can seem excessive and prudent at first, but it can save your company time and operational bandwidth. A good expense management software will help you keep an eye on all the expenses, the purpose for which they were incurred and help gather more details about them.
Categorisation of expenses:
If you are not categorising your expenses and only looking at the total sum, you may be missing out on details and generating inaccurate reports. Expense management tools allow you to put your expenses into categories so that you can better evaluate which area is doing well and which needs more scrutiny. It is advisable to broadly categorise your costs into fixed costs, like rent, insurance, etc., as well as variable costs, like travel, advertising, and taxes, so that there is ease in adjusting your budget.
This categorisation will also help you set a spending policy for your employees. When there are vague policies, the employees might spend on avenues which don’t generate revenue, or overspend on products and services in the name of business expenses. Expense management will keep these things in check and help you formulate rules and guidelines for the same.
Save labour:
Traditionally, companies dedicate a whole department to finance and hire a team of employees to track the company’s finances, sales, and spending. No matter how many professionals your start-up hires, human resources have their limitations and are prone to inefficiencies. An expense management software will reduce routine manual labour and requirements for a large team. Your receipts, spending, earnings, etc., will be accessible to you in real time, eliminating the need for a finance expert to explain your company’s financial health.
Conclusion
Start-ups have to be stringent with their hiring anyway because of limited resources, and this system can totally replace manual labour. Expense management will save start-ups from spending extra on employees since an app or software can do the same work more efficiently.
After reviewing the numerous benefits that expense management tools can provide, make sure that you and your business also reap the benefits. With receipt consolidation and expense categorisation, this cost—and labour-saving technology is the future of financial management.
