Everything You Need to Know About Expense Management
If you own a small business, you know all about expenses, but you probably know less about expense management.
It isn’t something that many freelancers or entrepreneurs think of when they dream of starting their own business. However, it’s incredibly important.
Expense management can make the difference between success and failure. Fortunately, an automated expense management software simplifies the process of creating expense reports.
If you’d like to learn more about this critical part of operating a business, then we encourage you to read on.
In this blog, you’ll learn everything you need to know about:
- Expense Management
- Options for Managing Expenses
- Benefits of Expense Management Software
- Choosing Your Expense Management Software
Expense Management Explained
Let’s get into the important stuff: what is expense management, and why is it so important?
Simply put, expense management is the system that your company uses for processing, paying, and auditing any business expenses. These expenditures could include travel, office supplies, software, services, and more. They vary across businesses, but regardless of whether you have a few or hundreds, you need to track them.
If you have no idea how much you are spending, you may spend too much, pay for fraudulent expenditures, or cause cash flow issues. Poor expense management can also create more work for your accounting and finance teams.
All of these problems can be resolved with a good expense management system, however. With a solid focus on policy compliance and automated expense reports, you can ensure that you never overspend. Best of all, the right analytics tools can help you can spend more efficiently.
Types of Expenses to Manage
Before you can begin to dissect the different options for tracking expenses, you need to consider the types of costs that occur in your line of business. As we mentioned before, they can vary widely from one industry to another, but most companies manage three categories.
Travel & Expense
In the business world, travel is a common thing. Therefore, travel and expense or T&E management is a critical part of running your company. Any time an employee travels for work, they need to submit a claim. Every business has its own policy for per diem payments and reimbursements for gas, lodging, and meals. If you fully reimburse your employees for work-related travel, all of their receipts and expense reports need to be accounted for.
On occasion, you or your employees will come across things that are small enough to pay with cash. The expense for postage, new pens, or staff party decorations can be covered by petty cash instead of taking the time to write a check or pay with a credit card. However, cash payments can also be more difficult to track. For that reason, you must keep accurate expense reports for any cash you allow your employees to keep on hand.
Today’s modern age has businesses subscribing to all kinds of services and software. From your accounting software to your SEO tools, you have a variety of IP expenses. The majority of these are recorded across your emails. While this is convenient to an extent, it can also be time-consuming to organize every expense, which brings us to our next topic.
Expense Management Options
You have two options when it comes to expense management: do it manually or utilize a software. The manual process works fine for small businesses with very few expenses and small expense reports. More and more companies, however, are switching to an online expense manager.
If you’re wondering which option is best for your expense management, consider the pros and cons of each:
Pros: It’s free! An employee can complete the process on paper, a spreadsheet, or another expense report.
Cons: It takes a lot of time. Once expense reports are made, they have to be forwarded to a manager. Management then approves and sends it to the accounting department. From there, that each transaction is put into the company’s finance system.
Pros: It’s more efficient. Instead of going through the lengthy manual process of recording business expenses, you can automate everything.
Cons: It typically costs money, but Wellybox offers a free version and many affordable options to fit your budget. An online expense manager can also cost you more time and resources as you train employees to use it.
When you compare the two, you can see the benefits of technology significantly outweigh the benefits of the manual process. In fact, there are even more reasons to choose an expense management software for your expense management system.
The Benefits of Expense Management Software
As we mentioned, the manual process of expense management is tedious and time-consuming. It can take several days to get all of your business expenses added to your accounting system. Worst of all, there is plenty of room for human error. When you utilize software, however, you can enjoy:
- Simplified Tracking: You never have to be surprised by business expenses. An expense tracker sends a notification the instant a purchase occurs.
- Expedited Reporting: Instead of waiting for your employees to create an expense report, you can speed up the process with paperless reporting. Best of all, you don’t have to worry about any expense reports getting lost in the shuffle.
- Effective Policy Compliance: Policy compliance is one of the key elements of expense management. It’s important to outline which expenses are covered and which aren’t. A software can automate the process and ensure that each expense complies with corporate policy.
- Useful Analytics: To see where you can cut costs or better manage spending, use the powerful analytics provided by your software. Based on reported expenses, you can receive rich data organized in a single dashboard. This feature drastically reduces the time your finance team would have to make such calculations.
- Customizable Approval Process: Every company has their own methods and systems, so you need software with a custom approval process. With this feature, you can align your expense management software with your organizational hierarchies.
- Complete Integration: You can easily integrate your expense management into your accounting and ERP. With all of the tools available, your finance team can process all of your expense data. From there, they can sync it with the accounting program of your choosing.
Wellybox offers many of these tools, benefits, and features. Not only does it make it easy to keep track of all business expenses in your email, but it also integrates with some of the most popular accounting programs. However, there are many other software options that offer automated expense management, so which one is right for you?
Choosing the Right Expense Management Software for Your Business
With all of the different software programs, you need to carefully consider weigh your options. It can be difficult to choose, but you don’t have to make the decision blindly. We’ve created a list of criteria that will help you select the software that is best for your business.
Does it Offer Options for a Multi-Level Approval Process? Depending on your organization’s hierarchy and the nature of the expense, you may have a different approval process. Therefore, you need to make sure that your software is flexible and easy to configure so that you can customize every level of the approval flow.
Can it Integrate with Your Travel Desk? Imagine how much simpler it would be for you and your employees if they could book travel and claim every related expense in one report. A good software will be able to integrate with your travel management desk to do just that! It can even ensure that all claims comply with your company travel policies.
Can it Read Digital Receipts? In today’s digital age, there so many paperless billing options. Therefore, it is imperative that your expense management software has the technology to read digital receipts. Software like Wellybox can easily identify all of the critical information needed for accounting. For example, Wellybox can read the merchant name, expense date, amount, and more.
Will it Integrate with Your Accounting Software? Lastly, you need to make sure that your expense management software seamlessly integrates with your accounting software. This is another great feature of Wellybox. Since the software works with QuickBooks, Xero, and more, you can get simple and easy expense reporting.
Sign Up for Your New Expense Management Software
Stop losing receipts and missing out on critical business expenses! Take the first step towards simplifying your small business finances by signing up for Wellybox, your online expense manager.
Our expense management software is specially designed to scan emails. It checks for digital receipts for services and software. When it detects one, it can record the business expense and send them to your preferred accounting software. As a result, you never have to forget to record an IP expense ever again.
If you’d like to know more about Wellybox, our pricing, and features, we encourage you to take a look around our website. You can also contact us if you have any questions!