Unexpected Capabilities. Unmatched Service.
small business expense management

Effective Strategies for Small Business Expense Management

You stop at Office Depot to pick up a few reams of printer paper before the workday begins. Later in the day, you sign up your company for a Google Workspace plan. Near the end of the day, you sit down and pay your office’s electricity bill.

All of these are small business expenses. And as they pile up, you might need some help with your small business expense management.

Definitionally, business expenses are simply costs that you rack up in the process of operating your business. It’s an expansive list, ranging from office supplies to marketing spend to business travel. And because businesses incur so many expenses in their usual day-to-day, it can be easy to lose track as these payments pile up.

Of course, you can’t afford to lose track of your expenses, for numerous reasons. Chief among them: Your business doesn’t generate infinite cash. Also, thorough business expense management can help you each tax year as you’re determining your eligibility for various tax breaks.

The following are a number of tips on how to better manage your expenses — tips that will help you better budget, track expenses, and even improve your profitability.

Codify Expense Management Rules

One easy way for expenses to get out of hand is to have no set of rules that govern expenses.

An expense management policy sets all of the standards for spending money — what money can be spent on, how much, how it’s paid for, how it’s reported, who is authorized to pay for what, and more.

These policies are extremely helpful not just in educating employee spending, but also limiting it. Consider an employee on the road for work: With no cap on meals spending, they might be tempted to spend whatever they want, wherever they want. But if they have, say, a $40 per-meal limit, that’s a certain and known cap that a business can budget around.

Use Credit Cards Instead of Cash

A credit card is one of the most powerful tools in small business expense management.

A corporate credit card effectively puts some sort of limit on how much an employee can spend — it might be a high limit, but a renegade employee can only do so much damage. It automatically creates a track record of expenditures. It takes a step out of the process — no more needing to reimburse employees! And you can build up cash-back or other rewards on a corporate credit card, which puts more money back in your business’s pocket.

Review Expenses

When an employee gets a receipt for something they bought for the business, that should not be the last time someone views the expense.

Whether it’s you, your accounting team, or an outsourced CFO, someone should review all expenses, for a couple of reasons.

For one, analyzing expenses can help you determine whether certain costs of business are rising or falling over time. (And in the case that they’re rising, you might be able to figure out how to cap those costs.) Also, keeping a close eye on expenses can reveal potential fraud.

Simplify With Expense Management Software

Human error looms large as it pertains to expense management. Forgotten receipts, faulty math and more become inaccurate reports … and the potential for an audit come tax time.

One way to cut down on several sources of human error while also speeding up and simplifying the process? Expense management software.

Expense management software automates or quickens much of the process — submitting expense reports, populating approval requests, tracking payments, and more.

Talk to Small Business Financial Pros

Every small business goes through growing pains — and among them is wrangling growing expenses. It’s a common problem, and one that we can help with.

McManamon & Co. is an accounting, tax, fraud, forensic and consulting firm that offers custom services to companies across a broad spectrum of industries. We not only help you analyze your expenses — we can also help you institute expense tracking programs to streamline the process going forward.

Find out more about what we can do for you. Call us at 440.892.8900 or contact us online today.

Tags:  , , , , | Posted in McManamon & Co., small business, Small business finances