News

Keeping a lid on business expenses
21 April 2022

It is always a challenge to keep costs down for businesses, particularly at a time of soaring inflation and steep rises in the cost of utility bills.

An expense report is designed to report on any business-related expenses an employee incurs, either by using a company credit card or by using their own funds.

This might include spending related to work activities, such as a business trip, travel and transportation, meals, training and workshops, accommodation, business supplies and tools.

The easiest way to manage expenses and process expense reports is to use expense management software, which automates the entire process for you.

Why it is critical to keep spending under control

Keeping expenses under control is vital to the long-term health of any business.

While some of the cost of expenses can be recovered via the tax system, much of it still falls on you and could reduce your profitability.

In implementing an expenses management system several steps need to be undertaken.

Manual expense management demands a lot of time, money and effort.

An automated expense management system with ready-made templates and cloud-connectedness streamlines the spending and employee reimbursement process and helps you to be more efficient.

Avoiding costly mistakes and duplicating

The best part about digital expense management systems is that they make it far easier for employees to follow the rules.

This eliminates most potential mistakes, such as overspending, double-entry and lost receipts.

By employing some of the latest technology, businesses can track employee spending and determine how the business will reimburse staff.

What’s more, many of the apps out there can connect to existing cloud accounting software to automate much of the accounts process.

It also applies the procedures and policies used to control this type of spending. For example, if employees are given daily allowances for meals when travelling, then the expense management process accounts for those limits when generating reimbursements.

Make the system secure and compliant

These systems allow you to limit user access to the system and to configure the software so that it prohibits employees from entering claims that are clearly in breach of organisational policy or the expenses guidelines of HM Revenue & Customs.

You can set the system up so that disputed claims are easily moved up the chain to senior management once certain limits or rules have been breached.

Make sure that data is collected properly

One of the most common problems with employee expense claims is that not all of the information necessary to prove the validity of the claim is captured correctly.

The latest systems safely and securely store information on the cloud, often allowing staff to quickly take a picture of receipts or invoices so they don’t have to be processed manually or stored.

Publish analysis of the data

If a claim looks ridiculous or excessive, allowing the claimant to see might lead to more sensible claims and can allow you to reinforce your rules surrounding expenses.

In many instances, it is entirely appropriate for expenditure to pursue a new client or the management of an existing one.

Transparency of the spending involved ensures that everyone can see the true cost of client acquisition or retention.

Businesses without automated expense software should explore the options available to them to help them save time, and money and reduce the strain of managing expenses manually.