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December 21, 2022
Business expense management is the process of organizing, tracking, predicting and managing all the expenses incurred in the process of running a business.
It’s important for small businesses to keep a careful record of their expenses for accurate cash flow forecasting. By monitoring expenses regularly, these small businesses can better manage their budgets and identify areas where wasteful spending can be reduced.
A comprehensive expense management system also helps minimize costs and reduce the risk of noncompliance with tax laws. Unfortunately, some owners and CEOs ignore or even avoid business expense management because it seems like a daunting task — complete with a huge pile of paperwork and endlessly time-consuming record keeping.
However, when done correctly, staying on top of business expense management can be an invaluable tool for protecting its financial stability.
While any expense incurred for the explicit and rational purpose of conducting business can be considered a business expense, there are a few categories of expenses nearly every business has in common:
As you can see, the number of expenses that must be tracked and categorized correctly is excessive. That’s why it’s essential to have an organized business expense management process and clearly outlined policies in place before you start racking up more expenses than you can count!
A clearly defined business expense management system simplifies the entire process of tracking expenses, making it easier (and faster!) to manage the financial health of your small business. If your system is automated, you can save even more time while enjoying greater financial accuracy and fewer human errors.
This can help improve the operational efficiency of your company and reduce the manual effort required in tasks like employee reimbursements, vendor payments, invoice processing and more.
Proper business expense management provides a clearer view of your business’ finances by giving you visibility into your budgeting and a better understanding of your spending patterns. It also ensures you’re not potentially held responsible for your business’s noncompliance with rules and regulations.
The business expense policies you put into place, including who is allowed to make business purchases and how each kind of purchase will be categorized, reduce the risk of fraud, mishandling of funds, wasted expenses and non-compliance. With accurate, compliant financial data in hand, you can make better, more informed decisions about expenses in the future.
By automating expense tracking and providing useful insights into your small business’ finances, business expense management facilitates better control over costs — improving efficiency across the board. With just a few clicks, you can see what expenses occur again and again, which may be redundant, and what expenses may be canceled, changed or reduced.
With a good business expense management process in place, you can better manage the timing of your incoming and outgoing cash. When you’re clear on what expenses are occurring, and when, compared to your current cash on hand, you have a better idea of what can be purchased now, and what should wait. That improves your business’ liquidity and stability.
Proper business expense management is crucial for small businesses at any stage of growth. By tracking and organizing all expenses, business owners can protect the financial future of their company, improve cash flow, reduce unnecessary expenses and increase their company’s financial transparency.
Do you have a system in place for managing your business expenses? If not, now is the time to put one into action. If a lack of time is your biggest hurdle, keep in the mind that expense management is among an array of accounting services that can be outsourced to a third-party expert.
Our team is made up of seasoned professionals who bring years of industry experience to the table. You gain a trusted advisor who understands your business inside out.
Say goodbye to the hassles of hiring, training and managing in-house finance teams. You will never have to worry about unexpected leave of absence or retraining new employees.
Whether you’re a small business or a global powerhouse, our solutions scale with your needs. We eliminate inefficiencies, reduce costs and help you focus on growing your business.
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