How do I record business expenses in a spreadsheet?

Many small companies rely on tracking expenses to maintain an accurate view of the company's financial standing each month.

Over the past ten years since the first ripples of the financial crisis, most SMEs and sole traders, at least the ones who have survived, have been under financial scrutiny.

SME managers and financial directors will have been required by their banks and accountants to monitor company spending closely and manage expenses as efficiently as possible.

Bookkeeping

One of the ways in which they may have been doing this is by employing a spreadsheet such as those provided by Microsoft and Google. For companies not using software for their bookkeeping, a spreadsheet approach allows an accurate view of the information.

It is possible to summarise expenses on the spreadsheet and monitor how they fluctuate over the year. The advantage is that the process is quite simple, and most people will recognise the rows and columns and understand the calculation process from using the program for other purposes. To create the spreadsheet follow a simple process:

  • Enter the months across the first row (at the top of each column)
  • Use the first column to create a comprehensive list of expense types
  • Then in each month enter the amount you spend in each category in the relevant cell
  • Enter a calculation formula using SUM at the end of each row and the bottom of each column to calculate total expenditure per category each year and total monthly expenditure respectively.

Fluctuations

The spreadsheet solution will enable you to compare expenses in different categories over the year and monthly fluctuations in each group. By making a comparison with the previous year's spreadsheet, you can see how the year is progressing and make predictions about the upcoming months and spot patterns for the year ahead.

For sole-traders and many SMEs, this may be a good way of keeping a lid on expenditure; it also ensures that you have an overview as to where the company's money is being spent and how quickly, in comparison with funds coming in. If you cannot get a handle on how much you are spending, the company is going to find it difficult to move into profit.

Expenditure

So far so good, but what are the disadvantages of such a process and how could the company's position be improved by looking at alternatives?

Firstly, keeping the spreadsheet up-to-date and making sure it is relevant can be time-consuming. It is no good leaving everything to the end of the month and then trying to track down all the expenditure in different areas. This is not only going to take time, but there is also the risk that receipts for services and goods have been misplaced. This is particularly the case if the updating is allowed to stretch beyond month end.

Furthermore, unless the spreadsheet is updated almost continually, that is to say on a daily basis, it is worthless if the owner or finance director wants a snapshot of the current status in any particular area, or wishes to make a direct comparison of a cost which has just crossed their desk.

Receipts

So what are the alternatives that will solve the problems outlined above? One obvious one would be a prepaid MasterCard which can be issued to employees to use for expenses. Our company card, for example, allows administrators and management to cap individual employee expenses, thereby preventing runaway spending and ensuring control.

It also means that employees need never be out of pocket while waiting for expense reimbursements.

More significantly it also ensures that accounts departments have a clear handle on expenditure levels, and there is never the risk of lost receipts scuppering accurate reconciliation. This eradicates unpleasant end-of-month surprises for the finance team.

In comparison with the spreadsheet alternative, real-time apps can make expense submission and recording a matter of a few clicks, saving precious time for sales staff in the field and HQ-based accounts departments.

If you are having difficulty keeping track of your firm's expenditure and are not even using a spreadsheet, employing one will obviously help. If on the other hand, you are looking for a time-efficient accurate way of tracking expenses, there is a viable technological alternative from Soldo which, despite the sophistication of its operation, remains simple to use and monitor.

Details of our pre-paid business card and systems can be found here.

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