How can I keep track of company spending?
As every business manager knows, the cost of goods sold (and of course it applies equally to services) can wipe out the profit generated by sales. The problem with keeping track of company spending and managing expenses is that while bigger ticket items are relatively easy to control, money can haemorrhage from an organisation through multiple expense accounts, petty cash reimbursement, mileage, allowances, meal vouchers and other channels.
Recognise the size of the issue
Because any one item doesn’t seem very large, it’s hard to imagine that expense spending could make a big difference to company profitability, or indeed survival. But as it includes multiple categories of spending, this can be a significant drain on the organisation. Cash is the lifeblood of any business, and when it starts to pour out of the company account in an uncontrolled manner, cash flow is put at risk. So the first step is to recognise that expenses are a non-trivial business cost.
Once the size of the problem and the importance of controlling it has been understood, companies often start looking at how to manage expenses. Unfortunately, they are often forced to conclude that control is simply too time-consuming, so instead, they impose some arbitrary rules which tend to have limited effectiveness.
Avoid a mountain of data
One of the key reasons that expenses are not tackled rigorously is because of the large amounts of data, much of which can be paper-based, right down to till receipts. However, with modern technology, it’s entirely possible to set up expense analysis in real-time and reporting systems that will get business costs under control without creating either a paper mountain, more clerical work or a huge data input task.
Expense control is highly dependent on the visibility of what is being spent, by whom and why. The business needs to get the best possible value out of every non-productive penny that is being spent. So the first thing to do is to issue everyone who spends company money with a prepaid business card.
The great thing about these is that they can be used by everyone in the business who is spending money. This cuts off the least visible channels by which cash is draining out of the organisation and brings the expense claim headache to an end.
Once everything, from a pint of milk, to travel and hotel expenses, is on the company system and is being automatically logged in a single application, it’s far easier to see what is being spent, where and by whom.
Exploit the data
There are now applications such as Soldo, it is an expense management solution that will allow you to access expense data via a desktop dashboard with a drill-down facility so that you can look at the detail if you need to. What’s more, you can integrate this with accounting software such as Sage and Xero. At a stroke, you have real business intelligence that you can use to introduce efficiencies and to stop wasteful spending in the business.
One of the most illuminating exercises is to compare expenses per day for various employees who may be travelling on company business. Again, it’s possible to see how much is being spent on the same items across different parts of the business and at different times. The expenses spend suddenly becomes an auditable item which can be far more robustly managed.
Customise expense policies to the individual
Our expense management systems allow you to control every aspect of spending on the prepaid company card. This starts with deciding how much an employee, or the financial management group, is going to load onto the card. The company can then determine what the money may or may not be spent on. Spending can then be analysed, and the rules and limits that apply to the card can easily be changed by the administrators.
If you are looking for a way out of the nightmare of petty cash, receipts, expense claims, vouchers and all the rest of it, click here for information on prepaid business cards and discover a system that does all of this. It’s quick to install, easy to use and will put you back in control of every element of the expenses cycle.