Many small businesses have one major priority: making money. While revenue tends to be the focus of operations, expenses are inevitable in the course of doing business and expense tracking is more important than you may realize.
The invoices sent from vendors are critically important to internal operations, and mismanaging expenses can mean mistakes, missed deadlines, and lower profits. When you want to master the art of expense reporting, here’s what you need to know.
The Current State of Expense Tracking
Expense tracking refers to the practices used by businesses to monitor and organize the everyday expenses that occur as a part of doing business. While larger, more established businesses often utilize finance software to manage this process, small to mid-size businesses are still resorting to the basics: Excel spreadsheets and paper invoices.
While fine in the early days of business, these practices can hamper growth, requiring manual inputs that demand an increasing amount of energy as expenses grow over time. Entries take longer, putting busy work in the hands of a finance manager rather than using their skills and knowledge to analyze and strategize.
Getting Expense Tracking Right
In the modern age of business, there’s no need to use pen and paper, or even Excel, to keep an eye on where your money is going. With automated options that can populate line items based on purchase data, it’s significantly simpler to track expenses, organize invoices, manage payments, and analyze trends. Instead of wasting time on data entry, finance team members can focus on the bigger picture, offering analysis that can be extremely valuable in making future decisions.
Automated expense tracking takes place in many forms, from small business platforms like QuickBooks to larger options like Oracle’s business intelligence tools. There are also many expense tracking tools and apps that integrate with accounting software programs and sync with mobile devices. While the implementation costs may exceed that of Excel, the opportunities available through a streamlined approach to expense management can do wonders for the trajectory of your operations.
A proper method of expense tracking offers numerous benefits to your business, providing an efficient and effective way to monitor and track costs. These advantages include:
- Reduction in the workforce needed to catalog and organize expenses, lowering human capital costs
- Simplified scaling, making it easier to manage increased invoices without additional resources
- More accurate reporting
- Better access to analytics for comparison and analysis purposes
- Easier detection of problem areas and red flags
- Greater policy enforcement
Getting a handle on expenses can be deceptively challenging, especially for new businesses still developing best practices. If Excel is all your company knows, it can be hard to fully shift direction and take on a completely new way to handle invoices and record transactions. When you need assistance finding the best possible way to move forward, Klein Hall CPAs is here to help. As a comprehensive resource for area businesses, we’re prepared to help you create an infrastructure that can support the growing demands of your company. Get in touch to learn more!