Did you know that about 3/4 of financing for new businesses comes from business loans, business credit cards, and lines of credit? Financing in these ways is common but doesn’t always cover all expenses.
Your employees might need additional items and tools to do their jobs correctly. The money you provide them refers to spend or expense management.
What should you know about spending management and expense reporting? Read on to find out the details.
What Is Spend Management?
Spend management allows businesses to control expenses that might include anything from software subscriptions to office supplies. Your employees should have a spending limit for them to go out and do their jobs.
More specifically, these expenses include tools, travel expenses, incidentals, etc. Spend management does not include operating costs or payroll.
Every business has an approach to spend management and expense reporting. Traditional methods involve manual labor and are outdated processes for businesses with a lot of expenses.
Handling expenses is often set out in an official expense policy. However, employees can take advantage of an expense policy if it isn’t clear.
A software spend management solution can clear up common expense reporting problems.
Common Expense Reporting Problems
To save money, your business should avoid common expense reporting issues. There are simple ways to keep spending under control with tracking, but a lot of companies go left.
These are some expense reporting and spend management issues you’ll want to avoid:
Unclear Expense Policy
Do your employees know what they can use business finances for? If not, create a clear expense policy for them to find out.
An expense policy should give guidance and set boundaries. Without a great policy, expense reporting is likely to be inaccurate and cost your company money.
Lack of Centralization
If all your business expenses aren’t in one place, expense reporting isn’t going to be easy. This is especially true if you allow your employees to track and report expenses in their own ways.
Expenses should be managed by a financed team with a centralized program. You can check out virtual cards and how they connect with a card-based spend management platform.
The most common problem with expense reporting and spend management is human error. This is likely due to a manual process.
Employees might enter data inaccurately and cause chaos with business reporting. Spending management reporting software can mitigate the risk of human error with automated processes.
Update Your Existing Expense Reporting and Spend Management Process
If you are having trouble tracking employee expenses and can’t quite figure out why your cash flow is so low, you need an updated process.
Manual spend management is prone to human error caused by unclear expense reporting policies and a lack of centralization. With a software or card-based spend management program, you’ll have better tools to succeed.
Find the right spend management platform for your business and don’t forget to keep coming back for more articles like this!