Business Expense Management 101: An Introduction For Entrepreneurs
Posted on: 28 July 2020
With so many people making the decision to start their own small business, expense management has never been more important. Many entrepreneurs mistakenly believe that expense management plans are only necessary for large businesses, but they are actually far more important for small businesses who have tighter budgets and less room for surprises. Here are some tips to consider as you start to create your new expense management plan.
Craft A Budget
The first step toward accurate and precise expense management is to create a budget for your business. You can budget by the month or by the year, but you need to clearly define how much money you are allotting to spend on each specific type of business expense. This is an important part of expense management because it allows you to exert greater control over your company's spending and understand where your money is going.
Track Your Costs
Establishing a budget is great, but it isn't going to help you much if you don't keep track of what you're spending to compare it against the budgeted amounts. Invest in a business expense management platform that allows you to precisely track every expense and reconcile those costs against both your bank statements and your budget.
This step should never be overlooked because it is a crucial part of identifying where your money is going and when. You'll be able to spot spending trends simply because you're keeping a clear, easily accessible record of your company's spending.
Stick To Your Budget
Once you've established a budget and have a way to monitor your spending, you can start enforcing that budget that you've established. Monitor your spending regularly against each budgeted line item. When that limit is reached, cease spending in that category until you've allotted more funding for it. This enforcement is vital because, without it, you're still not going to get a solid sense of control over your company's costs.
Review Regularly
You should schedule quarterly or annual reviews of your expense management system. Make sure that the plans you put in place are still working for your business and talk with those who are responsible for each stage so that you can be sure that the tools they've been provided are working as they were intended.
You may want to have those individuals contribute to the selection of your expense management software or take their feedback into account at the end of your first review period to ensure that you're using a platform that will best monitor and report your company's financial activities. Contact a company that provides business spending management solutions to learn more.
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