5 Expense Management Best Practices for a Smarter 2021

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5 Expense Management Best Practices for a Smarter 2021

Good cash management is always a primary concern for business owners. If you can’t keep a handle on the money flowing in and out of your company, you’ll have a hard time growing and staying profitable.

And after a tough year in which companies everywhere had to tighten their belts and focus on cash, now’s the perfect time to overhaul the expense process.

This article presents 5 five areas that virtually every business can improve on.

1. Craft a clear expense policy

Good spend management begins with clear expectations. if the whole company knows the rules, you’re already well on your way to handling expenses easily.

But employees can’t follow the rules if the rules aren’t clear. Which is where a well-crafted company expense policy comes in handy.

Your policy should be:

  • Short and sweet. It shouldn’t be an exhaustive legal document. Write it like most people won’t read or remember it!
  • Easy to navigate. Help employees jump to the section they need. Your teams are busy, and they likely have very specific questions or challenges.
  • Focused on the five W’s: who, what, when, where, why. Make sure employees know exactly what information is required.
  • Actionable. Show employees what it means to be compliant. Explanations are good, but fill-in-the-blank templates are best.

Writing policies may not be your idea of a good time. But being proactive saves you from a mountain of questions and issues in the future, so it’s worth the effort.

2. Upgrade the company card

Shared company cards are a common problem for growing businesses. You have different teams “borrowing” cards for new software or one-off purchases, and you can quickly lose track of who’s spending what.

And despite their name, most corporate cards aren’t really designed for companies at all. They’re basically the same as your personal credit card, which you would never share with anyone. So why should companies be different?

There are better options available today, even if most banks haven’t caught up. Here’s what to look for:

  • Explore virtual cards for online spending. You create one per purchase, so you don’t have to share important company card details on hundreds of websites.
  • Also look into employee expense cards. These give each team member their own physical card, but with set limits. So you can see who’s bought what and why, but you’re always in control overall.
  • Aim for real-time credit card reports. You shouldn’t have to wait until the end of the month to see what was spent. Find options that let you do this as spending occurs.

As stated above, there are far better options than the classic bank cards. Start thinking about what you want, not just what they offer.

3. Keep an eye on subscription payments

Software-as-a-service (SaaS) tools have become a vital part of the modern business stack. But despite being easy to use and quick to set up, they’re not always simple for finance teams to manage.

Many companies simply make the first credit card payment and then forget all about them. The payments keep coming off the card, but nobody’s monitoring them, and there’s no clear paper trail.

A few keys to better subscription management:

  • Create a tracking system to monitor recurring payments. If you weren’t before, keep a close eye on when payments and renewals are due.
  • To automate this, use subscription management software or smart company cards. (Virtual cards are perfect)
  • Keep communication open between finance and IT teams or heads of department. Ensure that they know which payments they’re responsible, and that they’re responsible for cancelling old ones, too.

The more important SaaS tools become to your business, the more they’ll start to impact your spending. So it pays to get ahead of these early.

4. Move away from paper processes

These include expense reports and physical paper receipts. Today, both can be digitized easily and legally, so there’s no reason to rely on paper records anymore.

Sadly, far too many finance teams still have to deal with the tedious admin of checking and manually entering this data.

Your best bet is a mobile expense management app and software that removes paper from the start. Why bother transferring paper records to digital, when you can be digital by default?

This has several advantages:

  • Real-time financial data, since you’re not waiting for paper forms to be filled.
  • Fewer errors, since much of the filing process is automated.
  • An easier experience for employees, who (let’s face it) aren’t always great with following finance rules.

Just because certain finance processes have a traditional feel to them - the way they’ve always been done - doesn’t mean they’re ready for an upgrade.

5. Automate accounting and reconciliation

Digitization goes hand-in-hand with automation. And this is where the real value is gained. Once documents are in the system, you can use simple workflows to replace what would normally be slow and manual.

Chief among these are the fiddly accounting tasks that are essential for compliance, but don’t always feel like major growth contributors.

Automated accounting brings you:

  • Instant reconciliation, in real time. Tools check for errors and duplicates across thousands of records in a blink.
  • Better audit preparedness. Because you’re looking for errors and missing documents in real time, you’re pretty much always ready for audit!
  • Huge time savings for accounting teams, since these are the activities that can take hours or days by hand.
  • More accurate records, since you’re avoiding data entry from the beginning.

You can also integrate accounting tools with your other processes. Keep clean records in your spend management software, for example, and they’ll be good across the board.

Conclusion

2021 promises to bring plenty of unexpected surprises, twists and turns. We may not know exactly what’s in store for businesses - at least for the first half of the year.

Which makes it the perfect time to ensure that your expense management exceeds expectations. The better you can monitor and manage cash flow - and avoid costly errors - the more prepared you are for any surprises we might have in store.

And the good news is that making improvements is pretty straightforward. Just look for the tools to help, and stop relying on systems that no longer cut it. Simple as that.


Author:

David Hansen, US Market Development, Spendesk

David Hansen helps growing companies create more efficient and effective spending processes, and move away from the traditional hassles of spending at work.