Expense accounts can be a tricky business in almost any company, but small businesses especially find themselves in an interesting plight. In general, small businesses usually have the least amount of money available for expenses accounts and yet they often need to reimburse their employees more often for expenses made on the company’s behalf by their employees. Not managing expenses properly can lead to unpaid invoices, over payments, and all sorts of financial problems though, so it is well worth the effort to have in place a system that allows you to have complete access to and keep track of all financial records for your small business.
Petty cash is usually one of the standard means of having cash on hand for most small businesses. These funds can be tracked in a variety of manners, but if the tracking process can be automated it leaves a paper trail and that can come in handy when there are expenses that cannot be readily verified. Automated expense tracking programs can be set to alert certain people within the company if withdrawals above a certain amount are made. They can also be used to generate records of the spending habits of different employees.
Company credit cards are another item that can be abused if it is not properly tracked. While these credit cards are incredibly convenient to use it is important that limits be placed on their use and that they be carefully monitored. Purchases over a certain amount should require that the standard expense reporting procedures be followed. Strict rules should be in place that company credit cards should not be used for personal expenses. An automated expense tracking system will allow you to make sure that these rules are complied with. It will also make it very easy for the accounting department to reconcile expenses on a regular basis.
Speaking of the accounting department, account reconciliation is very important, in fact, account reconciliation should be done on at least a monthly basis. An automated system makes this job much easier for the accounting department, and if your business is really small the automated system may be able to take care of all your spend management needs. There are expense management systems out there that can take care of all the financial processes of your small business, including receipts and invoices, payroll, and many other tasks that become overly tedious when they are done manually.
Travel expenses are another area where the ability to track expenses is very important especially in this Pandemic situation. Of course there should be firm guidelines in place beforehand that determine limits on things like the type of airfare a company will pay for, the kinds of hotels that can be covered as expenses, and the kinds of services that are covered at the hotel. In order to truly track travel expenses you need to have a record of receipts and a good automated expense tracking system will allow employees to input their travel receipts so that a digital copy will be available any time. For a small business, an automated expense management system is definitely a great investment.