Whether you are running a small business or start-up, expense management can be as important to your bottom line as revenues. Taking a close look at your expense processes and policies are all part of having an expense-minded philosophy, and can make cutting costs and minimizing waste simple.
Create an expense policy for your business: It is important to have a set policy with regard to employee spending – keep it updated and communicate it well. For example, some of our customers create a simple one- to-two page document that is formatted like a contract which they ask employees to sign. Creating a formal document and requiring an employee’s signature as acknowledgement of the policy reinforces the importance of following the rules, and that there may be a consequence if they fail to do so.
Important details that may be included in this contract:
- Approved vendors (i.e. Motel 6 / Holiday Inn Express vs. regular Holiday Inn or more expensive options)
- Don’t use cards for personal items.
- Treat our money like you would yours.
- A simple statement about consequences to detail that unauthorized purchases could be deducted from pay, and / or multiple infractions could lead to being “written up” or terminated (it is good to be firm and clear)
Overcome manual processes for funds disbursement and expense tracking: Often in small business or start-ups, managing expenses is a task left to the business owner or another key member of the team. Manually wiring money to employees and collecting receipts to track their spending can be an inefficient use of time that takes away from a business owner’s ability to focus on identifying spending patterns and areas of waste. By moving to an automated process, business owners can spend more time focusing on the big picture rather than trying to follow a paper trail. For example, prepaid expense card solutions can provide business owners with automated real-time expense tracking and reporting tools.
Limit mountains of receipts: By using available technologies, business owners can free themselves from the burden of collecting, sorting and entering receipts. It’s also more environmentally-friendly for those business owners seeking “Green” solutions. One of the best ways to do this is to sign up for a cloud storage service such as Dropbox. Have employees snap photos of receipts and upload them into a shared folder that your finance people can easily access. Assign folders to each cardholder so when finance folks need to access them, receipts are already organized. Less paper floating around the organization is always better – and it’s automatically backed up! Expenses can get out of control quickly, minimizing profit margins and creating extra work.
By using these tips, small biz owners can develop an expense-minded philosophy, and become more disciplined about the cost basis for their businesses.