When it comes to tracking business expenses, Ben Franklin said it best. “Beware of little expenses,” the wise old sage warned. “A small leak will sink a great ship.”
That advice may be more than 200 years old, but it still holds today. If you know your expenses, you can control them. That’s easier said than done, however. Multiple employees can make expense tracking more complex than even Ben Franklin ever imagined.
So, how do you keep an eye out for minor leaks? Let’s take a look at some ideas.
Have a policy in place
You should create a list of allowable expenses for your company and a list of those you won’t cover. Then, communicate that list like your business life depends on it (because it does)! It’s easy to create one using templates. We found some good ones here you might find helpful. Now that you have a template in place, it’s good to know the IRS rules for deductible expenses. Those rules may not always be clear for your particular needs, so consult your tax accountant if you have any questions.
Automate, automate, automate
Manually processing business expenses is a clunky process with lots of complicated spreadsheets and confusing email correspondence. Manual tracking is difficult when everyone is working under one roof and nearly impossible when employees telework.
Thankfully, there are plenty of software programs that automate the process. A quick Google search for expense management programs will get you started. It may be challenging to research all the options, but you will save money and increase productivity.
Keep it Simple
When you or your employees are traveling, keeping up with paper receipts can be a hassle. So, consider software that allows employees to track receipts using a cell phone camera. This will make life easier for your employees and your accounting team. No one has to deal with lost receipts, and your accountant can track things in real-time.
Another way to simplify things is to issue a company credit card with a debt limit. They make tracking expenses easier, help avoid complicated employee reimbursements, and offer generous payment terms.
One word of caution. Debt limits on credit cards can be high. So you may consider a one-time expense card or debit card with a set amount of money instead.
Transparency is vital in any expense management plan. Employees should feel they have a grasp of what is allowed. Surprises after the fact can lead to lost time, lost trust, and lost productivity, so over-communicate on policies.
Encourage feedback from employees on what is working on the policy and what isn’t. While you are at it, encourage ideas on cost savings. Many companies are turning it into a game, rewarding their employees who come up with ways to save money.
Just make sure the reward is substantial and communicate that as well. Slather your internal and external communications with the great work that the employee did. It will encourage more ideas and empower your team to think more strategically.
As you can see, expense management doesn’t have to be difficult. With a good plan, the right tools, and a strong communication strategy, you’ll be able to plug those little leaks in your financial ship quickly. Old Ben would be proud!