Expense and Wealth Management Tips To Use in 2020
As a company grows, as do the expenses associated with running the business. As such, it’s crucial to have a handle on expenses and know where the money is going and why.
Having the right expense management services in place can improve cross-functional team communication, calculated spending cuts, and spending money on things that bring the business value. Here are some compelling reasons why businesses need to monitor expenses and the best expense management tools available right now.
What is Expense Management?
As a business expands, the key leaders may have less awareness of daily operations as they focus on high-level strategic planning. On the ground floor, there are various daily expenses that add up to impact the bottom line.
For example, a salesperson on a trip overseas will have expenses associated with their stay, such as meals and transportation. A manager who has to drive two hours to another location could stop for lunch on the way, pick up a bottle of water for the drive, and charge their mileage. A marketing associate could pay for the design and printing of an ad in high profile magazine that’s expected to yield a high ROI.
So what role does expense management play?
At the end of the accounting period, these small changes across the board will have to be reimbursed to employees or allocated to the right departmental budget and accounted for in the books.
The problem is that traditional methods of expense management are time-consuming and tedious, with a large margin of error. Expense management apps create a centralized platform that solves those problems.
Who Oversees Corporate Expense Management
Another challenge businesses face with corporate expense management is that responsibility and accountability are shared. This is vastly different than personal finance and wealth management, where your actions only impact you.
These three main stakeholders play a significant role in expense management.
In the hierarchy of corporate expense management, department leaders often have a budget that they are responsible for. Depending on the department, it could be expansive and detailed or moderate and simple. For example, the accounting department is likely to have a smaller budget than marketing or sales, based on the nature of the job.
Department leaders monitor and track expenses within their department and report as needed, with expense reports from their subordinates funneling in.
Project managers often have expenses that impact all departments and aren’t always tangible. For example, coffee and donuts for a meeting are a tangible expense. Borrowing Susan from accounting for two days to get insights into how a proposed innovation will work is intangible.
Project managers have to account for all the moving parts of a project to be able to provide an accurate depiction of how much a project costs.
The accounting department also has an integral role in expense management. The information from all departments will funnel to them for processing. It’s accounting that’s responsible for ensuring the project manager’s expenses hit the right accounts, and the salespeople get reimbursed for their travels.
If the information accounting receives is convoluted, the reporting will be inaccurate.
Streamlined Expense Management Services
Traditionally, the expense manager would calculate everything in Excel sheets or a separate project management system that doesn’t directly communicate with a business’s financial software.
Automation has created a paradigm shift in the way businesses operate in recent years. Rather than replacing hardworking employees, automated processes remove the ambiguity and tedium, allowing employees to focus on high-value tasks.
To err is human; to automate, divine. With automated expense management apps, your business can:
- See real-time spending and utilize live tracking to keep expense managers up-to-date rather than discovering an issue at month-end.
- Simplify auditing with one centralized system that’s easy to navigate.
- Reduce back and forth using instant approval or rejection of expense claims.
- Drastically reduce time spent processing expenses
- Create a collaborative cross-functional team environment for streamlined communication between teams
In summation, automation can revolutionize corporate expense management. Rather than your traveling salesperson finding out that his expense wasn’t approved a month after the fact, he can submit a pre-approval request with the click of a button. Susan in accounting will no longer have to chase people around for signatures, wasting her valuable time. C-suite executives will be able to pull up a live snapshot of major project costs.
In other words, using an expense management app can cut expenses both directly and indirectly.
The Best Expense Management Apps and Tools
As stated previously, automation has revolutionized the world of business. Machine learning, artificial intelligence, and cloud computing make for intuitive programs that are accessible to mid-sized businesses around the globe.
Some of the highest recommended expense management apps include:
Spendesk markets itself as the world’s most innovative expense management platform. This versatile program can handle multi-currency functions, a simple user interface, training support, and streamlined processes to create alignment between teams.
This cloud-based program uses AI to predict and forecast expenses, even detecting recurring expenses and accounts to mitigate repeat work. Spendesk offers mobile expense management apps that feed back to head office, making it an ideal choice for businesses with remote teams.
Zoho Expense is another smart platform and capitalises on automation to reduce hands-on work. For example, you can scan a receipt into the app and have it automatically turn it into a recorded expense. Zoho is meant for businesses that have strict spending policies and can be customised to enact them by setting limits.
Finally, the platform uses unique IDs for various users throughout a mid-sized business, so the information gets funnelled back to accounting in an organised manner.
Xero is notable for its scalability. This platform could be used by an entrepreneur and still be effective when that person grows into a small business or large corporation.
Xero has a user-friendly interface that makes accounting tasks simple for non-accounting professionals. This platform is integrative and can be streamlined with other key business tasks aside from expense management, such as payroll, invoicing, etc.
Modern businesses cannot afford to skimp on expense management services. By implementing the right tools and automated protocols, your business can trim the fat and become more profitable than ever.