9 Tips to Improve Your businesses Expense management

Managing a company's expenses can be a chore at best and a nightmare at worst. When you have employees reporting to you, the problem becomes even more difficult to solve.

Large corporations may have dedicated accounting departments that can handle expense management as part of their day-to-day duties. However, managing expenses in a small business can divert valuable time away from other, more important tasks required to keep the business running (such as marketing and delivery).

Here are a few pointers and best practises for effectively managing your company's expenses:

1. Keep track of your expenses.

Whether you're a freelancer or a small business, staying up to date is critical to avoiding being overwhelmed by unnecessary administrative burdens at the end of the year.

Also, by never allowing your expense tracking to be more than a week out of date, you can quickly catch out-of-control expenses before they become a problem.

2. Establish a centralised filing system.

The proverbial "receipts shoebox" has its advantages — at the very least, you know where to find all of your receipts when you need them!

Proper digital filing can be difficult to achieve in this day and age of electronic receipts and invoices from multiple sources. This can result in a loss of deductibles on your tax return.

One option is to save each receipt and bill in a centralised digital folder that is sorted by date.

3. Purchase basic accounting software.

There are a plethora of accounting software packages available. Many of them are devoted to larger corporations.

Something like FreeAgent is ideal for freelancers and small businesses that require some flexibility.

This also solves the first two problems mentioned above, because accounting software will assist you in staying on top of your accounting (and therefore your expenses). The software also provides you with a central location to store all of your company's records.

4. Connect your company's bank accounts to your accounting software ("Bank Feeds").

If you link your business bank account to your accounting software and make sure that all company expenses are always paid for with business accounts or credit cards, your accounting system will automatically notify you when an expense needs to be explained.

5. Make use of tools such as Revolut Business.

Revolut Business makes it easier to manage employee expenses by providing a centralised location to manage all employee business credit cards. You can set spending limits and view expenditures (on your smartphone or through the web app) as they are made with each of the business cards.

You can also easily disable credit cards if you discover that one of your employees is unexpectedly overspending.

Furthermore, Revolut Business integrates with many popular accounting software providers, so you don't have to manually enter expenses into your accounting system.

We have a partnership with Revolut and can provide you with detailed instructions on how to use it if you so desire.

6. Assign someone the responsibility of reducing expenses on a regular basis.

Cutting costs is a double-edged sword because the cheapest service is rarely the best.

Saving ten or twenty pounds on an item you buy two hundred times a month, every month, adds up to a £24,000 – £48,000 savings over the course of a year! With that kind of money, you could even hire someone to go out of their way to get the best deal on every single supplier contract. It takes time to constantly check and double-check existing contracts. However, if your company relies heavily on suppliers, this could be a critical position to fill within your finance department.

7. Reward employees who find better deals.

Make employees aware of the need to save money and reward them if they find better deals from suppliers. You could offer a 10% cut of any savings they generate each year. So, if they find a different supplier (of the same quality) or negotiate a lower price with an existing supplier, bringing your total bill for the year to £1,000 less, they will receive an extra £100 in their final pay check for the year.

8. Provide a sliding scale of rewards to employees who spend less on business trips.

If employees spend 15% or more less than the approved budget for a business trip, put a portion of the savings into their own pockets.

Assume you decide to reward employees with "50% of the money saved" during a business trip. If their business trip has an approved budget of £1,000 and they spend only £700 (i.e., 30% less), put half of what they saved (£300) into their back pockets, or £150.

9. Put in place a well-known expense policy.

One important point to include in a Company Expense Management Policy is that the company will not reimburse employees for expenses that have not been pre-approved. (Perhaps there should be a provision for "exceptional cases" as well.) It would be wrong to penalise an employee who paid for something out of their own pocket in order to secure a client contract that day, bringing the company additional revenue!)

We have also accounting software that will help you to manage your accounts in London.