Business expense management can be an effective way to reduce company expenditure and maximise profitability – providing you have the right tools at your disposal. Without a clear business expense management strategy in place, it’s likely that company expenditure will be higher than necessary and complex workflows will make it difficult to keep track of where your company funds go.
Fortunately, our business expense management solutions, such as dedicated expense cards, make it easy to implement effective and cost-efficient strategies to streamline your financial management. In this article, we take a closer look at why business expense management is so important for businesses and how PayAlly’s business expense cards can help you to transform your company’s processes.
What Is Business Expense Management?
Business expense management refers to how a company monitors, processes, facilitates and reports its expenditure. While this may seem deceptively simple, business expense management can be a time-consuming and complex task.
To create accurate financial reports, every business expense must be accounted for. This includes large investments, such as the cost of new premises, to smaller purchases, such as office stationery. As multiple employees can be responsible for making purchases or settling accounts on behalf of the company, numerous members of staff may need access to company funds. In turn, this means that each employee’s business-related expenses must be facilitated, managed and reported.
As you can see, business expense management can soon spiral into a virtually impossible task if you don’t have the right strategies and tools in place. Fortunately, collating company expenditure via a single account and issuing expense cards to employees is an easy way to streamline and manage your company’s outgoings.
What Are the Benefits of Effective Business Expense Management?
Implementing an effective business expense management strategy can deliver numerous benefits, including:
Increased Spending Control
No company wants to give its employees free rein over its finances, which is why it’s vital to have limits in place when employees are authorised to use company funds! If employees are permitted to use expense cards, for example, you can set custom spending limits for each card, in accordance with the employee’s role and expected business-related expenditure.
This gives senior management greater control over company expenditure and prevents employees from overspending on behalf of the company. With easy-to-manage spending limits, you can protect your company’s finances while ensuring employees have access to funds they need.
Company owners, managers, accountants and auditors should have access to up-to-date financial data at any time but, all too often, companies rely on outdated information when making important decisions. Employee expenses can account for a significant amount of the company’s overall expenditure, so it’s important that you have access to the latest data.
With a business expense management strategy and an online portal to review and manage employee expense cards, you’ll gain real-time visibility over your company’s outgoings. From monitoring usage to making operational decisions, you’ll have the data you need at your fingertips.
Accurate reporting is essential when it comes to your finances. You’re legally obligated to submit accurate financial information to relevant authorities, such as the HMRC, and failing to do so can lead to costly penalties and severe sanctions.
Due to this, effective business expense management tools should be seen as a necessity for any organisation. When company expenditure is collated into a single location, such as a centralised digital report, it ensures that no expenses are overlooked or forgotten. Conversely, it also prevents expenses being inadvertently overcounted or duplicated.
As a result, you can be confident that your financial reports are accurate, reliable and compliant with relevant regulations and guidelines.
Traditional methods of business exchange management tended to be difficult and time-consuming to implement. For example, many companies required employees to use their personal funds for business-related expenditure before ‘claiming it back’ from the company. Generally, this meant an employee would submit a form and receipt for every business-related expense, which the company would verify and approve or deny. Then, each employee would receive the money owed back at specified intervals.
As you might imagine, this created lengthy workflows for businesses and meant that accounting staff had additional responsibilities to undertake. In addition to this, employees were often justifiably unhappy at having to wait weeks or months to be reimbursed for company-related transactions.
While some companies still rely on this outdated form of business expense management, there are far better ways to handle your company’s expenditure. When each employee has a business expense card, for example, the transaction can be facilitated via one of the company’s business accounts and reported centrally. As the employee is not required to use their own personal funds, they do not need to claim the money back from the business and workflows are, therefore, significantly reduced.
Reduced Tax Liabilities
In the UK, limited companies are required to pay corporation tax on their profits, so your business expense management has a direct impact on your company’s tax liabilities. As ‘allowable expenses’ can be deducted from your revenue when calculating profit, accurate reporting can help to reduce your tax liability and make your company more tax efficient.
Implementing a more effective business expense management strategy can directly reduce costs by shortening workflows and limiting the amount of time you spend monitoring, reviewing and reporting your company’s expenditure. However, there are additional ways that expense cards and effective management strategies can help to reduce your business outgoings.
When you manage staff finances with expense cards via a single account, you can easily review expenditure and segment or classify each transaction. This allows you an accurate overview of expenditure, as well as granular insights into where the majority of company expenditure occurs. With this information, you can identify viable ways to reduce outgoings, thus maximising your savings and increasing the profitability of your business.
Business Expense Management with PayAlly
Our business expense cards give companies the flexibility and security to manage their company expenditure accurately and efficiently. To find out how you can benefit from custom business expense cards, contact PayAlly now.