Cracking the Code of Expense Management: What You Need to Know

If you own a business, you know all about expenses, but you probably know less about expense management.

This is not something many freelancers or entrepreneurs think about when they dream of starting their own business. However, it is incredibly important.

Managing expenses can be the difference between success and failure. Fortunately, automated expense management software simplifies the process of creating expense reports.

If you want to learn more about this important part of business operations, you should read on.

In this blog you will find out everything you need to know about it:

• Expense Management
• Expense Management Options
• Benefits of Expense Management Software
• Choosing your Expense Management Software

1. Expense Management

Let's get down to business: What is spend management and why is it so important?

Simply put, expense management is the system your company uses to process, pay, and audit all business expenses. These expenses can include travel, office supplies, software, services, and more. They vary from company to company, but whether you have just a few expenses or hundreds, you need to track them.

And why?

If you have no idea how much you're spending, you may be overspending, paying for fraudulent expenses, or causing cash flow problems. Poor expense management can also mean more work for your accounting and finance teams.

However, all these problems can be solved with a good expense management system. With a solid focus on compliance and automated spending reports, you can ensure you never overspend. Best of all, with the right analytics tools, you can make your spending more efficient.

Types of expenses to manage

Before you can begin analyzing the different cost tracking options, you need to consider the types of costs that exist in your industry. As mentioned, these can vary greatly from industry to industry, but most companies manage three categories.

Travel and expenses

In the business world, traveling is an everyday occurrence. Therefore, travel and expense management is an important part of company management. Every time an employee travels for work, they must submit an application. Each company has its own policies for per diems and reimbursements for gas, room and board. If you fully reimburse your employees for work-related travel costs, all receipts and expense reports must be retained.

Small change

Occasionally you or your employees will be faced with items that are small enough to pay for with cash. The cost of postage, new pens, or decorations for a staff party can be paid from petty cash instead of taking the time to write a check or pay with a credit card. However, cash payments are also more difficult to track. For this reason, you need to keep accurate expense reports for any cash you provide to your employees.

Intellectual property

In today's modern era, businesses consume all kinds of services and software. From your accounting software to your SEO tools, you have a variety of intellectual property expenses. Most of these are recorded through your emails. While this is convenient to a certain extent, it can also be time-consuming to organize all your expenses, which brings us to our next topic.

Expense Management Options

You have two options for managing expenses: you can do it manually or you can use software. The manual process works well for small businesses with very few expenses and small expense reports. However, more and more companies are switching to an online expense manager.

If you're wondering which option is best for your expense management, consider the pros and cons of each option:

Manually

Pros: It's free! An employee can complete the process on paper, in a spreadsheet, or in another expense report.

Cons: It takes a lot of time. Once expense reports are created, they must be forwarded to a supervisor. This approves it and sends it to the accounting department. From there, the individual transactions are entered into the company's financial system.

Software

Pros: It is more efficient. Instead of the tedious manual process of recording business expenses, you can automate everything.

Cons: The software is typically paid. An online expense manager may also cost you more time and resources as you will need to train your employees to use the program.

However, IceHrm offers many affordable options to fit your budget, so that you do not have to worry about it.

When you compare the two options, you will find that the benefits of technology significantly outweigh the benefits of the manual process. There are even more reasons to choose expense management software for your expense management system.

The Benefits of Expense Management Software

As mentioned earlier, the manual process of expense management is tedious and time-consuming. It may take several days to enter all of your business expenses into your accounting system. The worst part is that there is a lot of room for human error. However, if you use software you can benefit from:

• Simplified tracking: Never have to be surprised by business expenses again. An expense tracking system sends an instant notification when a purchase is made.
• Accelerated reporting: Instead of waiting for your employees to create an expense report, you can speed up the process with paperless reports. Best of all, you don't have to worry about expense reports getting lost in the shuffle.
• Effective Policy Compliance: Policy compliance is one of the key elements of expense management. It is important to determine which expenses are covered and which are not. Software can automate this process and ensure every expense complies with company policies.
• Useful analytics: To see where you can cut costs or better manage expenses, take advantage of the powerful analytics your software offers. Based on reported expenses, you get rich data consolidated into a single dashboard. This feature dramatically reduces the time your finance team would have to spend on such calculations.
• Customizable approval process: Every company has its own methods and systems, so you need software with a custom approval process. This feature allows you to customize your expense management software to suit your organizational hierarchies.
• Full integration: You can easily integrate your expense management with your accounting and ERP system. With all the tools available, your finance team can process all your spending data. From there you can sync it with the accounting program of your choice.

Choosing The Right Software For Your Company

With all of the different software programs available, you need to carefully consider your options. The choice can be difficult, but you don't have to make the decision blindly. We have created a list of criteria to help you choose the most suitable software for your business.

Does it offer options for a multi-step approval process?

Depending on the hierarchy in your company and the type of expenses, there are different approval processes. Therefore, you should ensure that your software is flexible and easy to configure so that you can customize each stage of the approval process.

Can the software be integrated into your travel desk?

Imagine how much easier it would be for you and your employees if they could book travel and account for all associated expenses in one report. A good software is able to integrate with your travel management and do exactly that! It can even ensure that all applications comply with your company's travel policies.

Can the software read digital receipts?

In today's digital age, there are so many paperless billing options. Therefore, it is essential that your expense reporting software has the technology to read digital receipts.

Transform your financial landscape with Icehrm's Expense Management System. Dive into precise expense tracking and enhanced efficiency. Explore the power of controlled spending, and take command of your organization's financial health effortlessly. With Icehrm, the future of expense management is at your fingertips – unlock it now and lead your organization towards a more cost-effective and successful future!