Being a startup business owner, you must be shouldering all responsibilities for your business. From amongst all the departments you handle, having a solid grip on expenses can bring a massive difference in the success and failure of the business.
To manage your expenses, you need to calculate and measure the total expenditure. Well, it simply means to seek some effective ways and track expenses in order to understand in which area you can reduce cost.
To work on business expense management, here are some proven tips you can follow.
What are quick fixes to manage business expenses?
Check out the best ways to manage the business expenses:
- Use Expense Tracking Software
It’s important to be aware of your business expenses, i.e., knowing where all your money is being invested. To do this, you will have to check back your bank account regularly. It may eat up a lot of your time and energy, and human error chances are possible.
To protect from any error and save your time, choose an effective and intelligent way to track expenses, i.e., business expense management software. It comes with a complete range from large-sized accounting software for managing expenses to limited subscription-based billing and invoicing services.
The software will help you in auto expense tracking and you will be aware of all the expenditures without any stress of calculation.
2. Separate Business and Personal Finances
Reading this, you might find it logical, but this is the most common mistake small business owners commit. It’s a strict ‘NO’ to use your personal money for any business purpose and vice-versa.
The reasons are two-fold:
- You won’t be able to track how much money you are spending for your business as there will no separate receipt. This can be horrifying when you fail to end up having no clue about the expenses.
- At the time of tax preparation, you will be confused about your actual profit(which is total revenue minus expenses) because you won’t have accurate expenses details. It might lead you into trouble with the tax institution of your country.
3. Save Receipts
You should be vigilant while saving your business receipts. There are various reasons behind this, but most importantly, it’s for expense tracking. If by any chance, tax officers come over to your place to audit you, the receipts and proper documentation will help you clear the process smoothly.
While saving your receipts, you must know in what department you have made expenses, like:
- Business travel (cab, flight, etc.)
- Association fees
- Entertainment(includes food)
- Office utilities & supplies
- Charitable contribution
To save time, you can use the upper sections in your expense management software.
4. Use Financial Statements & Records
With the help of expense management or invoicing software, you can create a report every week and month to get an overview of expenses and revenues. And, based on this, you can create a budget of monthly and yearly for your business.
To have a clear picture of financial terms, check out below:
Cashflow statement: This document helps you determine the cash running in and out for a specific time period.
Profit & loss statement: It is also recognized as an income statement. This statement helps you acknowledge the expenses and income quickly.
Balance sheet: It provides you an insight into your assets, liabilities, shareholder investments, etc.
5. Never Procrastinate
Most small business or startup business owners will disagree, but it’s the truth. According to researchers, 73% of small business owners procrastinate to keep an instant record of their expenses, and receipts are piled up on the table. Due to this delay, they face the issue of a receipt being lost or any mishap like water spilled over the receipts.
Also, when you procrastinate in sending invoices to your clients, you may face large payment delays. This will affect the cash flow of the company.
Sending late invoices will also lead you to miss your business cycle and then will have to wait for a month or more to receive your payment.
Using an online expense tracker and invoicing service will give easy access to create invoices as it has a track of client details and services saved in its record.
6. Cut short your expenses
Precisely have a look at which of the expenses are flexible and can be replaced without affecting the company or the employees.
For instance, check your coffee machine brand in your office and if it’s the costly one replace it with another machine which is good but comparatively has less price.
Likewise, you can cost-cut in a manner that does not hamper the quality of anything. This will help you manage your expenses, and you can utilize this money in something more materialistic.
Final Words
To run a business without facing any loss, it’s vital to know how you can be vigilant of your business expenses. This guide has given you the tips to track expenses. From all the solutions mentioned above, business expense tracking software can be all in one solution. It aids in providing you reports of expenses, helps in invoicing and accounting.
However, in the market, you will get different types of expense tracking softwares in which some have expense management features, and some have invoicing features. For example, there is Invoicera software that possess all qualities in one. Furthermore, Invoicera also has its business expense tracker app with 18+ features compatible with both- iphone and android.
FAQ
How to manage business expenses smartly?
To manage your business expenses in a smart manner, you can switch to auto expense management software.
Which is the best business expense tracking software?
Invoicera is the best and feasible expense tracking software.
I have started a new business and want to know which is the best expense tracking software?
Invoicera is the best expense tracking software for startups with 18+ features with 0 cost charges.
What are the tips to manage business expenses?
Check out the tips to manage business expenses:
- Save receipts
- Cut shot your expenses
- Separate your personal and business finance
- Never procrastinate
- Use expense tracking software
