A recent survey suggests that 1 in 3 small business owners cite inflation as their top business concern. Inflation makes it challenging for small businesses to increase revenue and sustain growth by reducing customer spending. At the same time, it makes it essential for small businesses to manage and control costs effectively.
Expense management software helps small business owners to control costs by tracking, processing, reimbursing, and auditing employee-initiated expenses more efficiently. An entrepreneur can implement expense management software for small businesses to automate a complex and crucial process end-to-end.
He can reduce upfront and ongoing infrastructural costs by implementing a cloud-based expense management solution. The software will enable employees to claim various expenses incurred for authorized business purposes without putting in extra time and effort.
Also, it will make it easier for the finance team to get spending visibility, ensure policy compliance, prevent expense fraud, and make data-driven decisions. Many small businesses already leverage expense management software as a cost-effective solution for curtailing costs and sustaining growth.
We can assess the effectiveness of the software as a cost-effective solution for business growth by discussing some of its prominent benefits and use cases.
11 Ways Small Businesses Use Expense Management Software to Sustain Growth
1. Automates a Crucial Business Process
Small businesses automate various business processes to increase operational efficiency, curtail hum resource costs, and make informed decisions. Expense management software helps them automate one of the vital financial processes. The accounting and finance team can use a single tech solution to manage various expenses incurred by onsite, offsite, and remote employees.
2. Ensures Expense Policy Compliance
While configuring the expense management solution, small business owners can implement customized and granular expense policies. Also, they have the option to categorize employee-initiated expenses into various categories – office, travel, and mileage. Employees can understand relevant rules and guidelines by accessing the software on computers or mobile devices. Hence, it becomes easier for them to curtail costs by avoiding out-of-policy expenses.
3. Boosts Employee Productivity
Employees often feel unmotivated when employers delay expense reimbursements. Also, they find it challenging to submit paper-based expense reports early and accurately. Expense management software enables them to generate and submit automated expense reports without putting in extra time and effort.
The software generates expense reports by capturing data from invoices scanned by employees. Hence, the chances of data entry errors are eliminated. Hence, it becomes easier for the finance team to review expense reports and speed up reimbursements.
4. Ensures Real-Time Spend Visibility
Expense management software for small businesses features intuitive dashboards. Small business owners can use the dashboard to access employee data in visual formats. They can differentiate expenses based on statuses like paid, unpaid, scheduled, and to be reviewed. Real-time expense tracking helps small business owners make important financial decisions based on real-time employee expense data.
5. Improves Cash Flow and Budget Management
In addition to tracking employee-initiated expenses in real time, the dashboard allows users to generate and schedule a variety of custom reports. A small business owner can use the dashboard to generate reports based on employee expense data using criteria like department, project, employee level, or vendors. The real-time data visibility and understanding make it easier for him to manage cash flows, predict costs, and prepare budgets.
6. Assists Tax Regulatory Compliance
Expense management software comes with built-in tax calculators. The tech solution calculates GST, VAT, and other indirect taxes directly when generating expense reports. Hence, it becomes easier for small businesses to file tax returns on time. Also, the software helps them meet and comply with tax rules and accounting standards by recording detailed information on expenses and taxes.
7. Facilitates Vendor Negotiations
As noted earlier, expense management software helps small business owners generate custom reports. They can use the software to analyze the payments made by employees to various vendors. The insight helps them get better rates and special discounts by negotiating with leading vendors. Also, small business owners can control overall costs by making vendor negotiation an ongoing process.
8. Fosters Data-Driven Decision Making
New-generation expense management software uses advanced data analytics. The analytics make the software effective in detecting trends and patterns by analyzing real-time employee expense data. Also, the software gains data-driven insights that help small business owners avoid unnecessary expenses, improve financial strategies, and control costs.
9. Accelerates Expense Audits
Small businesses conduct expense audits regularly to ensure that expenses incurred and paid by employees comply with predefined organizational policies. Expense audits help them detect expense policy violations and expense fraud committed by employees early.
In addition to capturing elaborate information about employee-initiated expenses, the expense management software captures comments or remarks made by managers while reviewing expense claims. The digital audit trail makes it easier for small businesses to control costs by preventing policy violations and expense fraud.
10. Prevents Expense Fraud
Expense fraud committed by employees makes it difficult for small businesses to avoid revenue leakages. Expense management software prevents travel expense fraud by generating expense reports based on invoices and receipts scanned by employees. The new-age expense management tools detect expense fraud using intelligence technologies. Also, they send automated notifications to small business owners each time any type of expense fraud is detected.
11. Options to Integrate and Scale
The number of expense claims submitted by employees grows gradually with the growth of a small business. A small business owner can scale up cloud-based expense management software on demand as the number of employees, expenses, and transactions increase. At the same time, he can streamline multiple financial processes by integrating the software with existing enterprise systems like accounting software and travel management software.
Expense management software makes it easier for small businesses to track, process, reimburse, and audit employee-initiated expenses without escalating business resource costs. An entrepreneur can reduce infrastructural costs by opting for cloud-based expense management software for small businesses.
But a small business owner must focus on implementing an expense management solution that is easy to use, configure, customize, and integrate. Also, they should prioritize software that creates opportunities to control ongoing costs by leveraging real-time expense data of employees. The right expense management software will help small businesses to sustain growth by controlling costs in several ways.