Small businesses can seem easier to manage, with smaller personnel teams and different budgeting concerns from larger corporations. However, small businesses can also face challenges that larger companies have departments to handle. In regards to best business practices, expense reporting affords small businesses the ability to better oversee how the budget is being handled, and this informs the owner as to how to both grow and maintain the endeavour.
Investing Or Just Spending
Especially when small businesses are just starting out, there is an expectation that a considerable initial investment can take several years to show returns. In managing the budget, owners do take this imbalance into consideration, and will amend fund allocation as the company grow and begins to show a profit. The importance of good expense reporting is that it also shows a depth to the practices that simple focus on the bottom line does not.
A major expenditure for any business is in the area of marketing. Even established companies understand that market exposure is necessary for maintaining clients, and new businesses are concerned about establishing a customer base for steady returns. However, promotional campaigns are just like any investment, in that they may generate a response, but they can also result in losses that need to be written off.
This is where multi-layer expense reporting can also inform the decisions that small business owners make regarding their use of funds. Report generation that shows correlations for money out versus money in with specific spending trends also illustrates tactics that are working to facilitate growth. With this type of data, small business owners begin to gain a more cohesive picture of the company budget.
Small Things That Add Up
Another arena where small businesses are experiencing losses that could be avoided comes in the form of supplies and requisitions. This is especially true for environments where petty cash funds are used in acquiring the resources that are needed for the company. It is common for employees to take the responsibility for replenishing lost supplies, either through a requisition form or through the use of petty cash, with or without receipt documentation. The problem is that expense reporting can only catch these expenditures if the information is accurately captured.
Some small businesses allow for reimbursement of supply pending without a receipt, so long as the cost is under a certain amount. Where best business practices begin to fall apart is in not recognizing that these smaller investments still add up, and can take a toll on the actual profits that are gained. Unfortunately, the reason for allowing this less than optimal business practice is due to a sense that less paper work in the form of receipt verification will lead to more efficient use of work time.
Sadly, this is not true, and the use of integrated expense reporting allows even small business owners to single-handedly monitor how money is flowing through the company. Technological advances in both hardware and software give employees the ability to submit paperless receipts that will immediately show up on the expense reporting, and will thus inform the owner about spending trends.
While investing in one’s own company is a best practice in business, owners still want to ensure that they are not just throwing money away. Needless spending can be easily curtailed by using expense reporting to uncover trends and habits that are not serving the company’s highest good.