It’s 11pm – you closed shop three hours ago but you’re sitting by candlelight at your desk, fill out the books. You’re tallying up expenses, wiping sweat from your brow, and thinking to yourself how this must have been how your ancestors did when they crossed the pond for a new world of opportunity.
Except you have a computer, and you can barely do fractions. Don’t kid yourself with the romance of doing it all by hand, and don’t pretend the labor involved is worth any money you’ll save either. Expense management automation is a fast growing facet of business operations, and for good reason – there’s no reason you should be doing this yourself in 2020. If your receipts and inventory are running through a POS system, your expenses ought to as well.
In this guide, we’ll cover everything you need to know to automate your expense tracking and management.
What Is Expense Management Automation?
Expense management solutions are the softwares, hardwares, or systems you use to take care of expense management with little to no input. It can be an excel sheet, a software platform, or a Rube-Goldberg machine if you’re into that kind of thing. Automation specifically refers to softwares that can do almost all of the work for you.
For many, the phrase expense management refers to the ways your employees log expenses they need reimbursement for. However, many of these softwares can also automatically pull in expenses from your own business purchases to create reports and automate large swaths of your bookkeeping.
Why Should I Automate My Expense Management?
Unless your hobby is saving every receipt you’ve ever printed, automating expenses has clearcut value. It saves time and money, and enables you to make better decisions for your business and your customers. And, let’s face it, expense reports suck. It’s tough to keep track of your receipts, and sometimes even the most diligent savers can lose track of what they’ve been spending on. Let’s dig into why automation is so important.
Saving time is saving money
Perhaps the best reason to automate your expense management is to save the precious, precious time of which most small business owners are in short supply. For businesses that keep their accounting in house, importing receipts and expenses automatically can save hours of bookkeeping.
Think about it: rather than inputting your expenses one by one into each cell of a winding excel sheet, or worse yet writing them down in a notebook, automation can hand wave the tedium away, thus freeing up your time for the more exciting parts of running a business.
No room for error
Automating your expense tracking can significantly minimize your margins for error in accounting. Rather than relying on your and your staff’s responsibility, automated systems can, well, automatically pull your receipts into a repository. After all, according to some research almost 20% of expense reports are filed incorrectly.
No more losing receipts, and no more unaccounted inventory.Minimizing your room for error can also tip you off to when an employee is potentially committing fraud – like when they lift something from the shelves or skim some cash off the top. Automation can point out discrepancies in accounting and unaccounted for expenses so you can stay on top of your cash flow, before it becomes a problem.
Reimbursements made simple
If you’re running a business where employee reimbursements are a large part of your operations, automating their expense tracking can simplify a tedious and pressure-filled task.
Every time an employee travels or buys on behalf of your business, you’re on the hook to reimburse them in a timely manner. If it’s a large expense, any delay in repayment is felt significantly more by the employee than it would by your business.
At the same time, it’s a great way to make sure they’re not overspending on your company’s dime: most expense tracking solutions require them to upload some form of receipt for reimbursements to process, so they can’t pull the wool over your eyes and order the ribeye when your budget can only afford the salmon special. By instituting a software, employees with have less ways to circumvent compliance, thereby saving you more money.
Automating your expense tracking can help you make data-driven decisions around your budget, especially when it comes to cost cutting. You can easily pull expense reports from different time periods to measure the components of your costs and how they’ve changed over time. This can give you unprecedented business intelligence, especially as you scale your business.
Expense management automation is, in essence, the feeder to your business intelligence ops. It ensures your data is pure, so you can have the most accurate picture of your cost structure. Whether you’re running a restaurant with seasonal menus or a Mom and Pop hardware store with the same inventory you’ve had for decades, understanding cost structures, especially as they relate to demand, is vital to your business’ health.
All-in-all, automating your expense management can improve productivity, lower extraneous costs, and provide unparalleled business intelligence, all for a relatively low cost compared to the benefits. For small businesses and restaurants, it’s a critical investment to take your business to the next level.
How Does Expense Automation Work?
Now that we’ve convinced you it’s worth the investment, let’s explore what it can look like in your business. It’s important to note that not all expense management softwares are the same – in fact, some are better suited for different types of businesses.
In our neck of the woods, the restaurant business, the standard market leaders like Quickbooks and Restaurant365 have solid templates for most needs. But we’d recommend looking for a solution that has features tailored to your needs. After all, not every restaurant – and small business for that matter – operates the same way.
No matter what route you choose, most expense management softwares offer similar features to get you up and running quickly.
Workflows, workflows, workflows
Workflows are the name of the game for expense management: they use predetermined triggers to set off different functions and reactions, and can be modified to fit your business’ unique operations.
These solutions will usually pull reports from any associated bank accounts or cards, and assign expenses with specific labels or from specific vendors to specific workflows for analysis.
Let’s suppose you set up a workflow for inventory purchases. You set up the triggers so that anytime a card purchases goods from a list of vendors you buy produce from is logged in the workflow. Your platform will collect all of the expenses associated and send them into an overall report for your visibility.
At the end of the month, you’ll be able to see your cost structure, with little to no input when all is said and done. With the combined input of employee expense logging, getting a grasp on your business intelligence won't require a MBA.
5 Qualities of the Best Expense Management Software
1) Ease of use
First and foremost, the solution you choose should be simple enough to pick up quickly. This investment is supposed to make your life easier – convoluted rules and operations won’t help you achieve that goal.
In the same vein, it shouldn’t be exceedingly difficult for your employees to navigate receipt uploads either. If better compliance and faster reimbursement is an incentive for you, investing in an uncomplicated solution should be your top priority.
For small businesses with an expectation for growth, you should invest in an expense management software that can scale with your business. That means it should have options for small businesses and for enterprises.
Features you should look for include customizable templates, customer support resources, and robust tools for expense approval. This will allow your operations to grow as quickly as your business, so you don’t have to make a drastic switch when your business outgrows its britches.
3) Quick turnaround
For businesses that plan to rely on a software solution for reimbursements, turnaround times are key to keeping the ship sailing. Like we said before, unpaid expenses can harm your employees’ morale and bank accounts. Solutions that enable quick approvals, photo receipt uploading and processing, and fast debiting will keep the headaches at bay for your employees and your accounting departments.
4) Goal setting and tracking
Some softwares allow you to set goals for expenses and track them as they’re input into the system. These features may seem insignificant, but can make a huge difference in your productivity when it comes to raising your bottom line. Suppose you determine you spend too much on inventory, and you’re losing far too much to food waste.
Setting a goal for inventory expenses, and alerts to help you track how far along you are to reaching or exceeding them, can help you adjust your strategies on the fly, so you can achieve your spending and saving goals with confidence. You can cut down on food waste in just a few short months, and adjust your recipes, processes, or staff as needed.
5) Customizable reports
If you put 10 small business owners in a room, and asked them how they’d like to organize reports on their finances, they’d ask if they could leave. But before they’d go, you can be sure that each would have a different answer.
And that’s what makes customizable reports an important feature to look for in your expense management automation solution. Having the ability to fine tune which numbers show up in what boxes can make a huge difference in your overall productivity, especially for small business owners who can’t devote the time and resources to accounting like an enterprise can.
But it’s not just about placements: the numbers a restaurant wants to see and the numbers an ecommerce clothes supplier needs to see can vary wildly. Finding a solution that lets you tailor your reports to your individual needs is crucial to usability and productivity.
Cleanliness is Next to Productivity
Expense management solutions can streamline your accounting operations and provide a bird’s eye view into your business’s health. It’s an important investment to make for any business, small or large, and can take your operations to the next level.
Most business owners want fewer headaches, and automating expense tracking is a surefire way to reduce them. From reducing the oversight needed for employees to request reimbursement, to automatically filling out expense reports and cost structures, the benefits far exceed the cost.
Getting out of excel and into a software will save time, money, and sweat equity for any business that makes the jump. The next step is determining budgets and evaluating solutions: it’s a crowded market, after all. MarketMan’s Snap was built with restaurant owners in mind, and is outfit with all the features you’d want and expect from an accounting solution. To learn more, check out our overview, or request a demo to hear it from us.