It’s easy for business finances to veer away from the budget, and often it can be for want of monitoring and keeping a grip on expenses. The need to know what is being spent where is vital to the financial well being of a business.
Some suggestions of how to keep a check of business expenses:
Having a regularly revised, accurate budget is the cornerstone of keeping track of expenses and determining if too much is being spent in certain areas. Modern financial accounting systems can provide a rich harvest of useful information along with the regular functions of completing finance related admin tasks.
A regularly updated budget, showing expense categories, will instantly show whether expenses are under control or moving in the wrong direction in certain aspects.
Committing to checking your budget regularly – at least monthly but ideally weekly – and maybe running some expense and income reports will enable you to take action in areas where expenses might be increasing unduly.
That said, you may find certain expenses have risen as a natural consequence of conducting more business and generating more revenue, hence the need to compare income with expenditure.
Ask an expert
Spotting financial trends can sometimes be difficult for some above and beyond a basic comparing of financial expenditure over budgetary objectives. If you’re concerned about your overall outgoings but can’t readily tell what the root cause is, ask your accountant (if you have one) to take a look.
If you don’t have an accountant then it may be time to hire one; choose someone with a good reputation working with businesses of similar size and type to yours.
Separate business bank accounts and credit cards
If you don’t have separate accounts for business and personal finances, then doing so will enable you to keep track of business related expenses more easily than if they’re combined with personal money.
The same applies to credit cards; have one just for business use so you can quickly and easily see what’s been spent on it and allocate it to the relevant expense heading. You might also give them to members of staff to use for expenses that can be easily tracked through the monthly and online statements.
It may be easier to ask staff to use their company credit card rather than relying on them keeping a paper receipt and the attendant admin of organizing reimbursements. It’s a good way of monitoring and controlling expenses incurred by your staff too.
File receipts properly
If you need to check an expense, you don’t want to experience the frustration and wasted time of searching for an elusive receipt or not being able to locate it at all.
A simple filing system with separate envelopes for receipts in certain categories, or grouped by month, would help keep receipts easy to access. It will also help locate them easily when it’s time to gather financial information together for tax assessment.
Little and often
As mentioned above, it’s important to keep your finger on the pulse financially so as to keep expenses from getting out of hand. If you can swiftly identify and deal with an expense that may be increasing more than it should, then these are financial savings that can make a big difference over the course of a year.