Many new entrepreneurs think it’s the big decisions that determine whether a business succeeds or fails. But in reality, it’s often the small choices that have the biggest impact.
Managing your expenses properly can mean the difference between a thriving business and one that fizzles out prematurely. Don’t fall into the same old traps that catch so many entrepreneurs off guard.
Here are five expense management tips every entrepreneur must know to save money and keep their business humming along:
1. Automate Your Expenses
Let’s get the elephant in the room out of the way: yes, tracking and categorizing expenses manually is incredibly boring. Since precision and attention to detail are critical when it comes to expense management, errors can be a serious issue.
Automating your finance processes—which includes expense management—takes the tediousness and error-proneness out of the equation. Automation helps you keep your focus on the big picture while ensuring that your expenses are being managed correctly in the background.
Several great software options make expense management practically effortless; consult fellow entrepreneurs or your IT department for recommendations.
2. Go Paperless
We all know that businesses use too much paper. This isn’t just harmful to the environment—it’s also bad for your bottom line.
Using software that allows you to store digital copies of receipts streamlines your expense reporting process.
Not only does this make it easier for employees to submit their expenses, but it also makes it simpler for approvers and accounting associates to review and approve them. And if you’re ever audited, having all of your documentation in one central database will make the process much easier for everyone involved.
3. Conduct Periodic Expense Reviews
It’s important to review your company’s expenses regularly, even if you have a system in place to track them. This will help you catch any errors or discrepancies so that you can correct them as soon as possible.
You’re looking for anything out of the ordinary. For example, spotting SaaS charges that no one can remember signing up for or discovering that you’re being overcharged for office supplies.
It’s also important to keep an eye on overall trends. Are there any expense categories that have risen significantly since the last review? If so, you’ll need to figure out why this is happening and whether or not it’s necessary.
Regular expense reviews help you catch errors, track trends, and save money.
4. Look for Good Vendor Deals
Entrepreneurs and vendors often have a love-hate relationship. We need them to provide us with the goods and services we need to run our businesses, but we also want to get the best possible deals.
The key to maintaining a healthy vendor relationship is to be upfront about what you’re looking for. If you’re not happy with the price you’re paying for a service, don’t be afraid of negotiation.
A good rule of thumb here is to distinguish yourself from all the other clients a vendor has. Maintaining a good relationship with them gives you more bargaining power and can lead to better deals.
For instance, if your goal is to increase restaurant revenue, you might want to ask your food vendor for a volume discount. Or if you’re looking to reduce office expenses, you could try negotiating a longer payment term with your landlord.
In both these examples, your vendor will be taking home a little less money, but they’ll be making up for it in increased business from you. It’s a win-win situation.
5. Audit Your Expense Management Policies
Even the most comprehensive expense management system can have weak spots.
Over time, things change and procedures that were once effective may no longer be relevant. That’s why it’s important to periodically audit your policies to make sure they’re still aligned with your business goals.
Don’t let all that hard work go to waste—make sure your expense management policies are always up-to-date. Are there any areas where you can be more lenient? Or are there any areas where you need to tighten up?
Regularly checking your policies for gaps and inconsistencies helps ensure that your system is running smoothly and keeping expenses in check.
Expense management is not the most exciting topic, but it is a crucial part of running a successful business. Get a leg up on your competition by keeping expenses under control. You just might be surprised how much it improves your bottom line!
Sophia Young recently quit a non-writing job to finally be able to tell stories and paint the world through her words. She loves talking about fashion and weddings and travel, but she can also easily kick ass with a thousand-word article about the latest marketing and business trends, finance-related topics, and can probably even whip up a nice heart-warming article about family life. She can totally go from fashion guru to your friendly neighborhood cat lady with mean budgeting skills and home tips real quick.
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