How do unicorns manage their corporate expenses?
The most challenging part of being a startup is having the ideal financial alignment. With an improper outlook on expenses, even the most promising startups fail to make an impact.
Corporate expenses are not static; they change depending on internal and external business factors.
Even though startups make future expense projections and draft budgets, there are still certain expenses that they fail to consider that could bring down their financial capabilities.
To manage expenses, startups need to focus beyond the traditional rules of expense management.
By adopting technologically advanced spend management software, the management can radically anticipate total business expenses and oversee them without complex processes.
9 best ways unicorn startups manage their business expenses
Startup business expenses are the most undetermined ones. Every day, they encounter new challenges related to expense capturing and tracking.
Nevertheless, among all the uncertainty in a startup ecosystem, some companies have excelled in financial management.
Mentioned below are a few lessons from these companies to manage expenses and establish company-wide financial transparency.
1. They monitor spending at a macro and micro level
Companies need to have an aerial and in-depth view of the expenses to draw better conclusions and formulate expense policies.
Through an aerial vantage point, companies understand the financial culture and effectiveness of the expense management system. On the flip side, an in-depth picture helps uncover financial mistakes and errors.
2. They depend on quick reconciliation & invoice matching
Quick reconciliation of expenses ensures up-to-date bookkeeping and prevents logging duplicate entries. It helps eradicate computation flaws and aims to strike a balance between accounting books and bank statements.
Through instant reconciliation, companies can conduct invoice matching - verification of the invoice with supporting documents before payment initiation that helps identify paid and unpaid invoices.
Related read - How can automation help ease accounts payable reconciliation?
3. They integrate spend management & accounting software
Seamless integration between the spend management and accounting software enables the startups to enhance their bookkeeping and financial-well being.
The integrations between the two systems allow automatic syncing of transactions, avoid duplicate entries, provide a comprehensive evaluation of data sets, and deliver high precision in values.
Moreover, it allows faster closing of books without juggling between multiple software.
Related read - What are benefits of integrated accounting system?
4. They auto-categorize expenses
Modern-day startups use expense tracking software that automatically categorizes the expenses once logged into the system.
The auto-categorization helps in the sorting of expenditures according to their respective categories.
The primary use case of this feature is that the business owners do not have to spend time segregating the expenses while creating reports. They can easily select the expense category and map all the transactions under it.
5. Their employees use corporate cards
Corporate cards are a savvy spend management tool to control employee expenses and achieve high financial visibility.
With real-time tracking, managers obtain instant transparency into all payments. The spending limit allows cost-cutting and staying within the budget.
6. Prioritize business financial planning
Startups heavily concentrate on business financial planning.
With the help of a well-detailed financial plan, the management defines their financial goals in alignment with the company's goals, creates a roadmap for expenses, tries to improve the cash flow position, prepares for emergencies, imparts financial education, and all-in-all optimizes the spending culture.
7. On-the-top cash flow management
A firm grip on your cash flow can yield substantial benefits like:-
• Identification of the sources of income and gains
• Analyzing the expenditures and cost of business operations
• Anticipate bad debts and cash shortages
• Creating a reserve for emergencies and unforeseen events
• Plan cash allocation
Related read - 6 ways to improve cash flow in a business
8. Optimized payroll process
Successful startups have achieved maximum employee retention and satisfaction by acknowledging their efforts. One way of doing this is by on-time payment of their salaries.
Through automated payroll software, these companies initiate accurate employee payrolls with tax and other deductions.
The software allows paperless processing, individual accounts for each employee, benefits and rewards programs, creates training and development modules, and much more.
9. Improved inventory accuracy
A high-functioning production line is a result of superlative inventory management.
On-the-mark inventory benefits in the estimation of the product demand, preventing stock-outs, increasing the direct sales, enabling shorter lead time, lowering the cost per unit, creating an organized warehouse, and procuring cost-effective raw materials.
Why is it important to control & track expenses for Unicorns?
Expense policies alone do not guarantee transparent and effective expense management for unicorns.
They still need to optimize their expense capturing because the accounts department cannot practically run behind each payment and fetch its details.
Pointers below exhibits the importance of business expense tracking for unicorns.
Money management sustains business decisions
Any major business decision cannot be accounted for without the involvement of money. Without these funds, businesses would cease to exist.
With company funds playing such a crucial role in business affairs, unicorns need to stay mindful while making expenses.
By tracking your company's expenditures, you comprehend employees' spending habits, the expense categories that have the most transactions, and how expense policies improve spend management.
Expense tracking improves cash flow
An automated expense tracking software unloads the burden of fetching every invoice and receipt. With quick capturing of invoice details, no manual entry of records is required.
The software takes into account every transaction that happens with the exact details. The expense reports generated are also free from errors and omissions -- making the cash flow predictions more accurate.
Managing multiple vendors
In the initial stages, unicorns are highly dependent on multiple vendors for a smooth flow of operations. Managing such vendors can become a blunder if companies fail to record every payment.
A vendor management software manages individual vendors, records the receipt of goods/services, ensures timely payment, and maintains a collaborative space for the two parties.
Managing subscriptions
Another essential aspect of expense tracking is -- subscription management.
SaaS subscriptions are direct expenses of a business that, if left unmanaged, can take a dig at your budget. Every department has its online subscriptions that need to be handled to prevent revenue losses and save money.
Subscription management software allows users to oversee all their ongoing subscription plans, create recurring payments for them, and identify unrequired platforms.
Budget compliance
Budgets guide your business expenses and help you attain organizational goals. It lets you control and limit your unwanted costs and focus on key-revenue generating areas of the business.
Through business budgeting, managers track all the expenses and know if the funds allocated to departments are reasonable or not.
Track expenses and strengthen your financial performance with Volopay
Businesses today do not need a one-size-fits-all expense tracking software. Instead, they require a software that will adhere to and adapt itself to the company's spending policies and optimize the pain points in the system.
Volopay is an all-in-one financial control centre for businesses that helps you leverage automation for handling accounting activities.
With Volopay, companies can track corporate expenses and improve their financial well-being — without spending hefty sums.
Corporate cards
Our platforms offer two kinds of corporate credit cards - Physical cards and Virtual cards.
Through our corporate cards, companies can track business expenses in real-time, create individual spending limits, and make payments.
Virtual cards foster efficient subscription management. Use our cards to finance online payments. Create recurring payments for online SaaS subscriptions and enable on-time payment of dues.
Employee reimbursements
Reimbursements let you account for out-of-pocket expenses. With instant approval of expense claims, employees receive the approved amount directly into their bank accounts.
Multi-level approvals
A multi-level approval workflow routes a fund request to more than one approver to validate its authenticity. The real-time approval lets users consent to the request instantly to complete the transaction.
Approval policies ensure company expense policy compliance. The software immediately flags out-of-policy payments to avoid unnecessary spends from the outset.
Budgeting
Smart budgeting allows you to function under budget and adhere to the allocated amount. In case of a genuine requirement, the employees can raise a request for additional funds.
Bill pay
Bill Pay functionality facilitates quick vendor payments. Our software supports payments to more than 130+ countries with the lowest FX fees.