Expense tracking software: Guide for Indian businesses
Traditionally, finance and accounting teams would have to manually record and keep track of every transaction that the business would make. This meant piles of documentation, hours of manual labour and a whole host of errors and obstacles.
However, expense management has come a long way since the days of manual journal entries and ledger records.
We now have access to highly advanced, software-based tools that have made expense management a breeze. Expense tracking software has changed the way businesses manage their spending.
In fact, this software has made the process far more efficient and streamlined than it used to be during the days of manual accounting.
What is expense management for businesses?
To put it simply, expense management entails all the steps that a business undertakes to process, track and make business payments. The expense management system of a business primarily has two functions - to manage how payments are made by the business and how business spending is being tracked.
This system also involves all the policies and guidelines that govern business spending behaviour. This includes the tools and software used to manage, process and analyse company spending behaviour.
All businesses must have an expense management system in place. This is because expense management helps businesses keep a track of how company funds are being used.
The practice of expense management also informs future financial decisions and ensures that company funds are being utilized in the most efficient manner.
Types of expense management a business would deal with
1. Business payments for purchasing goods or services
This is the most common and regular type of business expense that has to be managed.
Business payments for purchasing goods or services involve payments made to vendors or suppliers for raw materials, finished goods and so on.
2. Travel expense management
T&E expense is another major expense category that businesses have to work with and manage regularly. This includes paying for tickets, accommodation, food & beverages, client entertainment costs and so on.
It basically involves all the expenses employees have to incur when traveling for business purposes.
Using corporate cards to manage your travel expenses can help eliminate all the challenges and streamline your travel expense management. Unlock the possibilities of a hassle-free business travel with our insightful article on the benefits of corporate travel card.
3. Miscellaneous
The miscellaneous expense category covers all types of expenses that do not fall into the previous two categories. This could include all kinds of expenses such as rent, utilities, office supplies and so on.
One crucial component within this spectrum would be petty cash expenses which involves cash-in-hand put aside for small day-to-day purchases. To streamline the management of such petty cash expenses, businesses can leverage specialized petty cash management software solutions designed for effective expense tracking.
Unique challenges in managing business expenses?
1. Traditional expense management problems
Using the traditional, manual approach to expense management can cause numerous problems and hiccups. In this approach finance and accounting teams have to use paper-based or excel sheet-based systems to manually record and manage each expense made by a business.
Not only is this process time and labour-intensive but it is also highly susceptible to errors and mismanagement.
2. Arising issues of expense management
As the world around us has changed significantly over the past few years so have the issues related to expense management.
The emergence of modern work cultures such as remote work has posed a sizeable challenge to expense management.
Companies have had to quickly adapt to the fast-changing work culture around the world. This has also led to the rise of new forms of expense fraud and mismanagement.
What is expense tracking software?
Expense tracking software is the answer to all the obstacles and problems that used to be associated with traditional forms of expense tracking. This software is a powerful, highly equipped tool that businesses can use to record and track how the organization as a whole has been utilizing its funds.
Business expense tracking software is an upgrade on the traditional paper or excel sheet-based systems. This software has made it extremely easy to organize and understand the spending behaviour of a company.
Using this software businesses can get real-time updates on business payments and purchases. As soon as an expense is made this type of software automatically records the associated data. This data is then compiled, consolidated and presented to business organizations in a manner that they can use to make informed financial decisions.
Take control of your finances with automated expense management
Benefits of expense tracking software
Instant real-time updates
With expense tracking software at your disposal you no longer have to wait till the end of a week or month to get a full picture of how money is being spent by your business.
This software is a powerful tool that can instantaneously record any transaction your business makes. This means you get updates on your business’s spending behaviour in real-time.
Efficient and quick reimbursements
Business expense tracking software can significantly lighten the load on your finance and accounting teams by keeping track of expenses that require reimbursements.
Whenever employees submit an expense report this software will instantly record the transaction and inform the appropriate personnel about the requirement for reimbursement.
In-depth data and analytics
One of the most useful aspects of expense tracking software is the data and analytics feature. This software can compile and consolidate large amounts of expense data to create in-depth, actionable reports and insights into your business’s spending behaviour.
You can further use this data to make informed decisions for the financial future of your company.
How does expense tracking software work?
Expense tracking software essentially works as a tool that businesses can use to keep a track of and record how company funds are being utilized.
Once you onboard a business expense tracking software it acts as a platform that unifies all your channels of payment.
Vendor payments, bill or invoice payments, subscription payments, travel expenses, employee expenses and even company card expenses are all tracked by this unified platform.
Not only does this type of software track expenses but it also organizes and consolidates all the expense data of the company. This data can be further used by the business to inform future decision-making concerning the finances of the company.
Traditional vs automated expense management
Automated software is the future of expense management. Not only have they offered an improvement on traditional expense management systems but they have managed to completely eradicate many of the problems and obstacles commonly associated with expense management.
For instance, with a traditional expense management system finance and accounting teams would have to spend hours manually going through expense reports, proofs of purchase, invoices and piles of other documents to create a full picture of how the company has been spending its money.
Even after all their effort, this data was not always 100% foolproof because of the presence of human errors and discrepancies.
An automated expense management system, on the other hand, requires little to no human intervention whatsoever. Automated systems can do the same job traditional systems could do in a fraction of the time as well as cost and without the possibility of any errors.
Features of expense tracking software
1. Real-time tracking
The real-time expense tracking feature of expense tracking software can be extremely useful with expense management. It provides instantaneous updates on how and where company money has been spent.
2. Auto-categorization
This software is also capable of automatically categorizing your spends, therefore taking out a lot of manual labour from the expense management process.
3. Reimbursement features
The reimbursement tool is a feature that is particularly useful if you don’t have set per diem rates and reimbursement for specific expenses. The tool automates much of the reimbursement process by itself.
4. Accounting integration
If your expense tracking software has the feature of integrating with existing accounting software then that’s a bonus, you won’t have to manually sync the two systems.
5. Data and analytics
Expense management can benefit a lot from the in-depth data and analytics that tracking software provides. The numbers can be useful in informing future decision-making and more efficient cost control of business finances.
6. Access on mobile
Choosing software that is accessible from mobile can free you from the restriction of only being able to access the system from the work office.
How expense management automation software can help your business?
Eliminates errors
Expense management software eliminates most of the manual work associated with expense management therefore also eradicating the possibility of human errors.
Faster reimbursements
Expense management software come equipped with expense reimbursement features that make the approval and subsequent reimbursement process much smoother.
Reduced expense fraud risk
With automation, you always get an added layer of security in the form of expense controls and cloud storage. This can drastically reduce the risk of expense fraud.
Improved spend visibility
By tracking your expenses in real-time expense management software can significantly improve the degree of visibility you can exercise over your finances.
Improved policy compliance
Expense management automation software significantly improve the level of policy compliance you can enforce. Software lets you set parameters, guidelines for spending that cannot be bypassed easily.
Easier accounting
Expense management automation software is equipped to keep all your financial records and data consolidated in a unified place for an easier accounting process.
Leverage the benefits of expense management automation with Volopay
If you’re on the lookout for an expense management solution that comes with just the right set of features that can streamline your business operations then Volopay is definitely an option to consider.
With Volopay you get the full suite of features that can make expense management much more efficient for your business. This includes features like Optical Character Recognition or OCR-powered document scanning, highly customizable multi-level approval workflows, automated reminders and notifications, automated payments and easy international payments.
You can even issue corporate cards with Volopay to further streamline your spending.
Suggested read: How to improve cash flow in a manufacturing business