A business pays for numerous small to large expenses every single day. Although they are important for daily operations, they also continue to majorly drain the company’s account. And if you do not keep a strict watch on your expenses, your cashflow may experience heavy instability, and you may also miss out on major tax deductions. But you no longer have to stress yourself with the exhausting job of manually tracking the business expenses, as today, there are quite a few technologically advanced business expense tracking software solutions that can effortlessly take care of the entire task. Such digital tools not only record all the expenses in a systematic manner, but also store them in the cloud for anytime accessibility. Most importantly, they produce easy-to-understand and clearly detailed expense reports to help you find out more about the profitability as well as the overall financial health of your business.
Challenges that businesses face while manually tracking expenses
- Data entry errors – Manually performing any job is undoubtedly prone to human errors, and in this case, expense tracking is not an exception. Your employees may enter the wrong amounts of purchase while inputting the data or they may accidentally choose the wrong dates or do anything else that may create a major problem in the crucial expense record.
- Misplace paper receipts – Paper receipts get tossed in folders and documents all the time, which further makes it difficult to find them. In fact, sometimes the employees, even accidentally throw them away, and that definitely leads to loss of information.
- Long approval and reimbursement procedures – Managers usually demand the employees to submit all the papers associated with an expense made by them for a project so that they can get reimbursed. However, the manual process of approval may take weeks, which can be tedious and frustrating for both the manager and the employee.
Advantages of using an expense tracking software
- Reduction in human efforts and errors – A well-programmed software minimizes the total number of human efforts required to record and analyze the expenses made during a certain period by simply streamlining and automating the entire process. This way, it also reduces the chances of calculation errors and as well as saves you from paying for the heavy cost involved in rectifying them.
- Offers the incredible mileage tracking feature – To fairly reimburse the employees, business expense tracking software also comes with the ability to track miles/kilometers. In other words, it tracks the distance traveled by employees for the completion of a project, and then converts it into time so that they can be added into the expense reports. Also, the calculated time is added to the invoices, before mailing them to the clients to get accurately paid for the billable hours.
- Receipt imaging – Another noteworthy benefit of using an expense tracker is that you get to take the pictures of the receipts, upload them online and attach them with the expense reports to keep proper proof of an expense made through the company’s account. In this manner, you also no longer have to keep a stack of all the paper receipts or face the consequences of misplacing them.
- Assists during the taxation period – The financial reports generated by the expense tracker make it absolutely convenient to assess the company’s financial position as well as to help you in calculating the tax-deductible expenses. By separating the tax-deductible expenses such as travel, phone, internet and other monetary benefits offered to the employees, the total amount subject to taxation gets reduced.
Steps to follow while choosing an expense tracker for your business
- Assess the requirements of your business – The first and foremost step in the process of selecting suitable expense tracking software is to analyze what kind of features your business actually requires so that you can search accordingly. Once you know what you are looking for, it becomes easier to find just the right kind of software for your business and the whole search process becomes quite simple.
- Fix a budget – The next step is to decide the price limit in which you want to purchase your software. Also, you must keep in mind that if you are getting all the advanced features for a price little higher than your budget, then you should not shy away from paying as it is a long-term investment.
- Check the reputation, ratings and reviews of the software – Before finalizing any software, it becomes extremely necessary to read every piece of detail about it, from its features to its ratings to avoid any regrets later on.
To sum up, whether you are a small business owner or a freelancer, you can definitely avail a range of advantages from business expense tracking software. As it not only streamlines the entire expense tracking process, but also offers an extra layer of convenience with features such as receipt imaging, mileage tracking and calculation of tax-deductible expenses. However, you must compare different software manufacturers to equip yourself with the best cloud-based expense track