Although expense management is necessary for any small to medium-sized business (SMB), wasting an excessive amount of time, money, and mental energy on it is not. Therefore, you must be proactive to simplify expense management and gain back the time and resources you need to grow your business. But how can you streamline such a tedious and time-consuming process? 

Below are some simple ways to get started. 

Expand your focus beyond expense management

The best way to get a grip on business expenses and avoid any end-of-the-month surprises is to take a proactive approach to payments. 

Expense management can be problematic because it's a retroactive process that, if done wrong, can drain company resources and carry hidden costs. According to the Global Business Travel Association, on average, expense reports take 20 minutes to complete, costing $58 per report. Moreover, 19% of those reports contain errors that take 18 minutes to rectify, costing an additional $52 per corrected report. 

For example, let's take a company with 100 employees and assume 20% submit one expense report per month. In that case, this company would spend around $14K annually on processing expense reports. However, this doesn't account for those expense reports that contain errors, meaning this company would need to pay an additional $2.4K for those corrected reports. At the end of the year, the total estimated cost this company would need to pay would be almost $17K! 

Additionally, your finance team manages expenses at the end of the month when employees have already made purchases and swiped company credit cards. Therefore, they waste a big chunk of time reconciling transactions and connecting the dots to determine who purchased what, from where, and most importantly, why. 

This reactive payment approach keeps many companies at a disadvantage and wastes time, money, and resources that could be better used. Yet, expense management remains an essential business process for companies of all sizes. Ultimately, the solution to this problem materializes by tackling expense management through a proactive and overarching spend management strategy. 

Implement a spend management strategy 

Even though expense and spend management are two different practices with distinct functions, they must work together to simplify finance processes effectively. Expense management focuses primarily on managing and paying employee expenses, while spend management focuses on tracking and controlling company spending. Therefore, in order for them to work in harmony, you must implement a thorough spend management strategy that prioritizes visibility and control throughout the month while still encompassing expense management processes as part of the broader plan.

With this in place, your team can regain the time to focus on the bigger picture, actively control company spending and gain visibility into payments before they happen, not after they do. This will reduce the time and mental energy your team spends on reconciliation at the end of every month. Because let's face it, expense management will continue to play a part in your business, and you’ll need to address additional expenses. However, by implementing a proactive payment approach and binding these two processes together, you can more easily manage both. 

In addition, you will empower your team to make better financial decisions, and in return, they will be able to adapt and course correct in real-time while reducing cash leakage in your business. 

Ditch the manual work and let technology do the heavy lifting

Many SMBs continue to manage expenses with some combination of spreadsheets, paper, and manual processes, which only causes inefficiencies that stress out your team. However, with today's technology, any business can go paperless, streamline payment processes, automate reconciliation, and remove unnecessary human intervention. 

You can do this by implementing a spend management platform to handle the heavy lifting that comes with managing the books. These functionalities can reduce human error, boost productivity, and save your team from headaches. 

Your business can:

Close your books faster and more accurately 

By reducing the amount of manual data entry for your team, you eliminate any potential human error and free up time to focus on the bigger picture, which will ensure you close the books on time and without surprises at the end of the month. 

Enhance security and control by using virtual cards 

You get complete control over the organization's finances and an added layer of security to prevent fraud, misuse, overcharging, and overspending. You can do this by easily setting custom card controls like card-per-recipient rules and spending limits, which protect your credit card from any unauthorized transactions.

Get one real-time view of all company card spending 

You gain access to a centralized dashboard, where you can track and categorize card payments, manage invoices, and monitor recurring transactions in real-time. The added visibility allows your team to plan ahead and see where business finances stand.

Move to automated receipt collection 

You can eliminate the hassle of hunting down employees for receipts by using technology to automate the process, track submitted receipts, and do the outreach all within the platform. 

Establish clear spend management policies and procedures

As you implement technology infrastructure to optimize spend management, keep policies and procedures top of mind. Many businesses fail to create straightforward procedures, which causes avoidable mistakes. 

Follow these guidelines to create simple yet effective policies and procedures: 

Get your employees on board

Get your team aligned with the new spend management strategy and ensure they have adequate resources to execute it successfully. 

Document the process 

Document all payment guidelines the team should follow, like approval workflows, allowable expenses, receipt submission guidelines, and deadlines. 

Test the process 

Continually test these policies and procedures as your team adopts them and provides feedback.

Adjust the process 

Revisit these policies annually to confirm their accuracy and alignment with your overarching spend management strategy, and make changes as necessary. 

Implement a spend management system in your business. 

Ready to go all in? Learn more about spend management here.