Expense management is a primary concern for any business. There are many aspects of your operations that require using funds, making it harder to track company cash outflow. Without proper management, your business might struggle to grow and stay profitable

82% of businesses are investing in technologies to help them manage their cash flow. They are partnering with reliable expense management companies to implement systems that could enhance their financial insights. By leveraging the right tools and strategy, they can improve transparency and control over their finances, particularly their expenses.

With that, here are some of the best practices that you can implement in your business for effective expense management.

1.    Establish a clear expense management policy

Rules serve as the backbone for many working systems. It sets expectations and lays out the groundwork for how you want the system to work. So if you want to implement effective expense management, you must establish clear policies on how it works.

Keep your policies simple and specific so that your employees can easily understand and recall them. It must outline exactly how business-related expenses should be handled. This includes:

• Allowable and disallowable expenses
• Reimbursement/payment processing
• Submission deadlines
• Allocated budgets

Of course, just having a clear expense management policy isn’t enough. You must also ensure that your employees follow them. You can do this by making these rules always accessible to everyone within the organization. This way, they can always go back to it for reference. You can also use expense software to automate the implementation of such rules by monitoring and tracking any discrepancies in the system.

2.    Process expense payments on time

It is a sad reality that companies often fail to process expense payments on time. As a result, employees who paid for business-related costs out-of-pocket have to wait for weeks or even months just to get reimbursed. This doesn’t just put financial strains on their part. It also affects the accuracy and reliability of your company’s financial data.

Avoid such scenarios by developing a timeframe for when expense reports should be submitted and be reimbursed. For example, you can set a particular day as the deadline for all expense reports and another day for when respective reimbursements are released. And if they miss the deadline, make sure to let them know how long the delay would be in processing their reimbursements.

You can even automate expense payment processing using some of the best software for expenses. This can hasten the approval process and ensure that the whole system runs smoothly.

3.    Digitize expense management system

The days of using paper-based systems for your expense management are now in the past. Embrace digital transformation by digitizing important documents, information, and processes for your expense management. This includes receipts, expense reports, and even payment methods.

There are many benefits to digitization. For one, it helps save time, money, and effort in managing documents and information related to your business expense. You don’t have to wade through piles of papers or go through file cabinets just to find the information you need. Nowadays, you can locate the document or information you want in just a few clicks on your laptop, desktop, or even smartphone.

Digitization also makes it easier for you to leverage data and analytics. By using business intelligence, you can parse through your expense data and generate insightful reports to help managers make better decisions.

4.    Automate where you can

With digitization comes automation. Once all the important documents and information are in the system, you can create simple automated workflows to replace your current manual ones. For example, you can automate your expense payment processing by using expense management software to review and approve expense reports and trigger the release of reimbursements accordingly.

You can also automate accounting tasks that are essential for compliance by integrating your expense management into your accounts receivable software. This allows you to automate routine tasks such as managing and updating your ledgers.

Automation provides you with a real-time overview of your expenses. It tells you exactly where and how your cash flows. This paves the way for instant reconciliation and better audit preparedness Moreover, automation minimizes errors in processing your expense data. This removes potential bottlenecks in your expense management system and ensures compliance within your organization.

5.    Centralize critical expense data

Businesses often work in silos when it comes to managing finances. As a result, expense data often comes from different sources within your organization. This leaves you with unsynchronized and uncoordinated information on your business expenses.

Break down the silos in your organization by centralizing critical expense data into a single, unified platform. Consider investing in software like Microsoft Dynamics 365. This cloud-based business application integrates your enterprise resource planning (ERP) with your other productivity applications and business tools. This combines your finance operations with your marketing, sales, talent, and other aspects of your business.

By centralizing critical expense data across all your business’ departments, you can get a comprehensive and complete view of data intelligence on your expenses.

Choosing the right software

Expense management is a crucial aspect of your business operations. A simple error in the reports or process can have lasting impacts on your organization such as loss of profit and legal liabilities. By implementing the best practices and best expense management software you can create better and more effective expense management for your business.