Data-driven companies are six times more likely to retain their customers and nineteen times more likely to be profitable. According to a McKinsey Global Institute report, these companies leverage data to improve customer experience and make better decisions.
For example, data-driven expense tracking can help you gain control over business finances. Whether you wish to import expenses from multiple spreadsheets, track sales tax, or make every deduction count, expense tracking software can make your life easier.
Why is keeping track of business expenses important?
Do you randomly spend money on eating out, buying stuff online, or ordering a new subscription without taking stock of your finances? Probably not.
Similarly, as companies scale, move into newer geographies, or add more employees, they need to organize their cash flow to stay on track.
82% of small businesses fail due to poor cash flow management. When companies lack cash, they cannot pay staff salaries, vendors, and even utility bills.
Tracking expenses can help. When employees start tracking expenses, they can see where the cash is going. The entire team will get in the habit of tracking expenses and become financially organized.
Take a look at how tracking expenses can benefit businesses:
- Control costs and become aware of where cash is spent each month
- Avoid paying unnecessary taxes by organizing and categorizing tax-related expense documents
- Motivate employees with prompt expense reimbursements
- Monitor company profitability by maintaining accurate expense records
- Improve money management and avoid cash shortfalls or non-payment of vendor dues
What is the best way to keep track of business expenses?
Recording every business expense is the best way to track where the money is going. Companies may document expenses using the pen-and-paper method, spreadsheets, or an online app.
Tracking expenses gives companies an accurate picture of overall finances, so they can pay staff and vendors on time. So, how can teams start tracking expenses?
Know what counts as a business expense
When teams start tracking expenses meticulously, it helps the company stay organized and lowers the tax liability.
It is essential to educate the team on what counts as a business expense first Any expense incurred by the company to run the business is a business expense.
Keep all paper receipts
With remote work being the new normal, teams may not want to retain paper receipts. However, original receipts can be required for legal compliance or audit purposes.
Scan all your paper receipts and store them in a unified cloud database to stay legally compliant and avoid unnecessary hassle.
File your digital receipts
With expense tracking software, you can scan and upload all business receipts to an easily accessible and secure online location.
Expense tracking software also lets you create useful reports and categorize your receipts for easy tracking.
Keep business and personal expenses separate
Keeping business and personal issues separate is an age-old business rule.
Get a dedicated business bank account and credit card and separate your business and personal expenses.
Categorize your expenses
Keep your finance reporting accurate by categorizing your expenses.
If all employees clearly categorize expenses, such as ‘salaries’ or ‘bills,’ it can save hours of unnecessary tax-time stress.
Audit expenses regularly
Review expenses and billing practices regularly to ensure they align with company policies.
Assess the adequacy of travel expenses, check paid advertising budgets, and document legal expenses to ensure no unauthorized payments occur.
Educate employees on best practices
Create an expenses management policy and educate employees on using it correctly.
20% of small and medium companies and 13% of enterprises have reported fraudulent expense reimbursements. Inculcating a transparent and fair culture across the organization also serves as a deterrent for potential fraud.
Encourage a cost-conscious culture
Set up expense best practices and encourage employees to be cost-conscious to ensure adequate liquidity in the company.
Adopt zero-based budgeting and empower managers to question expenses. Organize quarterly gamification sessions and reward employees who suggest viable cost-saving alternatives.
Can you create an expense tracker in Google Sheets?
Google Sheets is cloud-based spreadsheet software that is a part of Google Workspace. Teams can create expense trackers in Google Sheets using the device of their choice.
If your small or mid-sized organization doesn’t have any formal system for tracking expenses, Google Sheets is an inexpensive way to create one.
How to create an expense tracker in Google Sheets
Creating an expense tracker in Google Sheets is easy. Here’s what you need to do to get started:
- Open Google Sheets: You can access Google Sheets with a free Google account or a Google Workspace account, which is a great option for businesses. Then, open a blank Google Sheet. You can also choose a pre-made template.
- Label everything: Identify the rows and columns you want in the spreadsheet and label everything accordingly. A simple way to start is to add the months on the left vertically and expenses horizontally on the top. Months are entered in the first row while the expense categories go into Column A.
- Add the required formulas: If you wish to calculate the total of the expense categories, add a last row for the total.
- Personalize: Now that the core table layout has been set up, personalize the table by adding brand colors or shades to highlight specific rows or columns. Feel free to add comments if other users are collaborating on the spreadsheet.
Advantages of using Google Sheets for tracking expenses
If you’re planning to use Google Sheets to track business expenses, here are some benefits you can expect:
- The ability to collaborate remotely on projects from any device and location
- Real-time editing and data updates
- A reduction in manual errors with features such as SmartAssist, autofill, and formula recommendations
- Integrations with other Google products, such as Google Forms and Google Docs
- Version control to keep teams on the same page
- Complete compliance, secure encryption, and data privacy
Disadvantages of using Google Sheets for expense tracking
Despite the growing popularity of Google Sheets, there are some instances where it may not be a good idea for your professional services firm:
- Unsuitable for big data sets
- No comprehensive data visualization features and formulas
- Limited formatting options
- Complex calculations cannot be done by accountants and bookkeepers
- Data is at risk of a leak if the business email gets hacked
Can you get an app to keep track of expenses?
Expense tracking can be difficult, especially for professional services organizations. While larger organizations have dedicated teams to manage their finances, small and medium-sized businesses often lack a formal expense tracking system.
They may struggle with piles of paper bills, scramble at tax time, or waste time scanning multiple spreadsheets. If you have a fast-growing business or are upping the staff headcount, getting an app to keep track of expenses is essential.
What is expense tracking software?
Expense tracking software is an online application used to record, track, and manage business expenses.
Some expenses that can be managed by expense tracking software include:
- Per employee expense amount
- Spending limits for individual employees and departments
- Travel policy details, including airfare and transportation
- Reimbursement of travel expenses, including mileage
- Reimbursement rules for hotel and food expenses
- Company rules on expense policy violations
- Daily meal allowances
- Miscellaneous expense details, such as laundry and dry cleaning expenses
Why should you get expense tracking software?
Here’s why companies should use expense tracking software to manage their finances:
- Save time by reducing the number of manual expense entries
- Reduce the number of human errors in tracking expenses
- Lower chances of fraudulent entries
- Improve employee morale with quicker expense reimbursements
- Track historical expenses for any period
One of the greatest benefits of using expense tracking software is the ability to automate manual expense workflows. For example, some processes such as expense reimbursements, vendor bill payments, and staff salaries have the same internal workflows every month.
Empower your staff to do more productive work by automating the expense tracking process in your organization.
Features to look for in expense tracking software
Companies using expense tracking software can save time and increase transparency while automating the entire expense workflow.
However, what key features should you look for in an expense tracking system? Let’s learn more about it.
This can make tracking expenses much easier for professional services companies. You will no longer need to juggle numerous spreadsheets to manage receipts and payments.
Receipts can be easily verified and accessed through your dashboard. Since expense data is freely available, managers will also be able to make better decisions.
Automated processes and workflows
35% of HR teams spend their time correcting payroll errors. Companies typically need 100 staff hours per year to manage payroll for every 25 employees. Even though automation helps companies reduce their payroll expenses by 80%, fewer than six percent of companies use it.
Automating processes makes perfect business sense. Employers can set up their expenses workflows once — after that, they’ll be processed like clockwork each month, saving time and money.
Real-time reporting and analytics
Raw data makes no sense until analyzed and presented in relevant reports. Using manual expense processes can be tedious and time-consuming.
A cloud-based app for tracking expenses helps organize the data and generate curated real-time reports and custom dashboards for diverse stakeholders.
Inadvertent mistakes and potential fraud can also be avoided if employees know that expense data is easily accessible and updated instantly.
Alert and flag features
The frequency of fraud at small and mid-sized organizations is at 28% — their larger counterparts stand at 22-26%. Business Fraud Prevention confirms that an average small business stands to lose $164,000 due to internal control and billing issues.
To help with this, most expense tracking solutions come with specific alert and notification systems designed to flag inappropriate app usage.
Helps with audit and tax prep
All businesses file taxes, irrespective of their nature, size, or scope of business. Expense tracking software provides electronic copies of business expenses and receipts, organized by category.
The accounting and bookkeeping team will find this extremely valuable when the organization’s finances and processes are being audited. Expense tracking software will also clearly demarcate which expenses are tax-deductible and which aren’t.
Check if your chosen expense tracking software helps your company stay on the right side of local, state, and federal law.
The software should allow you to sort expenses into categories such as salaries, travel, sales tax, and mileage. Since the expense policies will already be entered into the software, it should flag any policy violations.
Why use Wrike as your expense tracking software?
Teams don’t need to search through emails to find receipts, correct payroll errors, or repeat manual entries when you have expense tracking software.
Professional services organizations can streamline their business expenses and complete their tax preparation by choosing an all-in-one expense tracking solution like Wrike. Automate repeatable tasks and utilize Gantt charts to keep an eye on deliverables. Wrike also lets you optimize available resources, generate real-time reports, and customize intake forms.
With Wrike’s project management software for accountants, delivering customized reports for stakeholder decision-making is easy. Since Wrike takes care of tracking expenses, teams can replace tedious manual workflows with strategic and value-adding activities that deliver higher business ROI.
Get a free Wrike trial to understand your cash flow, control costs, and achieve your expense management goals.