Expense management is critical to all businesses, no matter how long they have been established, or whether they are big or small. You will not be able to operate efficiently if you do not know how your budgets are being spent. Nevertheless, this is not to say that expense management is easy. There are a number of challenges that businesses will experience when managing their money. Read on to discover the top challenges faced by SMEs when it comes to expense management.
Paying too much for travel
There is no denying that travel expenses are rising all of the time, and this is something that small businesses need to contend with. Nevertheless, there are a lot of businesses that pay more for travel than is necessary. There are many different ways you can reduce your travel expenses.
For example, if your employees travel during the night, rather than during peak hours, you could save yourself hundreds of pounds. You should also consider implementing incentives for your workers to spend as little as possible when they are travelling. This is beneficial for companies that travel a lot. You could offer up a significant prize for the person that uses the lowest amount of their allowance.
Data entry errors
This is a frustrating one when it comes to expense management. A lot of businesses today still use spreadsheets, which require expense data to be manually inputted. This leaves you wide open to mistakes – and expense mistakes at that. You should look into advanced software solutions that will do the hard work for you so that you can minimise errors.
Outdated technology
Another area whereby businesses spend more than is necessary is on technology. This is because they do not update their tech as frequently as they should. This not only means they run outdated software, which leaves them lagging behind, but it opens them up to data breach risks, and this costs huge amounts of money. Telemedicine equipment manufacturers will tell you that this is especially important in this industry, whereby people’s lives are literally at risk and dated equipment errors have been responsible for many data breaches in recent years.
Problematic receipts
It is vital that receipts are accurate and that they are compliant with the policies that are in place at the time. The first thing you need to do is clarify your policies regarding receipt submissions. You should then put together a policy document that outlines all of this. Include information such as items that are not approved for reimbursement, as well as the time frame for receipt submission. This needs to be distributed to all employees.
Delayed employee reimbursement
Last but not least, you need to look at how long it takes you to deny or approve employee reimbursement. If you leave it too long, you could end up building resentment in your organisation, and you may find that some of your employees refuse to go on company trips. It is important to look at it from a human level and remember that your employees may not be able to afford to go without this money.
So there you have it: the top challenges that are faced by SMEs when it comes to expense management. If you can get a grip on the challenges that have been mentioned above, you can give yourself the best chance of managing your expenses effectively so that your business has a bright financial future.