Expense visibility: How important is it and how it can be improved

Decisions become smarter, financial planning is tighter and unnecessary spending gets banished. It's like setting a budget for yourself, but on a grand scale, fit for your business kingdom.

Imagine a renewable energy company based on the Sunshine Coast in Queensland. The founders were so focused on growing their business, that they didn't pay much attention to how much money their employees were spending. 

When they found five minutes spare and finally checked, they found out that some employees had spent more money than they should have on things like taking clients out to dinner and travelling for work. The company found itself in a little pickle.

What they found was Henry, a KFC enthusiast, bought 50 zinger burgers when his lunch allowance was only $25. Henry is 200 cm (really) and can put away Zinger burgers, but 50 still seems like overkill.

Chet took his clients out to Nobu when he was asked to find a “cost effective” location for dinner. Ironic. Nothing wrong if Chet enjoys the finer things in life but maybe not on the company's peso.

And Dane’s credit card was compromised and numerous fraudulent transactions occurred but our founders and Bill from finance, didn’t notice until they finally checked the statement.

Why is it that most companies don’t have real time visibility?

Blame it on the old ways of expense management – reactive and as outdated as a rotary phone. Reimbursements, credit cards (from the banks), and petty cash, all akin to a budget-blindfold, preventing real-time tracking against budgets.

How do we solve this? Here are two steps to get started:

Step #1 - Charting the Course:

First things first, we need a set of rules. Your expense policy should spell out all the dos and “do not do’s”.

Receipts must be handed in, any budget-busting needs permission, and there should be a go-to person for questions. And if you're missing a policy, worry not, here's a free template to get you started.

Step #2 - Tools of the Trade:

Now, to make Bill’s and your team’s lives easier, you need tools. There are free options (well, kinda free if you don't count the team’s time), relatively cheap solutions that will save a bit more of everyone’s time and then end to end packages that offer full automation. Let's peek at a couple:

One method you could implement, is a shared access spreadsheet, the treasure map of modern times. Digital is better than paper.  Your crew, armed with mobile phones, can either update it on the go or hoard their receipts until they're back at their desks, but remember we’re going for as close to real-time visibility as possible, so ideally they do it on the go (you could put this expectation in your policy).

Our shared spreadsheet should include:

• What did they buy (receipt must be attached - Bill needs this!)
• Amount
• Who made the purchase
• When was the purchase made
• Where the purchase was made
• GST 
• Reason for purchase (optional)
• How was the purchase made (do they need to be reimbursed or are they using a company card)
• Change (if petty cash is used - but you’d probably want to move away from this as quickly as possible)
• Category (so Bill knows what account code to match it to)
• Sub-categorisation (Either filled out by employees or finance teams depending on the business. However, some businesses don’t have sub categories)
• Check box for Bill for if it’s been reconciled or not

I know this sounds like a lot of work, and your staff will probably think it is. But, if done correctly, our founders and finance team should have more visibility on business expenses. We’ll share a solution with you below that automates all of this so fret not.

Not-So-Free but Wallet-Friendly:

For a few gold doubloons, you can find apps that will plug your bank account/cards/statements into your shared access spreadsheet. This will save your staff the hassle of filling out who, when, where and the amount but the rest will still need to be filled out. With a quick google search, we found one called Tiller and looks to be about $80 per year.

This saves some time, but you’ll probably have some staff still complaining about it and we’re all about making lives easier so let’s solve for this.

Full Automation: The Holy Grail:

It is possible to achieve visibility on your entire businesses expenses using a free spreadsheet, but it’s not easy (and not so free when you look at the time spent populating it).

It's time for the grand finale – full automation! If you’re looking for full automation with expense management, to make it easier on your employees and much easier on Bill in accounts, you can find solutions that offer

Instant card issuance, receipt capture and transaction coding, smart budgets with spending rules, real time visibility on transactions vs budgets they’re being spent from and one click sync into Xero. Budgetly is the leading solution.

Our recommendation is to check out an independent review site like Capterra to see what others are saying to help you make a decision.

Some questions to ask yourself:

1. Do they offer telephone support, free training etc?
2. Is their support based in Australia or is it off-shore?
3. Do they offer both physical and virtual cards or virtual only?
4. Are there other businesses like mine already using their solution?

We hope the info provided helps with the problems with not having sufficient visibility on your business expenses, especially when it comes to tracking and controlling employee budgets. From reading this you may have discovered that you have a few more problems with your expense process.

Want to look at the holy grail of expense automation?

The next best step is to talk to an expert - we offer free 1 to 1 consultations where will ask a series of questions to better understand your businesses’ specific problems and what’s most important for you to solve at this time.

We also have other helpful articles if you’d like to explore further in your own time. And if you're not quite ready for a personal parley, we've got an entire treasure chest of resources – feel free to dive in and explore.