How to track business expenses: a guide for smarter financial management

Running a successful business requires more than delivering a great product or service. Keeping meticulous track of business expenses is essential for maintaining financial health, improving cash flow, and making informed business decisions. Yet, many business owners struggle with the complexities of logging expenses, managing paper receipts, and categorising spending.

In this guide, we’ll explore why tracking business expenses is crucial, break down the best practices, and introduce tools like expense tracking software to streamline the process. Whether you’re a sole trader, a small business owner, or managing a larger team, these tips will help you gain control of your business finances.

Why tracking expenses for businesses matters

1. Understand your financial health

Proper expense tracking provides a clear picture of your cash flow and helps prevent money leaks. By categorising expenses such as payroll costs, travel expenses, and operating expenses, you can evaluate your business spending habits and make adjustments to achieve an accurate budget.

2. Stay tax time ready

Tracking expenses ensures your financial records are complete and accurate, which is essential for filing business income tax returns. Deductible expenses such as advertising costs, employee expenses, and office expenses can reduce your taxable income, saving your business money.

3. Make informed business decisions

Expense reports and financial statements offer insight into where your money is going. With this information, you can identify unnecessary expenses, plan for future investments, and make long-term decisions that align with your business goals.

4. Reduce risks and errors

Manual data entry and the use of paper receipts often lead to potential errors, approval delays, and even risks of fraud. Leveraging a business expense tracker app helps reduce human error and ensures your expense records are accurate.

Common challenges in business expense tracking

Tracking expenses can feel overwhelming, especially if you rely on outdated processes or struggle to separate personal finances from business finances. Common challenges include:

• Mixing personal and business expenses: Without a dedicated business bank account or separate business credit cards, it’s easy to blur the lines between personal expenses and business transactions.
• Manual processes: Logging expenses by hand or using spreadsheets is time-consuming and prone to errors.
• Lost receipts: Misplacing expense receipts can disrupt the reconciliation process and lead to incomplete financial records.
• Approval delays: Traditional approval methods often result in bottlenecks that slow down the entire paper process.

Fortunately, modern expense management software can address these issues, streamlining the business expense tracking process.

How to track business expenses: a step-by-step guide

1. Open a dedicated business bank account

To keep expenses separate, start by opening a business bank account. This step simplifies tracking expenses and ensures that business transactions are easier to manage.

2. Set clear expense policies

Establish an expense policy that outlines how employees should log expenses, submit expense claims, and categorise spending. For example, create categories for travel expense management, selling expenses, and payroll costs to organise your financial records.

3. Leverage expense tracking software

Modern expense management tools, like Weel, can automate the tracking process. Features such as real-time tracking, expense receipts uploads, and approval workflows save admin time and reduce potential fraud risks. Using expense trackers integrated with accounting software like QuickBooks or Xero ensures seamless record-keeping.

4. Keep a record of receipts

Digital receipts are more reliable than paper receipts, which are prone to damage or loss. Expense tracking software allows you to upload expense receipts and organise them by expense category, making the reconciliation process effortless.

5. Review and reconcile regularly

Schedule monthly reviews of your financial statements and income statements to reconcile credit card statements and bank accounts. This helps identify discrepancies, track of expenses, and spot potential errors before they become costly.

Common types of business expenses to track

Understanding the types of business expenses you need to log is crucial for maintaining accurate financial records. Here are the most common categories:

1. Operating expenses: Rent, utilities, and software subscriptions.
2. Travel expenses: Flights, accommodation, and mileage.
3. Payroll costs: Salaries, benefits, and payroll taxes.
4. Advertising costs: Marketing campaigns, digital ads, and promotional materials.
5. Office expenses: Supplies, equipment, and furniture.

By identifying these categories, you can create a business expense template tailored to your needs.

The benefits of using expense management software

1. Streamlined processes

Expense tracking software like Weel eliminates the inefficiencies of manual data entry and paper transactions. Automated features such as expense automation and approval workflows reduce admin time and allow business owners to focus on growth.

2. Real-time tracking

Modern tools provide real-time updates on spending, helping you maintain an accurate budget and prevent overspending. Expense product features like automatic credit card reconciliation and digital receipts keep you on top of your cash flow.

3. Centralised platform

A single platform for all expense records ensures consistency and reduces risks of errors. With a central platform, you can generate detailed expense reports, track company expenses, and identify areas for cost savings.

4. Customisation for businesses of all sizes

Whether you’re a sole trader or managing an enterprise plan, Weel’s features are designed to scale with your business. From expense cards for employees to robust reporting tools, you’ll have everything you need to stay organised.

Pro tips for effective expense tracking

1. Train your team: Educate employees on submitting expense claims and adhering to expense policies.
2. Monitor spending habits: Regularly review financial reports to identify unnecessary expenses and opportunities for savings.
3. Use Corporate Cards: Streamline your business spending with corporate cards, such as those provided by Weel, to help reduce admin time and offer insights into spending habits while ensuring every transaction aligns with your business policies.
4. Integrate accounting tools: Ensure your expense tracking software syncs with accounting systems like Xero or QuickBooks Time for streamlined financial decisions.
5. Plan ahead: Set aside time for monthly money management and review your reconciliation process to stay ahead of potential errors.

Why Weel is the go-to solution for business expense tracking

At Weel, we understand the challenges businesses face when managing expenses. Our expense tracking strategy combines the benefits of real-time tracking, automation, and seamless integration with your existing accounting software.

With features like:

• Corporate cards to simplify employee spending.
• Digital receipt uploads to eliminate the hassle of paper receipts.
• Approval workflows to reduce admin time and approval delays.
• Customisable expense categories for accurate record-keeping.
• Integration with your existing accounting software such as Xero, MYOB, and Quickbooks.

Weel ensures your business finances are always in check, helping you achieve an accurate budget, reduce unnecessary expenses, and make informed business decisions.

Conclusion

Proper expense tracking isn’t just about compliance - it’s about empowering your business to make smarter financial decisions. From using a dedicated business bank account to leveraging the latest expense management software, there are countless ways to streamline the process and maintain your financial health.

Ready to take control of your business expenses? Explore how Weel’s Business Expense Management Solutions can help you save time, reduce errors, and simplify your financial management journey. Take a product tour or book a demo today!