It's not uncommon to see mountains of receipts piled up in the back offices of small businesses around Australia. That doesn't even include the dozens or hundreds of receipts your employees could be hoarding in their wallets and desks, accounting for items they have purchased themselves or on a company credit card.
Picture: Ben Osteen
For many businesses, expenses are a mess. But they don't have to be. Using a few of these simple tips can make the monthly or annual requirement of expense reconciliation a smaller, neater task for small businesses.
Do your expenses daily or weekly, not monthly
When you're trying to keep your business ticking, it's not surprising that many owners and employees don't find the time to do their expenses. After all, it's not a fun task, and can take hours at a time — if it is delayed until the end of each month. Try splitting those expenses into smaller chunks, doing them at a set time every day or every week, so you don't get lumped with a tonne of receipts and missing invoices at the end of each month.
While of course you can't always authorise expenses for staff until the end of the month, you can ensure that any receipts you do collect that day or week are accounted for in your software of choice, and that your employees do the same. That way, a task that might take several hours each month will only take a couple of minutes each day or week.
Digitise your receipts
Many of us are undoubtedly stuck with 'George Costanza' wallets, threatening to fly open at any second, thanks to the receipts tucked into every nook and cranny. Receipts are the bane of everyone's existence, and while some stores are beginning to email electronic copies, it will take some time before the little piece of ubiquitous paper becomes truly extinct.
That's why it's time to take digital receipts into your own hands. Don't keep wads of paper in your pocket, wallet or desk. Instead, every time you get a receipt for a personal or business expense, scan or take a photo of it immediately on your smartphone. You can create a photo album labelled "Receipts" on your phone to keep track of these photos or, even better, input the receipt directly into your accounting or expenses software. Apps like Xero Touch, ReceiptBank, Entryless or Shoeboxed allow you to do your expenses on the go, as soon as you get the cab receipt or pick up goods from the shop.
Get rid of petty cash
Eponine Films had an ingenious idea when it came to minimising unaccounted expenses on the set of Australian film Love Is Now. Simply, they got rid of petty cash. It may seem like a big ask, especially if your business has long used petty cash for smaller items like stationery, but it's a fantastic way to reduce the incidental expenses and costs that often come with the day-to-day of running a business. For Eponine Films, it meant saving as much as $10,000 during filming, much of which they wouldn't be able to account for at the end of the day because the receipts didn't exist.
Removing petty cash and asking your employees to pay out of their pocket, to get reimbursed later on, may require cultural change at some small businesses, but can be a fantastic way to reduce overheads. More importantly, it leads me to the next point.
Make employee incentives clear
Our stats show that 52 per cent of employees at companies don't put in their expenses in on time, or at all. Ensuring employees enter their receipts promptly for personally paid expenses, and those paid on the company credit card, is vital to ensuring that you have a well-oiled business.
It's best to incentivise employees to ensure this happens. That can be done by making the expense process simple and easy. Asking staff to fill out several paper forms each month, or use clunky old software is a quick way to ensuring they refuse to do the task at all. Instead, adopting software built for expenses — like those mentioned above — and having an authorisation process that is painless will lead to happy workers, and in return, a happy business.
At the same time, communicating to staff that they will get reimbursed the quicker they enter their receipts, is a fantastic way to ensure your workers understand the importance of tracking their receipts and expenses. It shouldn't all fall to the small business owner, so having your staff on-side in this vital task is a great to turn an inefficient business into a profitable one.
Laura Cardinal is a product manager at Xero. For specific financial advice, always consult with a qualified professional.