6 Ways to Control Expenses In A Company
Expenses are a necessary part of any business.
They vary business by business and can change depending on your budget. But what happens when your expenses start to spiral out of control? You could soon be expensing more than your business can afford.
That’s why it’s always important to have some form of plan in place to control your expenses. That way you can avoid accumulating any form of debt.
But what exactly are business expenses and how can you control them? We’ll take a look at the top 6 ways to control expenses in a company.
Here’s What We’ll Cover:
What Are Expenses?
Business expenses are costs that you incur whilst operating your business. This could be anything from the rent of your place of business to your employee’s lunch whilst they’re on a business trip.
Your expenses can play a role in whether your business will have a net profit or loss during a period of time.
There are two types of expenses; fixed and variable. Fixed expenses are costs that are constant and don’t change, whilst variable expenses are costs that do change.
6 Ways to Control Your Expenses
1. Create and Stick To a Budget
You should have a budget in place that covers all of your expected expenses and leaves room for any unexpected costs.
It should be realistic and reviewed periodically to make sure that it still makes sense for your current financial situation. A budget can be made by looking at each spending category and understanding your spending habits.
2. Keep a Detailed Track of Your Expenses
Whenever any expenses are incurred, you should be keeping the receipts and filing them. This means that when it comes to your business’s tax return, all of your expenses can be accounted for.
3. Eliminate Unnecessary Purchases
It can be tempting to buy on impulse. If you see something that you feel would be beneficial to your business don’t buy it right away. Take the time to think about whether you really need the object - you’ll soon realize that most of the time you don’t.
4. Use Zero-Based Budgeting
One way to keep tight control of your expenses in a company is to use zero-based budgeting. Traditionally people create budgets based on what the previous budget was. But things change and budgets tend to change with them.
Zero-based budgeting begins the budget for each new period from a zero base. This is then reviewed with past budgets and weighing in with any current spending needs.
5. Downsize Your Office Space
This may not apply to every business but it is good current advice. With the rise of people working from home, many businesses are finding that they don’t need the same amount of office space.
It may not be necessary to constantly have all of your employees in the office. So you can save a huge chunk of your expenses by downsizing to a smaller office with lower rent.
6. Digitize Your Expense Tracking
By using expense and receipt tracking software such as FreshBooks, you can keep all of your financial needs in one place.
Tracking expenses is just one of the many features offered. With invoices, payments, credits, and other financial information in one place, it’s easy to keep track of your employees and your clients. Their software makes expense tracking simple. You can track your expenses conveniently in one place and access your expenses on the go.
Their software will also alert you when your clients pay expenses. They deliver customizable expense reports that make things easy for your accounting department.
No matter how organized your employees and your finance department are, mistakes happen and receipts are lost. By digitizing your receipts and expenses you can keep a constant track of all of your expense categories.
This can be done by getting your employees to take a picture of their receipts the moment they receive them. You can then upload these images and keep track of them through software.
Actual cost control is a key element of running a successful business.
By putting some of these tips in place you can take a step towards being able to control your direct expenses and getting a grip on your financial situation. So the next time you look at your expense report, you can let out a sigh of relief.
Are you looking for more business advice on everything from starting a new business to new business practices?
Then check out the FreshBooks Resource Hub.