Whether your tech company is a week, a year, or a decade old, managing expenses is an important step in staying compliant and staying profitable. Especially once employees and contractors start spending money on your behalf, you need to make sure they’re spending wisely and backing it all up with a receipt. If not, you risk damaging your cash flow, getting penalized during an audit, or becoming a victim of fraud.
We’re not saying you have to micromanage your team over every expense. The right processes for your business’ needs and size can make tracking and reimbursing expenses headache free. Here’s what we recommend:
A slick reimbursement policy works well for small startups
When your business is still in the early seed or startup stage, there’s no need to start handing out company credit cards to all your employees.
Instead, we recommend having your team use their own credit cards and submit for reimbursement on business expenses. This is a good way to keep everyone accountable and manage spending in the early days when you don’t have unlimited cash on hand. People are much more likely to monitor their spending, purchase only what’s necessary, and keep the receipt if it’s their own credit card they’re swiping.
Of course, to keep this fair to your employees and responsible for your business, you need as instantaneous a reimbursement process as possible. While there are many apps out there to help you do this, our favorite is Expensify. Along with several great features like expense reports and customized approval levels, Expensify can be set up to immediately deposit money back into your employee’s bank account once their expense is approved.
As your company grows, company credit cards will become necessary
Through the growth and scaling stage of your business, your expenses will start to increase in volume and in dollar amount. Employees aren’t going to want to swipe their own cards on massive purchases, so now is the time to start implementing company credit cards.
This is also the stage where your accounting starts getting more involved and complex. To keep your books in order and your stress levels down, we have two apps we recommend for managing expenses with company credit cards:
- Brex is designed for fast-growing companies. Unlike many company credit cards that allow credit based on the founder’s personal assets, Brex connects directly to your company’s bank account. They check the amount of cash you have in the bank every day and set your credit limit accordingly, while also letting you set limits on individual company cards and upload receipts automatically from your phone, anywhere, anytime.
- Divvy is another great expense management tool, with no annual fees and a credit line that scales with your business. We especially like Divvy’s enforceable budgets feature, which lets you set caps on expenses for different time periods or events to prevent overspending.
The golden rule of expenses: keep all your receipts
At the end of the day, having these processes in place means nothing if you’re not enforcing them. If there’s one piece of advice you can take from this blog – and pass on to your team – it’s to always keep a digital copy of your receipts. Without this virtual trail legitimizing your expenses, you could wind up being defrauded out of thousands or penalized during an audit.
But reminding your team to turn in the receipt from a business dinner two weeks ago isn’t the best use of your time. Let it be ours. WA lifts the burden of accounting off your shoulders by delivering a white-glove, seamless accountancy service, freeing up your time to focus on what you do best and delivering data that helps you grow your business. Learn more about how we can help streamline your processes and get you closer to your goals on our services page.