Control of company expenses

The cost management is a fundamental part of the smooth running of any business.. Proper cost control avoids potential financial problems as well as keeping cash flow at the desired level. Defining budgets, setting targets and monitoring expenditure and income are some of the best practices on which to rely in order to carry out a optimal cost management.

On the other hand, failure to control expenses correctly can lead to problems such as late payments, cash shortfalls or even bankruptcy of your business.

The expenditure control involves keeping track of both income and expenditures that a company makes, which must be reflected in a budget. In this way, there is complete control of each of the items as well as a global vision of all the information related to the company's expenses. For this purpose, all of them must always be accounted for.

To carry a efficient cost control we can to support us with software tools that allow this task to be carried out digitally and automated. The expenditure planning and cash-flow control is key for the smooth running of a company.

Keeping track of expenditures involves a number of advantages:

• Avoid financial problems in the future.
• It helps to better negotiate prices with suppliers.
• Savings are made on superfluous expenditure.
• The company will be much more solvent.

Steps to take to implement an effective cost control system

In order to implement in our company a proper cost control we can carry out the next steps:

1. Top-Down analysis of business expenditure

Full analysis of cow much, how and where money is spent using a Top-Down approach, i.e, starting with global expenditure and progressively moving down to more specific expenditure. This information is key in order to be able to differentiate between indispensable and superfluous expenditures.

2. Analysis of employee profiles

The next step is to know what kind of professional profiles our workforce has and what expenses they are likely to generate.

3. Implementation of an automation tool

Integration of an automated system that allows managing cost control more efficiently, quickly and accurately. New mobile technologies, the widespread use of the Internet and the development of cloud computing make these tools very easy to integrate into the company.

4. Defining the usage profile of each employee

Once the company's expenses have been analysed, the expenses of our staff have been studied and the system for managing expenses has been implemented, it is time to create the employees' usage profiles. These profiles can be used to define the type of expense, time slots, balances, etc. In addition, we can have the necessary information to move on to the next step, monitoring.

5. Monitoring

The last step in the process is to monitor expenses in order to be able to adjust them if necessary. To optimise our resources, we must be able to keep all our expenses under control and implement an efficient system to make our company more competitive.

Digitisation of company cost control

The digitisation of cost control offers multiple advantages, The savings in terms of management and storage, as well as the time and money spent on these activities.

A digital invoice or ticket is a document with the same legal validity as a physical paper document. For this reason, they must meet a series of requirements before the Tax Agency.

Some of the aspects to be taken into account when digitising expenditure documents are as follows:

• Use an approved format. The digital documents must be a file type PDF, TIFF, JPEG, PNG, ISO19005, as well as any other file type accepted by the Tax Agency.
• Minimum resolution of 200 pixels. The document must be perfectly legible, which is guaranteed with a resolution of 200 pixels or more.
• Use of AEAT-approved software. Not only must the file be in an approved format, but the programme or software used to create the file must also be approved.
• Digital signature of the document. It must be included in the digital document concerned.

The digitisation of the expenditure management process offers us a series of advantages over physical or analogue management of this type of documentation. Some of the most important advantages are the following:

• Space-saving. No physical space is required to store the documents, as they are stored directly on the computer.
• Saving time. The use of digital expense management systems saves a great deal of time, as it is a much more agile and dynamic system than the physical management of this type of documentation.
• Saving money. Much cheaper and more economical system.
• Immediate localisation. It allows the immediate location of any expense document, as the search is carried out automatically on the computer.
• Reduction of accounting tasks. By using digital expense management many of the tasks are automated so that the associated accounting tasks are reduced to a minimum.
• It facilitates the management of expense notes. It is a much simpler, easier and more convenient method to use.
• It adapts to the relocation of companies. As it does not require a physical space to access the document, it is perfectly adapted to the relocation of companies. Moreover, this type of expense management is perfectly adapted to the needs of teleworking.
• Saving paper. It is a greener and more environmentally friendly system, as it does not require the use of paper to hold the document.

Tips for efficient cost control

For efficient cost control in the business by preventing cash flow from drying up and debts from growing out of control, we will be able to carry out a series of actions:

• Keeping deadlines under control. If you do not know when bills, commercial loan payments or credit card payments are due, you may not have enough cash on hand. It is therefore necessary to record when payments are due and to schedule reminders.
• Control spending. Know how much money the company spends per day, week or month. Without this information, unnecessary invoices could accumulate, generate excessive spending or misuse funds. It is essential to centralise management to avoid absent-mindedness and surprises.
• Don't forget accounts receivable. If we offer credit to customers, it should be borne in mind that money may not be received for goods sold or services rendered until the due date or longer.
• Programming of purchases. To avoid times of low cash flow it is always a good idea to schedule purchases as far as possible. The key is not to make unnecessary purchases until bills have been paid and to wait until you have enough cash available to cover new expenses.
• Improve inventory management, try to reduce costs by negotiating with suppliers, try to increase revenue through promotions and maintain a cash reserve. are also measures that improve results in expenditure management.

Benefits of cost control in business

The first and foremost benefit of cost control is savings. Increasing the organisation's cost control capacity should therefore become a priority.

Some of the most important benefits The benefits we can achieve if we control our company's expenses are:

• More money available for innovation which will improve our position vis-à-vis our competitors.
• More resources available for staff capacity building. Investing in training is the key to keeping staff up to date.
• Increased chances of retaining talent in the company. Savings can also translate into opportunities to design new policies that prioritise talent retention.

Discover all the possibilities that Edenred offers companies to enable them to to carry out efficient cost control. Request information without obligation.