12 January 2022

Control of company expenses

La 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:

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 expenses

Análisis completo de CHow much, how, and where money is spent using a top-down approach, i.e, Starting from global expenses, it progressively descends to the more specific ones. This information is key to being able to differentiate between essential and superfluous expenses.

2. Employee Profile Analysis

The next step is to understand what types 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 manage expense control in a more efficient, fast and accurate way. New mobile technologies, the widespread use of the internet and the development of cloud computing allow these tools to be very easily integrated into the company.

4. Definition of each employee's usage profile

Once the company expenses have been analysed, our staff's expenses studied, and the system that allows for expense management implemented, it is time to create employee usage profiles. In these profiles, it will be possible to define the type of expense, time slots, balances, etc. Furthermore, we will have the necessary information to move on to the next step, monitoring.

5. Monitoring

The final step of the process involves monitoring expenses so they can be adjusted if necessary. To optimise our resources, we will need to be able to keep all our expenses under control and implement an efficient system to make our company more competitive.

Digitalisation of company expense control

La digitalisation of expense control offers multiple advantages, including the savings it implies regarding management and storage, to the saving of time and money invested in these activities.

A digital invoice or receipt is a document with the same legal validity as a physical document on paper. Therefore, 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. Digital documents must be in PDF, TIFF, JPEG, PNG, ISO19005 format, or any other format 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 said file must also be approved.
Digital signature of the document. It should be included in the digital document in question.

La digitalisation of the expenses management process offers us a series of advantages over the physical or analogue management of this type of documentation. Some of the most notable advantages include 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 manual management of this type of documentation.
Saving money. Much cheaper and more economical system.
Immediate location. This allows for the immediate localisation of any expense document, as the search is performed automatically on the computer.
Reduction in accounting tasks. By using digital expense management, many tasks are automated, minimising associated accounting tasks.
Makes expense note management easier. It constitutes a much simpler, easier and more convenient method to use.
It suits the offshoring of companies. As it does not require a physical space to access the document, it adapts perfectly to the de-localisation of companies. Furthermore, this type of expense management is perfectly suited to the needs of remote working.
Saving paper. This is a more ecological and environmentally friendly system, as it does not require the use of paper for the holding of 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 it is not known when invoices, business loan payments or credit card payments are due, there may not be sufficient cash available. It is therefore necessary to record when payments are due and schedule reminders.
Control spending. Knowing how much the company spends per day, week, or month. Without this information, unnecessary bills could accumulate, excessive spending could be generated, or funds could be misused. It becomes essential to centralise management to avoid oversights and surprises.
Don't forget accounts receivable. If we offer credit to customers, we must take into account that we may not receive payment for goods sold or services rendered until the due date or later.
Programming of purchases. To avoid periods of low cash flow, it's always worthwhile to plan purchases as much as possible. The key is not to make unnecessary purchases until invoices 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, attempt to increase revenue by resorting to promotions, and maintain a cash reserve. These are also measures that improve results in expense management.

Benefits of cost control in business

The The primary and most important benefit of expense control is saving.. Increasing the capacity for expense control within the organisation 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 that will improve our position against our competitors.
More resources to hand for staff training. Investing in training is key to ensuring staff remain 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.