One way to define success for an accounting firm is to be good at helping clients manage their business expenses. Minimizing tax liabilities, maximizing cost-saving opportunities, and reducing unnecessary spending are all essential ways to lessen the negative impact of expenses on your business.
Yet, despite the importance of expenses when it comes to client services for accounting firms, many companies do not effectively manage their own internal expense tracking. If your firm is in this situation, it can put a bottleneck on administrative productivity and have a negative impact on employee engagement. Worst of all, it might add significant costs to your monthly overhead, expenses that could have been avoided with a better system for expense management.
There are a few standard practices that can make your expense tracking much more efficient. Most of these tips aren’t difficult to implement, and many of them will be included by default when you use an accounting practice management software suite.
If you haven’t already, one of the simplest ways to streamline expense tracking is creating a standard form. You shouldn’t be relying on your team members to collect their receipts or write up their expenses by hand from memory. Instead, create a basic template that can be used for all kinds of expenses that are submitted to the company.
This form should include areas that explain the total amount spent, the date, and the category or reason for the expense. It’s also a good idea to include space for someone to write notes about the particular expense in case there’s a longer explanation, or it’s a special case.
Once you’ve got a basic form that allows your team members to record and submit expenses, the next step is getting a better internal handle on all of those expenses. To do this, your accounting department should come up with a way to assign specific expenses to certain client accounts and members of the team.
This simple step makes a huge difference when it comes time to look back at the previous month's or quarter’s expense reports and analyze their patterns. For example, you may notice that a certain client is requiring a lot more in-person meetings, leading to elevated travel costs for you and/or your staff. On the other hand, a well-categorized expense report could also reveal that specific team members may be spending too much on a certain client process or deliverable.
A caveat here: make sure that your method of tracking and categorizing expenses is streamlined with the rest of your process. If it takes too long to figure out which client an expense comes from, this step could actually have a negative effect on the efficiency of your expense reports.
The best way to avoid this is to use practice management software or another method of automated tracking that doesn’t add any more time or effort to the process. Check out this free resource that breaks down the metrics every accountant should be tracking.
There’s no reason your expense policy has to be a hidden secret or shrouded in difficult language or processes that are hard for your team to understand. That’s not to say that you need to be completely transparent with your employees and clients about every part of the process, but people do need to understand the steps that are involved for them to get reimbursed for expenses.
This achieves a few things in your business. First, it makes disputes and questions over expenses much less common because they are easier to solve when the policy is clear and accessible to everyone involved. It can also improve employee engagement when team members know there won’t be a long, drawn-out process for them to get reimbursed for what they spend for business purposes.
At this point, you’ve probably noticed a pattern in these suggestions: automate and streamline everything you possibly can relate to expense reports so that they don’t become an unnecessary burden on your team and your accounting department. If each month you’re finding that you have to take time to investigate different kinds of expenses or you’re having trouble tracking your costs per client or employee, it’s a sign that you should rethink the way you manage internal expenses.
One of the best ways to do this is with a modern accounting practice management software tool that includes an array of features relating to different parts of the accounting firm's operation, including expense management. Software is designed to simplify the parts of our business that are monotonous, even if they aren’t difficult. No matter how you decide to implement the tips above, standardizing your expense forms, categorizing expenses by client and employee, and maintaining an open and transparent expense policy are all ways to make this part of your business less of a distraction from key revenue-generating activities.