The act of monitoring business expenses is easy. Even a 10-year-old could do it. All you have to do is look at how much you spend on a regular basis. But that's not what this article is about. This article is about how to quickly and easily monitor your expenses. Because no one is in the business of merely monitoring their expenses. Rather -- all business owners should be paying attention to the important things. This article will help you get your expense tracking under control so you can worry about more important things.
Stick to a Schedule
It can be very difficult to keep track of expenses if you're constantly having to approve/disapprove things. When evaluating expenses gets in the way of your critical path for the day, you're likely to make mistakes. Instead, set a time aside each week to plan out expenses. This will also help keep you from making knee-jerk reactions. Sometimes people approve/disapprove expenses just to get them off their desk.
It's important as well to make sure money leaves your accounts on certain days. Rather than just letting things come and go, keep a consistent schedule. This is especially important for freelancers who like to pay on the date on the receipt even though it's distracting to do so.
Invoice Using Just One Service
How does your invoicing process look? QuickBooks is fantastic but it's likely overkill if you're a freelancer or even for many small business owners. There are other services out there for free or a much lower cost than QuickBooks. For instance, Due.com has its own online invoicing software you can use for free.
Invoicing via just one service will keep you to quickly and easily analyze your expenses. When this cannot done, pull open all of your accounting tools at the same time. Figure out a way to integrate them even if it's manually via Excel or a similar tool.
Using just one tool also makes invoicing customers must, must faster. There's also less of a chance to make mistakes. The last thing you want to do is to have to revise invoices. Though I suppose even worse would be accidentally charging a client too much because you were too distracted bouncing from one invoicing product to the other.
Make It Automatic
Make as much as this automatic as possible. This includes principles. That is, how much money do you want to put back into your business? Many people use a percent. If you want aggressive growth, put a number such as 50% back into the business. This way, you know how much you can responsible reinvest. It's never a matter of wondering if you should put an extra $1,000 into a project this month - it's a matter of reaching that percentage that is your goal. Setting a goal like this is also helpful because it forces you to keep expanding. As you become more profitable, you'll need to think of new ways to reinvest into the business. Perhaps this much it's expanding the blog. Next month it may be sending gift baskets to your most profitable clients.
Don't Focus Too Much on Expenses
I've know a few websites who went down many times during peak traffic times before they finally upgraded to decent servers. Sure they saved money on hosting but they actually suffered a net loss. That's because they lost so much profit because every time their site was featured in a prominent publication, the site would crash. Saving money is pretty useless if you're not making any to save.
How to Quickly and Easily Monitor Your Business Expenses was originally published on Payments blog by Will Lipovsky.