- Expenses are recorded instantly and accurately in an automated process so that clients are billed appropriately and budgets can be accurately created and tracked
- CFOs can easily analyze spending habits recorded in one digital location and make data-based recommendations for cost control
- CEOs can turn these insights into actionable plans for the company’s present and future direction
- Time previously spent on logging expenses in spreadsheets can be reallocated to billable work
- Job satisfaction among employees goes up as they’re reimbursed more quickly
- Digitization eliminates the need for physical storage of paper receipts, potentially reducing storage overheads
- Why expense tracking software is a necessity
- That the ROI is high enough
- What kind of software will support your professional services organization the most competently
Why do you need automated expense tracking software?A paper and spreadsheet expense tracking system is error-prone. Lost and forgotten receipts can’t be billed to clients or accounted for in budgets, weakening cash flow and profits. Manually executed spreadsheets are far from immune to miscalculation. Compounding these issues is the time-consuming data entry that wastes hours of potentially billable time for staff, project management and accounting. If you’re still wondering whether you can do without expense tracking software, know that instituting new policies and guidelines alone will not garner long-term results. Observance will eventually grow lax if you haven’t made business expense tracking a no-brainer for people via automation. Adopting the software in combination with your organization’s financial policies is still the most effective way to address expense-related money loss and make it easy for everyone to follow regulations.
Essentially, you’re looking for software that smooths every aspect of the expense tracking lifecycle, from recording receipts to charging those project costs to clients. Simple, fast and seamless.
In services firms, the expense tracking software that tightens up costs the most effectively integrates fully with projects and billing.
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Challenges of expense trackingThe major challenge with receipt tracking in any company continues to be getting people to actually do it, particularly when they’re using corporate credit cards. Historically, recording expenses has been a tedious process that involves opening a spreadsheet, looking up cost codes and logging expenses one at a time. It typically happens at the last minute as the monthly deadline approaches. Sometimes not at all. The point is, it’s a major hassle–and humans are programmed by nature to avoid hassle at any cost. Research shows that the difficulty level of a situation actually affects our perception and judgment of it. Consequently, people will opt for the easier of two paths because their brains register it as the most viable option. If someone has a company card they can swipe and forget about instead of carting around receipts and spending hours logging them later, they’ll do it. So, to compete with this simpler pathway, business expense tracking needs to be quick, easy and relatively instantaneous. Automated expense tracking software accomplishes this by allowing staff to snap a picture of a receipt with their phones and record it instantly. They can select an expense category, add a description for Accounting and send it on its way for verification, smoothing the approval process and ensuring faster reimbursement. The experience is better for everyone involved, and the result is that expenses don’t get lost or sidelined.
Who should adopt automated expense tracking software?The need for automated expense tracking increases with the size of the business. Larger and multinational companies with hundreds to thousands of employees are at particular risk of losing tons of cash from multiple leakage points as larger numbers of staff incur travel, material and client entertainment expenses. These businesses simply don’t have the time and capability to micromanage the way expenses are recorded, tracked and reimbursed. Truth be told, there has never been greater need for expense tracking software to cut costs wherever possible than in this current age of threatened business stability. In a recent Gartner survey, 62 percent of CFOs reported plans to make SG&A budget cuts by 10 percent or more this year to offset the impacts of Coronavirus. Dwindling revenue projections have spurred major staff reductions across industries–something services businesses, whose sole source of revenue generation is their staff, may have to think twice about. Budget cuts are one part of the equation. Solutions that permanently seal up money leaks inside of the company should also be implemented. Where manual expense tracking is losing the business money due to reporting errors and omissions, expense tracking software is a necessity for long-term financial security.
What’s the ROI for expense tracking software?You’ve probably already surmised that expense tracking software delivers a significant return on investment.
Then there are the money-saving efficiencies. How much is your staff’s time worth? Every hour employees spend doing billable work instead of creating cost reports increases your return on investment. Consider how much your managers’ and CEO’s time is worth–they’ll need to deal with the spreadsheets, too, instead of attending to other responsibilities that impact the company’s health. Add to these gains the ability to make data-driven financial decisions based on better tracking and easily accessible expense data in one location. CFOs are in a better position to determine whether they need to reallocate department budgets or more sharply define expense policies. As poor expense practices are revealed and better policies are instituted in response, ROI increases exponentially.
Your company will recoup lost dollars thanks to properly recorded project expenses.
Do you need PSA software to track expenses?Since services firms really require that expense tracking software hook into the project and billing sides of business, the most viable option is comprehensive professional services automation (PSA) software. PSA solutions centralize and integrate expense tracking with your daily business operations, including project management and invoicing. This way, expense tracking becomes a natural part of your organization’s workflow and the flows between the business, staff and clients. VOGSY can provide an apt example of travel expense tracking. Let’s say Brian, an account manager for a client your company has a current project deal with, incurs a travel expense during his fulfilment of chargeable work: a taxi receipt. After the ride, Brian opens VOGSY on his phone and adds a “travel” expense as predefined by you to ensure that only legitimate expenses are charged to projects. He adds a description, snaps a photo of the receipt and uploads it to the appropriate project deliverable to await approval as a project cost. Brian’s completely done in about a minute or less. Now VOGSY will update project financials automatically, such as budget (if applicable), amounts invoiced and DSO and also create an accounts payable record in your integrated accounting software, enabling Accounting to effect payment to Brian. When it comes time to invoice, the expense will be automatically added to a prepopulated invoice. Expenses are completely transparent and the flow between your organization, employees and clients is smooth and efficient. A similar scenario for expenses that you cannot charge through to the client under a fixed price project: Brian will perform his steps as normal. However, VOGSY will determine that whilst the cost is associated with the project, it cannot be charged to the client. The effect of the expense on the project margin is automatically calculated and visible on VOGSY’s margin tracker.
What is the best expense tracking software for larger businesses?If your services business juggles dozens of projects at the same time, you’re likely going to want an ERP-based PSA. For one thing, it’s going to give you the most bang for your buck because for one price point, you’ll be able to run your business operations through a highly scalable all-in-one system. But it’s also about efficiency, the need for which increases alongside company growth. Though most PSA software integrates everyday operations, including project planning, time and expense tracking and budget planning, many PSA solutions are specialized in one area and simply add on features. As a result, these additional features offer limited functionality and data. For instance, a task management PSA is great at managing tasks, but its extra features–including expense tracking–are typically clunkier (i.e., less user-friendly) and limited in their capacity to provide usable insights. ERP-based PSAs, on the other hand, are built to streamline all operations in one data-centric system, including resource planning, project management, customer relationship management (CRM), expenses, billing and reporting. Note, however, that if you choose one of these software solutions, it should be user-friendly (not all ERP options are) for maximum adoption.
In VOGSY (an ERP-based PSA), for instance, you’ll have:
The biggest advantage of an ERP PSA for the CFO is that it marries expense and project cost tracking with granular project, company and employee data together in real time. CFOs don’t have to go anywhere else–or wait on anyone else–to analyze the company’s financial position from a holistic view and devise targeted cost control strategies.
- Access to real-time project health with budget and margin data and track company health with out-of-the-box charts and reports for revenue forecasting, employee utilization, billability and financial KPIs
- Unified Sales, Project Delivery and Accounting so that all interactions remain in one place for easy documentation and reference during tax time and annual budget talks
- Software that’s a breeze to learn and work with as VOGSY integrates with Google Workspace and utilizes Google design principles–we’ve even heard clients call it “fun to use.”