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The Green Sheet Online Edition

May 22, 2023 • Issue 23:05:02

Make use of modern expense management tools

By Todd Pollak

For many small businesses, the past few years have been extraordinarily difficult. From managing rising expenses due to inflation to preparing for a possible recession, small business owners are balancing many financial considerations.

Successful companies need a steady source of income and cash on hand to manage expenses and make payroll. Unfortunately, many businesses struggle with cash flow issues. According to a US Bank study, 29 percent of small businesses that failed cited cash flow problems as a factor in their failure, and many small businesses are unable to pay vendors, loans, themselves or their employees because of cash flow issues (see https://bit.ly/42v7sHC). Unexpected or untracked expenses Oneof the key sources of the problem: unexpected or untracked expenses. Many businesses end up in a cash flow crunch due to unpredicted bills (such as a costly repair or software upgrade) or they overspend each month due to unrecorded expenses. To avoid these pitfalls, business owners should have a rigorous process in place to track expenses every month and project future expenses that are likely to crop up.

While efficient expense management is critical for any business, it can be especially challenging for companies to manage employee spend. With outdated tracking systems consisting of stale spreadsheets and expense reports, many businesses don’t have a good sense of what employees are spending each month, making it harder for business owners to keep an eye on growing expenses and stay ahead of cash flow problems before they can have dire consequences for the business.

Upgraded payment methods

Many small businesses leverage the latest software for various functions including HR, payroll and CRM, but often expense management tools are hindered by outdated payment methods that are no longer efficient or effective. With modern expense management tools, companies can issue corporate cards for their employees rather than requiring them to pay with a personal account and be reimbursed later.

In addition, companies can provision cards directly into an employee’s digital wallet so they can start spending right away, which is especially helpful during business travel.

Customized programs

Provisioning a tailored card to each employee also eliminates many of the risks inherent in sharing corporate card numbers, including a higher likelihood of incurring unexpected costs, unauthorized expenses and overspending.

Additionally, employees that borrow a card from a manager or another employee may store the card number to use again and again, making it difficult to track expenses and approve each transaction.

Businesses can create highly customized card programs and set spend controls for each card. For instance, they can limit spending to certain employees, certain times, specific merchants or set amounts, reducing potential fraud and gaining visibility into spending.

With these set parameters around spending, companies can have much greater control over their expenses and employee spending habits.

Real-time visibility

Modern expense management tools also provide accounting teams with real-time visibility into spending without waiting until the end of the month to reconcile expense reports. This gives businesses a more accurate look into spend patterns to help guide budget allocations and a more holistic view of a company’s financial situation.

By using expense management tools, small businesses can gain better control over their finances and make more informed decisions about their spending. This can ultimately help them free up time to focus on other important aspects of managing their business like marketing and customer retention, driving growth and revenue for their business. end of article

Todd Pollak, chief revenue officer at Marqeta, is an analytical sales growth and global marketing leader. Marqeta is the world's first modern card issuing platform. Its open API platform allows businesses to instantly issue cards and process payments. You can reach Todd at linkedin.com/in/todd-pollak-991b6.

The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.

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