Getting Business Credit Card Expenses Under Control

Blog / Bookkeeping

Getting Business Credit Card Expenses Under Control

Oftentimes in small businesses and startups, spending is heavily managed through credit cards. From software subscriptions to digital advertising, credit card expenses can quickly accumulate and become a nightmare for the person doing the reconciliation. 

If your company is growing quickly or has an influx of cash, you may find yourself spending freely. But keeping a close eye on these charges is important to maintain a healthy profit margin and manage cash flow. 

If you are noticing unexpected charges or needing to increase your limit, it may be time to dig into how you might reduce your credit card expenses and get spending under control. 

We’ve compiled some tips that you can follow to conquer common problems businesses face in order to get credit card spending under control.

Problem 1: Expenses vary widely and aren't tracked back to a budget

It’s difficult to control expenses if you don’t know what you’re supposed to or allowed to spend. 

Solution: Create a budget

Even if a budget isn’t officially necessary, it’s a good idea to draft one for cash flow purposes. Take your expected costs across all categories and jot those out across the months in the year, leveraging your department managers to fill in gaps. (PS. Here are tips for setting up a proper budget.) 

Through this process, you may also create allowable limits for common expense types and communicate these limits company-wide. For common personal expenses, like travel costs, provide maximum per diems that are worked into the budget to anticipate the charges. For instance, the maximum meal allowance may be set to $25/person/meal.

Problem 2: Spending across the company is lumped together on one card

How many times have you had to send out an email or Slack message to multiple people asking who is responsible for a mystery charge that’s missing a receipt? 

It’s not uncommon for one or two cards to be the central payment source for the business’ various expenses. This can create major headaches when it comes time for the monthly reconciliation if there are frequent one-off charges from across the business and results in needing to chase people for invoices.

Solution: Consider breaking out payment sources by team, vendor, or category.

A common example is Marketing. Typically Marketing has many monthly SaaS subscriptions and advertising expenses, so you may dedicate a credit card that they are responsible for reconciling. This keeps all team expenses in one place and holds the manager accountable for all charges. 

Problem 3: Difficulty allocating expenses to specific clients

If expenses can’t be easily mapped to clients, they also won’t be recovered from the client. 

Solution: Set up a system whereby invoices can be allocated directly to clients.

If you’re not using a receipt tracking software like ReceiptBank, this might be a worthwhile investment. In this case, you can easily consolidate all charges relating to a single client and easily invoice them for the charges. 

Problem 4: Employees are working remote so it's difficult to get physical receipts

If collecting and storing physical receipts is how the company was managing expenses prior to COVID-19, invoice and receipt tracking may be more difficult. 

Solution: Use tools such as Receipt Bank or Expensify for digital receipt submission

Did you know that CRA accepts digital copies of physical receipts and invoices as official records? It’s time to leave the filing cabinets behind and convert your paper receipts into a digital format saved in secure, cloud-based storage. This eliminates the barrier of employees having to be in the office to submit receipts and allows for easy digital submissions.

Problem 5: Surprise employee reimbursement reports

If employees are using their personal cards and submitting months worth of reimbursements in one report, this poses a problem as it’s hard to anticipate the cash outflow when you’re not expecting the expense to come up. It also makes it difficult to accurately closely monthly books when you continue to have charges come up for months past.

Solution: Set time limits for reimbursements to be submitted

This ensures timely submission and reduction of high balances. For example, you can set a policy for all personal expense reports to be submitted by the end of the following month. 

It also helps if expense reports are simple for employees. Cumbersome Excel sheets may be a reason why employees procrastinate. Make it easy for them by considering an app-based solution, like Expensify, that allows employees to take a photo and submit it for reimbursement straight from their phone.  

Another option is to have communal virtual or physical prepaid cards for team activities, coffee meetings, or recognition programs. These can be centrally managed and eliminate the added paperwork and reconciliation that reimbursements require. 

Instill a new spending culture across the company

In addition to these tips, doing regular vendor reviews and getting competitive quotes before signing up are good practices for reducing your costs. 

Setting approval limits based on role type may also reduce unexpected or unapproved spending. 

By instilling good spending and tracking habits throughout the company, you will reap the rewards of having spending under control.

If you need help keeping on top of your credit card reconciliations or paying your bills on time, reach out to learn how we can help. 

Gracia Chua
About Gracia Chua
Gracia Chua is the Marketing Specialist at Enkel Backoffice Solutions, a Vancouver based accounting firm that provides day-to-day bookkeeping services for small to medium-sized businesses and non-profit organizations.