The more you know about your expenses, the more control you can exercise over your business budget—and that’s crucial to a small or midsize enterprise’s (SME’s) long-term success. If you use business credit cards, you may already have a powerful tool for improving expense management.
Cards can be especially useful tools if you segregate business expenses from personal expenses, which improves tracking, helps you more easily answer auditors’ (or IRS) questions, and may help qualify your business for sizable card rewards.
Strong Expense Management Does More Than Save You Money
Expense management obviously means making sure all employees are spending your business budget carefully and honestly. But it also means making sure you don’t waste money on purchases that don’t support your business objectives.
But expense management can also mean identifying patterns that lead to opportunity. For example, you might discover you’re spending more on one category of product than you realized. If so, perhaps you can centralize purchasing in that area, and qualify for a substantial discount. Or maybe you notice unusual payments from one retail location, and discover employees there are responding to a sudden spike in demand for a specific service you offer. You might decide to start promoting that offering at other stores, so you can replicate the first location’s success before competitors notice.
With both “cost-cutting” and “upside opportunities” in mind, let’s look at some of the business card tools and reports you might use to strengthen expense management and build profits.
Make the Most of Account Alerts
Nowadays, most cards offer fraud alerts: the credit card company will immediately text or call you when asked to approve a transaction it suspects might be fraudulent. But some business cards offer additional account alerts you can configure to provide useful and timely expense management information.
Watching individual employee credit card expenses can help you ask better questions as an entrepreneur or manager
For example, you might request a daily account snapshot, or an immediate spend-tracking alert for card purchases exceeding a certain amount. That won’t just help you identify abuse, it can flag payments arising from business problems you hadn’t noticed. For example, do excess unscheduled repairs suggest an emerging problem with your facility or vehicle fleet?
For some business cards, you can request to be notified when you’ve hit a specified spending threshold. If you intend to make a significant purchase before the billing cycle ends, some business cards allow you to check in advance if the purchase is approved.
Use Business Card Mobile Apps
Even if alerts aren’t available to provide expense management information you need quickly, mobile apps often are. Some business credit card providers offer apps for viewing new transactions, making payments, and seeing if outbound or incoming card payments have posted. Often, the same tools allow you to efficiently manage your card relationship—for example, adding or removing authorized cardholders or adjusting their spending limits to accommodate sudden needs or events.
Track Individual Spending by Each Employee
Some business card reporting tools enable you to explore the behavior of individual authorized cardholders, summarize each employee’s spend in each key category, and even drill down to specific transactions.
Exploring your credit card transactions in these ways can help uncover fraud. But it can also help you manage expenses by identifying more modest or inadvertent misuse, such as travel or supply purchases from vendors with whom you haven’t negotiated discounts.
Watching individual employee credit card expenses can help you ask better questions as an entrepreneur or manager. Those questions may show you’re paying close attention to how the company’s business budget is spent—and that can be a good impression to make. But sometimes you’ll notice an expenditure that reveals an employee has provided exceptional customer service—for example, arranging a same-day courier shipment to return a lost wallet to a customer from out of town. You want to know about (and recognize) the positives, too.
Explore Spending Trends Related to Categories and Timing
Modern business credit card expense reports can help you organize expenditures by category so you can identify areas of rising and declining cost, perhaps learning actionable expense management lessons.
If office supplies costs are rising, is that attributable to increased printing? Can you move some documents to electronic-only, replace high-cost printers with lower-cost devices, or print internal documents on economy settings? Are office catering costs slipping out of control? Can more economical menus or caterers be found? Are you beginning to incur significant T&E costs for guests, consultants, and event-related travel? Perhaps it’s time to improve the business budget by considering a business travel account.
In some cases, you can export reports in standard formats and manipulate them even further with QuickBooks, Microsoft Excel, or other business analysis software. For example, you might identify patterns in when you incur higher costs, information that can be used for managing cash flow more effectively.
The Takeaway
Your business credit or charge card may provide expense management tools, resources, and data you can use to drive profits—not just by understanding and reducing costs but also by identifying new opportunities to efficiently grow your business.
Read more articles on managing money.
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The information contained in this article is for generalized informational and educational purposes only and is not designed to substitute for, or replace, a professional opinion about any particular business or situation or judgment about the risks or appropriateness of any financial or business strategy or approach for any specific business or situation. THIS ARTICLE IS NOT A SUBSTITUTE FOR PROFESSIONAL ADVICE. The views and opinions expressed in authored articles on American Express represent the opinion of their author and do not necessarily represent the views, opinions and/or judgments of American Express Company or any of its affiliates, subsidiaries or divisions (including, without limitation, American Express Business Trends & Insights). American Express makes no representation as to, and is not responsible for, the accuracy, timeliness, completeness or reliability of any opinion, advice or statement made in this article.
