Most likely, you did not found your startup out of a burning passion for bookkeeping. However, there’s tremendous value in having your inner financial workings sorted out properly on every stage of your journey:
As you’re bootstrapping through your very early days you want to make sure to NOT miss the point where your adventure consumes too much of your personal resources.
Once your team grows and external investors demand accountability it is even more important to operate a proper system to process, pay, and audit employee-initiated expenses.
As so often, it’s about timing: When should you upgrade from pragmatic spreadsheets to a more sophisticated solution? Our friends at finway (a b2venture portfolio company) share these time wasters indicating that it’s time to up your Expense Management game:
- Searching for missing invoices
- Reminding employees to submit invoices
- Manual matching of transactions and invoices
- Invoice approval by e-mail or on paper
- Manual preparation and execution of payments
- A single corporate credit card for everything
- Reconciliation between budgets and expenses via spreadsheets
Implementing an expense management system comes with a couple of dimensions:
- Who: While you might be your own CFO at the very beginning it pays to get help from professionals early on. This won’t just make your life much easier, it’ll also help to safeguard your cash flow and avoid compliance problems with local tax authorities.
- Establish oversight and simple ways to validate expenses without generating additional paperwork.
- Once your team grows beyond a few dozens you’d also want to get more sophisticated about tracking their spending and reconciling it with the teams budget (see here for more on budgeting)
- Use flexible and secure payment methods, e.g. expense cards tailored to individual staff members.
- How: It’ll most likely be Excel or Google Sheets at the beginning. However, switching to a startup/SME friendly software solution early on makes perfect sense. Having all invoices, subscriptions, approval processes and smart company cards united on one holistic platform will help avoiding the time wasters listed above.
While we have a preference for our portfolio company finway to manage expenses in the most effortless way GetApp offers a comprehensive overview of other Web-based Expense Management Software solutions.
If you want to go a little broader, check out this great overview by Jana Ludwig-Martyushev and Florian Huber: