How To Keep Track Of Business Expenses as a SME

Tracking your expenses is a vital part of managing any business. It is the foundational component of financial health that can greatly influence your decision-making processes. 

By knowing how to keep track of business expenses, you’re putting yourself in a good place for impactful budgeting and potential tax deductions. That being said, it isn’t always easy getting set up, and there are evidently a lot of key areas you need to consider.

This is why we incorporate a business expense tracker or spreadsheet: to have a detailed look at all your monthly outgoings. Let’s find out how you can get started. 

Why is tracking your business expenses important?

When you understand where every penny is going, you’ll start gaining a real understanding as to where your company could save money. 

You’ll see which costs are essential and which can be reduced or eliminated. It goes without saying that doing this is fundamental for budgeting and planning for future investments. 

It can also safeguard you in case of audits, providing clear evidence of your financial operations.

Use a Business Expense Tracker

A business expense tracker can be as simple as a spreadsheet or a specialised app. These tools can often have automated transaction categorisation and report generation. The more automated you can make/get it, the better!

By adopting a business expense tracker, you’ll be able to oversee all your financial transactions. It will help you understand where your money is going and what areas you could be saving in. 

It helps when tax season rolls around as well. You won’t have to scramble through piles of receipts or try to remember what each purchase was for. Instead, a quick glance at your sheet will include all the details like the date, amount, vendor, and purpose of the expense.

Create a Detailed Business Expenses Spreadsheet

A detailed spreadsheet is a good starting point that will detail exactly what you’re spending on utilities like water, gas, and electricity, among other outgoings.

Once you see everything first hand, you will be more inclined to find ways to drive down these costs like;

Comparing Business Water Rates and Avoiding Overpayments

If your current water bill seems unusually high when you’re tracking business expenses, it might be time to switch business water supplier. Or, at the very least, compare them to other competitors. 

In the UK, businesses aren’t restricted to one water supplier, so you have the flexibility to shop around for better rates and make the switch. By doing this, you’ll be able to find the most cost-effective option for your business needs.

Monitoring Other Utility Costs like Gas & Electricity

Just as you’ve assessed your water costs, you can also keep a watchful eye on gas and electricity. If you notice that your electricity costs surge during certain months, you might be inclined to find out why this has increased and whether it is business activities or inefficient use of equipment.

By keeping this data organised, you can hone in on areas that are unnecessarily draining your budget. This visibility allows you to evaluate alternative providers or negotiate better rates.

Reviewing any Industry Related Subscription Services

By checking up on your industry-related subscription services, you can usually cut back on pesky monthly fees that ultimately add up over time. Many SMEs often subscribe to software, tools, or memberships they no longer use or need. 

By keeping track of these via a business expense tracker, you can identify which ones provide real value and which ones you could do without.

Start Keeping Track of Your Business Expenses

Now that you know how to keep track of business expenses, you can start taking proactive steps towards becoming more aware of your outgoings and making every penny count.

Make it a habit to record expenses as soon as they occur. You will thank yourself in the long run.