A school had many suppliers – water bottles, laundry, househelp, stationery, electricity, and phone bill just to mention some of them and the Financial department also has to deal with dispersing salaries and taxes.
While the fees are deposited to one of the bank accounts, the debit used to happen from another. Not to forget some of the cash that was used and many cheques that were in pending clearance. It was hard to compare each month’s statement and see the revenue generated for some time.
The above scenario can be replicated to any other sector – Coliving space, RWA’s, Enterprises, Small and medium businesses, and even freelancers and solopreneurs.
Any business needs to get clear visibility of its expenses and earnings. And while the earnings we make sure to track, we often forget/miss the expenses.
Without knowing the outflow, you are risking your business health, and hence we bring to you some of the key reasons Why a business needs to track the expenses? How Hylobiz could help businesses in keeping a track of outflow and How Expense tracking could make your life easier.
So let us get started –
Why should I track every business expense?
Here are three reasons for you to start tracking all your business expenses –
To know your financial health
Mr. Narayanan often used to handover Cash as a salary to his staff, issued cheques to his suppliers from a specific bank account. He used to follow/call all his buyers in case of their pending dues and frequently used to check his bank account for credits or invoice payment.
During a personal emergency when he needed some funds, he was “surprised” as the bank account from where debit used to happen was having a low balance. He got quick help from his CA friend, and he was in shock to know that he was not making a profit, the expenses were more than his earnings.
Has he been tracking his expenses daily he could have maintained his financial health by cutting expenses and re-strategizing his business?
So expense tracking helps to know your business’s financial health.
For easy auditing and tax filing
One of the Resident Welfare associations planned to get solar panels fitted in their apartment. They collected money from all residents in this regard, shortlisted a vendor who would be supplying the material and fitting it as well. One could avail tax benefit with Solar panels. With an accelerated depreciation (AD) of just 3 years, your investment in solar gives you direct tax benefits.
With an AD of 40% for Year 1, 40% for Year 2, and 20% for Year 3; the direct tax benefits to be availed within the first 3 years of investment is 12% of the solar power system’s cost, but with a miss and multiple individuals involved in the project, the benefit was missed out.
Another case worth highlighting is of a Solopreneur that puts in his/her money on devices, the internet, stocks, logistics, etc. These all could be claimed under tax benefit. If you are traveling to visit a customer/client, that also can be an expense to be claimed under taxes.
But this all is possible only when you are tracking your expenses.
To conclude, if you are transparent about your inflow and outflow, taxes audits and legal matters could be taken care of.
For simpler reimbursements and compensations
The enterprises, small and medium businesses need to reimburse their employees and also release the payouts. As an employer, your need is to keep the expense tracking accurate, and timely dispersals would mean boosting employee morale.
If your payouts are handled in a planned manner, you can also take the benefits of showcasing the business deductions as an expense.
In short, all the payouts and reimbursement if following a process would help you keeping track and availing benefits.
How Hylobiz Helps in Automating Expense Tracking and Management?
Use Hylobiz Dashboard to keep track of all payouts and pay-in – Access your Financial Health
With Hylobiz powerful Dashboard you can view your business health that includes –
- Transaction History
- Payouts and reimbursements
- Vendor payments
- Bill Payments
- Taxes and benefits
Integrate Your ERP’s, bank accounts and keep a tab on your financial health
Access your ERP with our pre-integrated ERP list with Hylobiz or just upload your invoice file to kick start your digital collections with a simple two-step process.
With all your business banking accounts integrated, Hylobiz helps you with automated reconciliations of your banking transactions. All your receivables and payables are consolidated and updated in a single report with a Unique Payment Identity Number.
If you want to know if Hylobiz and your company can be a perfect match, schedule a free demo today.