Managing corporate expenses is fundamental to the smooth running of a company, as it helps to control and optimise costs.
One effective way to achieve this is by categorising expenses, thus obtaining a clear and orderly view of where money is being spent. In this article, we will explain how to categorise your business expenses and how this can help you manage them.
What are the expense categories?
Keeping efficient control of business expenses is key to maintaining good financial health. Categorising expenses is one of the best ways to get a clear view of your money and identify savings opportunities.
Expense categories are pre-defined groups into which a company’s expenses are categorised, allowing for informed decisions on expense management. Some common expense categories include mileage, per diems, tickets, transportation, accommodation or others.
Benefits of expense categories:
- They make it easier to track and control expenses.
- Help identify areas where the most money is being spent.
- Allow comparisons and analysis between periods and departments.
- Budgeting and improved decision making.
Most common expense categories
It is important to keep a record of the kilometres travelled by employees whether they use their own vehicle or a company car. This includes all expenses related to the use of the vehicle for business travel, such as fuel, tolls, parking, maintenance, repairs and insurance. This way the associated expenses are accounted for and the corresponding taxes can be deducted.
Per diems are expenses incurred during business travel and by categorising them, limits can be set. It includes living expenses during travel, both domestic and international.
Transport tickets are expenses incurred for the transfer of employees and includes both public and private transport costs necessary to perform the work: planes, trains, buses, taxis or rental cars.
Accommodation expenses are necessary during business travel and includes hotels or flats for business travel.
The “other” category is used for those expenses that cannot be classified in the predefined categories and is useful to control expenses that do not fit the other criteria such as office supplies, supplies, training or subscriptions.
Tips for labelling expenditure categories:
- Be specific: make sure to create specific expense categories to identify the type of expense and its purpose to make it easier to track and analyse.
- Simplify: Strike a balance between specificity and simplicity, so as not to confuse users with too many expense categories.
- Consistency: maintain the same structure of expenditure categories over time to ensure consistency.
- Flexibility: allow the option to create new expense categories according to users’ specific needs.
Control and categorise your corporate expenses with XPENDOR
XPENDOR is a corporate expense management application that allows you to categorise expenses efficiently and easily. Some of the expense categories offered are mileage, per diems, accommodation, tickets, transport and others.
XPENDOR is a complete and efficient solution for corporate expense management, which allows companies to have greater control and visibility over their expenses, reducing the risk of fraud and improving decision making.
Want to know more? Contact us below and find out more about our corporate travel and expense report management software.