Positive cash flow is essential for every company or startup to sustain profitable growth. A business can maintain a positive cash flow situation only by tracking both operating and non-operating expenses regularly. The best expense tracking software makes it easier for small businesses and startups to record and track various expenses without investing extra time and resources.

In addition to simplifying the recording and categorization of expenses, the software eliminates human errors and facilitates real-time expense monitoring. You have the option to choose from a wide range of expense tracking solutions for your business. These solutions can be divided broadly into two categories – on-premise and cloud.

Unlike on-premise solutions, cloud-based expense tracking tools do not escalate infrastructural overheads. Also, both onsite and remote employees can access the cloud-based software over the internet across locations. It is always important to evaluate an expense tracking solution based on its user interfaces (UI) and user experience (UX). But you must consider some of its key features or functionalities to choose the best expense management software for small business.

11 of the Important Features Provided by the Best Expense Tracking Software

1. Expense Policy Enforcement

Your organizational expense policies will help employees differentiate between reimbursable and non-reimbursable expenses. But you can reduce the number of expense claims submitted by employees when the software rejects out-of-policy expenses incurred by employees. Hence, you need an expense tracking solution that allows you to implement organizational policies, detect policy violations, and flags out-of-policy expenses.

2. Approval Workflow

In addition to defining non-reimbursable expenses, your organizational policies must allow employees to incur specific expenses after getting approval from concerned authorities. You can make it easier for employees to get approvals when the expense tracking solution allows you to define a multi-level approval workflow. At the same time, you need to ensure that an employee can send the approval request to the appropriate authority using expense management software.

3. Expense Categorization

In addition to differentiating expenses, categorization helps your business analyze expenditure data and make informed financial decisions. You can track various types of business expenses

accurately by creating custom categories like project expenses, client expenses, and one-time expenses. Hence, your organization needs an expense management solution that allows you to create custom categories based on specific needs and rules.

4. Automated Expense Reporting

The expense tracking software streamlines expense tracking and processing by eliminating paperwork. It enables employees to submit digital expense reports instead of paper-based expense reports. But you need to opt for software employees can use to generate automated expense reports. It is also advisable to choose software that generates expense reports automatically by capturing information from receipts scanned by users. These features are essential to streamline the entire process by initiating automated expense reporting.

5. Receipt and Invoice Management

Your finance team will need receipts and invoices while reviewing automated expense reports. Likewise, they have to store the receipts properly for audit and compliance purposes. Hence, you need expense tracking software that digitizes receipts and stores the digital receipts securely. The feature will make it easier for the approver and auditors to access receipts almost instantly.

6. Digital Audit Trials

You must conduct expense audits regularly to ensure policy compliance, detect unnecessary expenses, and prevent expense fraud. The best expense tracking solutions facilitate regular expense audits by creating digital audit trials. They capture the comments posted by approvers while approving or rejecting expense claims. Hence, auditors can easily know why an expense is approved or rejected while revisiting digital expense reports and receipts.

7. Real-Time Expense Tracking

The best expense tracking software features dashboards. Also, they allow you to customize the dashboard by providing ready-to-use templates. You can leverage the dashboard to see and monitor various expenses in real-time. The feature will help you differentiate between paid expenses and outstanding expenses. Also, you can analyze spending patterns by generating graphs and evaluating recurring costs based on specific expense categories.

8. Custom Report Generation

In addition to increasing spend visibility, the dashboard creates opportunities for you to create custom reports in minutes based on real-time expense data. You can generate custom reports to compare different categories of expenses. Likewise, you can track expenses across departments, projects, vendors, and employees by generating reports using the appropriate parameter. These reports will make it easier for you to make informed decisions by detecting expense trends and patterns.

9. Data Analytics

The expense tracking software will unify and store expense data in a centralized location. But it can analyze the data and find meaningful patterns only using data analytics. Hence, you should prioritize expense management solutions featuring built-in data analytics. The feature will help you make informed financial decisions by making sense of a large amount of expense data. Also, you can use the data-driven insights provided by the software to ensure policy compliance, prevent expense fraud, make budget forecasting, and monitor expense trends.

10. Data Security

The expense tracking software will store sensitive financial data of your business. In addition to storing expense reports and receipts, it will unify expense data from various departments. The software can protect sensitive financial data using encryption technologies, implementing multi-factor authentication, and supporting access restrictions. Hence, you should check how expense management software for small business eliminates emerging security risks.

11. Third-Party Integrations

Your organization can extend the software’s core functionality by integrating it with existing financial solutions like accounting software and payment processing solutions. The cloud-based expense tracking solutions can be integrated with existing enterprise systems using application programming interfaces (APIs). But you need to ensure seamless data transfer and sharing between these software solutions after the integration.

Final Words

The right expense tracking software will help your organization record and track business expenses regularly and accurately. But you can simplify expense management only when your employees can access the software seamlessly on computers and mobile devices. Likewise, you need to ensure that the expense management software for small business provides the features required by your organization to automate a complex and multi-step business process fully.