If you’re a high-net-worth individual, you’re all too familiar with wealth management and trust services solutions and how you can use them in your personal life – but what about for your business?
If you’re starting a new business, acquiring a business, or just want to fine-tune how your organization runs, a wealth management solution like spend management can save money.
What is spend management – and more importantly, how can you use it for your business? Keep reading to find out.
What Is Spend Management?
Spend management is a set of practices that helps your business track and manage funds. This includes where your money is going, and why. Spend management is also called spend control.
Spend Management Tools
Spend management is important to any organization, but previously it was a time-consuming and labor-intensive process. However, there are now digital tools that can get the job done much faster and easier. This software can help, for example, by allowing you to see your outgoing money in real-time.
Aside from software, companies often rely on other spend management tools.
Business credit cards can be convenient, and the line of credit on these cards can be higher than a personal credit card. They also offer a revolving line of credit, meaning that as you pay the credit down you may get more credit to spend.
They also offer the traditional perks of a personal credit card. They can help build credit, be used for online purchases, and some offer rewards.
However, the interest rate can be high. Like any credit card, there is the potential for fraud and security issues. Finally, you need to establish a policy for who gets a company card, and how they should use it.
Petty cash is money kept on hand for small business purchases. Depending on the size of an organization, each department could have its own petty cash fund.
Petty cash is quick, convenient, and easy to understand. The downside is that petty cash is extremely vulnerable to theft or misuse. It also only allows for small purchases.
Expense claims are when employees submit claims for purchases made out of pocket, in an effort to get reimbursed. Much like using a company credit card, you need to have a policy in place for what criteria are needed for an expense to be considered a business expense.
Usually, the three requirements are:
- It must have been a work-related expense (i.e. hotel accommodation for a work trip)
- Employees must keep and provide receipts as proof of purchase
- Expenses must be submitted shortly after the expense (i.e. the week after a work trip)
However, managing expense claims can be tricky for both the employee and the employer. An unclear policy for how to submit an expense claim can frustrate employees. Sometimes costs are small and inexpensive, which means they can easily be forgotten about.
Processing employee claims can be time-consuming, especially if the employee is missing information about their claims. Claims can also arrive at any time of the year, and employees want immediate reimbursement.
Choose Wealth Management Solutions for Your Business
Spend management is the answer for wealth management solutions. A business that is clueless about where its money is going is in a lot of trouble. If you’re not practicing spend management, it’s not too late to get started.
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