By Marcus Leach
A survey of over 400 owners of small to medium sized businesses (SMBs) reveals that despite the current economic climate, one in five don’t know how much money they pay out in expenses every month.
The research also shows that almost 40 percent are ‘not confident’ that their expense records allow them to claim for the tax reductions they are entitled to, suggesting some SMBs are missing out on significant potential rebates in a tough economic climate.
According to the study, carried out by Concur, almost 40 percent also admit that only their accountant knows how much is expensed to the business on a monthly basis. A further third (32 percent) say they ‘only have a rough idea’ of the amount they are paying back to employees.
While over half (58.2) percent of public sector employees indicated they would never consider submitting a false claim, only 12.2 percent said they have never done it because they knew they wouldn’t get away with it. Taken together, these findings expose a significant lack of insight into an important financial process.
For any business, a complete lack of visibility over expense reporting means that employees could be submitting false or inflated claims, or making claims outside company policy. Even SMB owners who retain an accountant to manage the process, could still miss out on identifying patterns in expense claims which could help them streamline processes or identify potential cost inefficiencies.
“SMBs shouldn’t rely solely on their accountant, as they typically only have a limited amount of insight into the business itself," Isabel Montesdeoca, VP at Concur said.
"Increased transparency of expenses allows businesses to put automatic regulations into place depending on their policies, spot trends in claims and keep taxes in order. If you know you are paying out £500 a month in catering to one supplier, you can negotiate a ten percent discount.
“More visibility of claimed and approved expenses can be achieved through web-based reporting and tracking tools. Much like keeping an eye on personal bank accounts with online banking, SMB owners should get into the habit of checking expenses so they don’t lose out.”
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