Real-Time Reporting

Streamlined Accounting Reporting: Techniques and Solutions for Success

These new techniques can reshape how you manage your company's cash flow.
Written by:
Cody Nelson

Have you ever asked how you can make your business accounting more efficient?

Accounting plays a crucial role within a business’s financial health and well-being. According to GoRemotely, roughly 60% of small business owners feel they aren’t knowledgeable when it comes to handling their accounting. Small business owners typically run their company’s respective financial cash flow; however, some may hire specific employees to run their accounting business report processes.

The overall accounting reports process boils down to two elements: monitoring all transactions and analyzing/reporting these transactions to oversight regulators (separate agencies such as the IRS). This process requires strict following of both your accounts receivable and accounts payable in order to assure your business is ultimately sustaining profitability.

Given the significant role accounting plays in a company’s “health”, it’s crucial to have a strong confidence and understanding of how to best streamline your bookkeeping. Having the right reporting infrastructure in your accounting will ultimately help you maintain accuracy and peace-of-mind; doing so, also, starts with reshaping your point-of-spend payment methods.

Traditional Expense Payment Methods

Before diving into the reporting side of bookkeeping, it’s important to know how companies today are utilizing traditional payment methods. When it comes to expenses, there’s no true “one-size-fits-all” spend method amongst different industries; there are, however, a few more commonly used methods when purchasing supplies: 

Employee reimbursement method:

This is one of the most common forms of expense management across different industries. This is where employees will simply pay out-of-pocket from their personal funds to later be reimbursed (paid back) by their company. Companies accustomed to this payment method usually have credit cards  on-hand, but only for high decision-making executives (typically because most feel they’re the most trustworthy). 

Singular credit card sharing method:

Smaller companies typically use this method amongst their staff; employees who need to pay for supplies will simply pass a singular credit card amongst each other on a need-to basis.

Cash stipends/per diem method: 

Some companies- a lot of the time in construction- prefer to hand out cash “allowances” to their employees so they can spend it on job supplies. At the discretion of their company, employees usually will use the leftover cash as they see fit.  

Petty cash method:

Companies, sometimes with multiple locations, have a set amount of cash on-hand for employees to use if/when they need to purchase supplies.

Modern Methods of Expense Management Tactics and Reporting

Each payment method coincides with different expense management tactics and reporting on the back end (post-payment). Here are some financial reporting best practices and methods finance departments traditionally use to handle expenses:

Receipt collection and/or expense reports:

Accountants typically collect receipts after transactions to assure the company’s accounts payable assets directly match the amount an employee paid out-of-pocket, with a company credit card, or with petty cash. Sometimes, these receipts are attached to expense reports or scanned in and sent digitally via email from employees to their respective finance departments. If employees need reimbursement, accountants will write checks in the same amount payable as the receipt shows; the receipts then get physically or digitally filed away for later reference.  

Manual categorization:

Bookkeepers will classify transactions based on certain characteristics that coincide with transaction categories. This is usually done in a third-party accounting system, mainly to keep them organized for later reference. 

Bank statements: 

Finance departments utilize bank statements to verify the transaction amounts they’re given receipts for, usually when employees use company credit cards. 

Third-party accounting systems:

These software-based systems are most used by accountants for importing/entering transaction information to categorize transactions and balance their cash flow. 

The Problems with Traditional Expense Management and Bookkeeping

If many companies today use these methods, what problems can they cause? While many of the traditional reconciliation methods can be time-consuming (like collecting physical receipts or manual reconciliation), the biggest reporting obstacles occur directly after purchase. Each payment method, individually, comes with its own set of challenges:

  • Employee reimbursement- employees can easily lose receipts or forget to submit expense reports. It’s also a tedious process to physically collect every receipt
  • Credit card sharing- if you have multiple employees making purchases, it’s both inefficient and impractical to have employees share cards. They also become dependent on each other to buy their own supplies, and moving cards physically from person to person increases the chances of them being misplaced. There’s also no way for admins to get an accurate, real-time view of which employee spent which amount unless you rely more on end-of-month bank statements.
  • Cash stipends/per diems- anytime cash is carried around, there’s always a risk of losing it. While most companies who use per diems don’t usually track each transaction, there’s no way to get funds quickly to an employee if supply purchases exceed their allotted amount; then they must pay out-of-pocket, giving accountants more work to do in the reimbursement and reconciliation process.
  • Petty cash- reference the previous point on loose cash, plus you increase the risk of theft as employees or other individuals can simply use this money. Bookkeepers must get physical receipts as there is no bank statement to reference.

While each can present their fair scope of unique challenges, they all have three things in common: little to no real-time transaction visibility, increased risk of losing money (poor protection of cash flow), and increased work in the reconciliation process.

Scaling your Business with Modern Accounting Reporting

The best modern accounting reporting tactics start by reshaping your point-of-sale payment methods. Move away from a cash system, card sharing, or employee reimbursement and consolidate it to (multiple) credit cards. Allow each employee to have one on-hand and implement a spend management solution that will give you more control over each respective employee credit card connected to the same account.

Set up merchant category controls on these cards, where admins can specify exactly what kinds of retailer’s employees can spend; this would eliminate any concerns that cards could be misused. Also, set up spend limits for each card so each employee can only spend up to a certain amount out of the master accounts allotted credit limit. The right spend management platform will also allow employees to utilize a smartphone app that tells them how much they can spend on their card, where they can spend, and a way to digitally upload receipts.

These capabilities will allow finance departments to set strict budgets as they manage their accounts receivable turnover. Merchant category controls will also help prevent unnecessary spending and further protect your business cash flow (and your overall bottom line).

The reporting side of these transactions will then give accountants full visibility and control over each transaction. With credit cards tied directly to each transaction, finance employees can use a smartphone app (or desktop) to get a real-time view wherever and whenever employees are using their respective credit card. Modern spend management platforms will allow accountants to click into each transaction to see a digitally corresponding receipt; these transactions will be easily identifiable using search filters with unique characteristics of spend by card name, transaction type, transaction amount, and many others. As employees spend, modern software solutions will also give you real-time insight on spending trends by category, amount, and timeframe. This allows financial departments to make decisions faster on where they can cut spending, increase spending, or further optimize their cash flow.

A new point-of-sale spend method, coupled with fast and accurate transaction reporting will save time, money, and effort altogether.

Older Accounting Tactics vs Modern Accounting Tactics with U.S. Bank Spend Management

Companies today can equip their finance departments to have accurate and efficient bookkeeping processes. Part of doing this is knowing exactly where you can adapt your current methods, and why adapting them would be significant to your workflow.

After reviewing some older accounting reporting tactics, you can begin to understand how modern accounting solutions can provide a more streamlined approach and protect your company’s bottom line in a side-by-side comparison. More specifically, implementing financial accounting best practices and the right kind of software solution. Here’s what a modern accounting approach could look like with U.S. Bank Spend Management (compared to how you may be doing things):

Physical receipt collection vs digital receipt capture:

Physical receipt collection requires employees to submit receipts to their finance department if they pay for out-of-pocket expenses, use petty cash, or use a company credit card. With physical receipt/expense report collection, accountants go through these one-by-one to make sure their accounts payables align with the amounts being spent. This can create a long and time-consuming process.
Digital receipt capture allows employees to simply capture a digital picture of their receipt and upload it into a mobile app or ecosystem. Admins can view these submissions in real-time simply by logging into the ecosystem dashboard. The digital receipt is uploaded into its respective transaction so the matching process is already done, eliminating the need for physical collection, and doing away with time-consuming matching processes.

End-of-month bank statements vs real-time transaction tracking:

Using end-of-month bank statements means accountants are waiting to manually sift through a report to match and verify transaction amounts using a company credit card. Not only can this process also be time-consuming, it can be riskier when assessing your spending.
Real-time transaction tracking will give accountants the ability to track transactions as they happen-from every direction-along with the merchant category of spend they were in. This live reporting view will also give admins the ability to identify transactions quickly, with their respective receipts, using card filters. This is another way accountants will save time and better manage their cash outflow.

Manual Categorization vs auto-categorization: 

as mentioned previously, manually coding, and categorizing transactions can be a time-consuming process. Even if your current accounting reports software allows you to select multiple transactions together, there is an even faster way.
Once a credit card is used, accountants can customize transaction rules that will auto- code transactions with similar characteristics. As that happens, U.S. Bank Spend Management has some auto-sync features that will automatically transfer all transaction details into your third-party accounting software. That would mean the hard part of reconciliation- on top of digital receipt capture- is non-existent.
Other notable features with U.S. Bank Spend Management include:

Third-party accounting systems:

These software-based systems are most used by accountants for importing/entering transaction information to categorize transactions and balance their cash flow. 

The Bottom Line

U.S. Bank Spend Management is a spend management platform that will give finance departments across each industry the confidence and precision they need to manage, optimize, and scale your businesses spending.

The controls and reporting that admins have on this spend management platform can help businesses scale smarter, spend efficiently, reconcile accurately, and ultimately grow their business.