It’s tempting to think of many business expenses as an investment: You buy a tool and use it to create a valuable product or service, and it generates revenue. But a whole lot tends to happen between that initial purchase and your return on the investment. Tracking business expenses is the best way to gain an accurate understanding of the total costs and really know whether you’re making money or not.
When it comes to computer hardware and software, for example, the total costs can far exceed the initial purchase price, according to an article on the CFO Magazine website. Say you’ve decided to set up a data center, and the hardware is going to cost you $2.1 million. But this upfront amount represents a tiny fraction of the true cost over time. According to the article, managing that data center’s security, availability, and performance would amount to more than $4.2 million — every year.
Whether you’re assessing the long-term value of an IT initiative or business travel, you need to review past expenses and compare them to current spending. Fortunately, today’s cloud-based services make tracking business expenses easier than ever. Expense report software, combined with robust analytics, helps managers balance the big picture against the details, keeping day-to-day operations running smoothly. Using an analytics system, executives can track global and departmental spending or drill down into the fine details, generating extensive custom reports to support effective decision-making.
Robust, easy-to-use analytics are the key to understanding the true cost of a business expense, not just its initial purchase price. That’s how you determine that the first five years of your data center would represent an investment of $23.1 million, not the $2.1 million you originally thought. If you still decide to build it, it might be the right decision for your business. Nothing ventured, nothing gained, right? Just be sure to know what you’re really spending.
How does your business go about tracking business expenses? What technology tools have made the process easier? Share your thoughts in the comments section below!
Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.