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It doesn’t matter how big your company is or how many employees you have, if you provide company-owned vehicles for personal use, you must stay informed about car fuel benefits.

We will give you everything you need to know from what the car fuel benefit is, to the 2024/25 rates and how to report car fuel benefit to HMRC.

Fasten your seatbelts and let’s get started. 

First things first, what is a car fuel benefit?

To put is simply, the car fuel benefit is applicable to UK taxpayers who use their company car for personal use and don’t pay for the fuel themselves. 
 
It’s also worth noting that normal commuting is classed as personal use for company car fuel benefit purposes. 

What are the company cars and vans rates for 2024/25? 

The government announced that it will maintain the van benefit charge as well as the car and van fuel benefit charges at the current level for 2024/25.   

 

Charge	Rate
Van benefit charge	£3,960
Van fuel benefit charge	£757
Car fuel benefit charge multiplier	£27,800

 

What are HMRC’s advisory fuel rates for company cars in 2024?

These are the fuel rates set by HMRC for company cars, starting from 1 March 2024:

Diesel 

Engine size	Diesel — rate per mile
Up to 1600cc	12p
Between 1601cc and 2000cc	14p
Over 2000cc	19p

 Petrol 

Engine size	Petrol — rate per mile	LPG — rate per mile
Up to 1400cc	13p	11p
Between 1401cc and 2000cc	15p	13p
Over 2000cc	24p	21p

 Electric

Electric — rate per mile

9p

 Hybrid

For advisory fuel rates, hybrid cars are considered either petrol or diesel vehicles. 

Do HMRC regularly update their fuel rates? 

HMRC updates the advisory fuel rates quarterly to account for fluctuations in fuel costs. These updates occur on the following dates:

• 1 March 
• 1 June 
• 1 September 
• 1 December 

How to report car fuel benefits to HMRC 

Your reporting options

1. P11D Form:

Submit this form at the end of the tax year, along with other benefits.

2. Payroll:

Process the car fuel benefit through payroll, deducting tax in real time.

Important update

From 2026, payrolling benefits will become mandatory.  
 
This means that if you are currently using P11D forms you should consider switching to payroll processing now to stay ahead of the change. 

Tax and Class 1A National Insurance Contributions on car fuel benefits

Your people must pay tax on any car fuel benefit they receive. The taxable value is calculated using HMRC’s appropriate percentage, which considers the car’s CO2 emissions. Cars with lower emissions are assigned a lower percentage, whereas those with higher emissions receive a higher percentage, varying from 2% to 37%. 
 
Your company also has contributions to make. You’ll need to pay Class 1A National Insurance Contributions on the value of the car fuel benefit provided to your people (currently at a rate of 13.8%). 

What method is used to calculate the fuel rates? 

Here’s a brief explanation of how HMRC calculates their fuel rates: 

1. Mean MPG calculation: HMRC starts by determining the mean miles per gallon (MPG) based on manufacturers’ data. This figure is adjusted to reflect the distribution of specific models sold to businesses.
    
2. Applied MPG adjustment: the mean MPG is then reduced by 15% to account for real-world driving conditions, recognising that actual fuel efficiency is often lower.
    
3. Fuel price data: HMRC sources the petrol prices from the Department for Business, Energy, and Industrial Strategy, while LPG prices are taken from the Automobile Association website.
    
4. Rate calculation: using the adjusted MPG and current fuel prices, HMRC calculates the advisory fuel rates.
    

By doing all this, HMRC ensures that the advisory fuel rates are accurate and reflective of real driving conditions and fuel costs. Here is the calculation breakdown: 

Diesel 

Engine size (cc)	Mean MPG	Fuel price (per litre)	Fuel price (per gallon)	Rate per mile	Advisory fuel rate
Up to 1600	56.7	149.4p	679.0p	12.0p	12p
Between 1601 and 2000	48.0	149.4p	679.0p	14.2p	14p
Over 2000	36.3	149.4p	679.0p	18.7p	19p

 Petrol 

Engine size (cc)	Mean MPG	Fuel price (per litre)	Fuel price (per gallon)	Rate per mile	Advisory fuel rate
Up to 1400	49.5	140.6p	639.0p	12.9p	13p
Between 1401 and 2000	42.1	140.6p	639.0p	15.2p	15p
Over 2000	26.7	140.6p	639.0p	24.0p	24p

 LPG 

Engine size (cc)	Mean MPG	Fuel price (per litre)	Fuel price (per gallon)	Rate per mile	Advisory fuel rate
Up to 1400	39.6	96.5p	438.7p	11.1p	11p
Between 1401 and 2000	33.7	96.5p	438.7p	13p	13p
Over 2000	21.3	96.5p	438.7p	20.6p	21p

 FAQs

Is it worth taking a company car?

Whether an employee should use a company car hinges on how much they drive and spend on fuel. If they rack up a lot of miles and their fuel costs exceed the car’s fuel benefit, it’s a good deal. However, if their fuel expenses are low, they could actually end up paying more with the benefit. 

Choose Capture Expense and manage your company cars and fuel with ease 

Want to see first-hand how our platform streamlines mileage tracking, calculations, and reimbursements, all while ensuring compliance with HMRC’s advisory fuel rates. Book a personalised demo today. 

Cash flow is the lifeblood of any organisation, and it can make or break a company.

However, increasing cash flow can be a challenging task, especially if you have limited resources. 

But don’t worry, you’re in safe hands. We’ve outlined the top 8 ways on how to improve cashflow, regardless of the size of your business. 

8 ways to improve cash flow

1. Do a deep dive into your expenditure

First things first, in order to improve cash flow and plan for the future of your company you need to know exactly how much money you’ve got coming into the business vs. how much you’re spending. 

Start by looking at your income:

Make a list of all your income streams from the previous year in order to detect peaks and seasonal trends (i.e. a boost around the holiday season). This will give you a better understanding of your customers’ spending patterns and which areas of your business are thriving.

Then look at your expenses:

Just like for your income, make a list of all the things you are spending money on such as: employee salaries; office rent; travel and accommodation for the sales team.

Now, for some of these expenses, like employee wages, there’s no wiggle room. But having a clearer picture of all your expenses will help determine where you can cut costs or look for more competitive deals.
 

Finally, compare the two: 

If you find that there are periods during the year when your expenses exceed your income, you can start to question why this is happening. 

2. Increase your prices

It might sound like something you should discuss with your senior management team first (and it definitely is). But even a slight increase to your prices, combined with a small reduction to your costs can go a long way. 
 
Ask yourself: would your clients care? Well, yes, they probably would care if they were told they had to pay more money. But would they care if prices suddenly went up by one or two percent? Probably not.

3. Send out your invoices ASAP

It’s a no brainer really, sending invoices out immediately helps expedite the payment process by encouraging clients to settle their debts promptly.

Make sure your invoices include:

• Clear terms and conditions. 
• The due date in bold at the top and on the payment slip. 
• Instructions for accepted payment methods. 

By immediately sending out accurate, and easy to read invoices, you reduce the risk of late payments and improve cash flow for your business. 

4. Entice your clients to pay sooner

Everyone loves an incentive, and this one’s a win/win for both you and your clients: Offer discounts for early payment. 

Incentivising customers to pay sooner serves multiple benefits. It helps speed up cash flow, providing timely access to funds for both operations and growth. Additionally, it contributes to strengthening your business’s financial position. 

5. Concentrate on building customer loyalty

By focusing on building customer loyalty you can increase retention rates.  
 
You can also ensure more repeat business, maintain a steady cash flow, and turn loyal customers into brand advocates who attract new business. 

6. Invest in your company 

Investing in your own business is crucial for boosting skills, productivity, and overall promotion, which directly impacts cash flow.  
 
While there is an initial cost involved, such investments lead to streamlined operations and improved efficiency. Whether it’s upgrading skills, optimising workflows, or enhancing marketing strategies, the aim is to reduce costs and increase profits.  

7. Improve your inventory

You can increase cash flow by improving your inventory through regular checks to identify “slow-moving items”. 
 
By selling these items at a discount – or discontinuing them entirely – you free up cash tied in inventory and prevent it from jeopardising your cash flow. 

8. Get rid of wasted expenses

Start by asking your employees for input and conduct audits to identify unnecessary costs.  
 
By identifying and cutting out these expenses, you’ll save money that can be redirected towards more productive areas of your business. This will ultimately improve cash flow.

Find more ways to improve cash flow with Capture Expense

We can help reduce your spend up to 44% by saving on costs; improving your spending habits and reducing your risk of expense fraud. 
 
Book a personalised demo today to see Capture Expense in action. 

FAQs

Why is it important to improve cash flow?

By improving your cash flow, you can ensure that your business is here to stay.

You’ll be able to: 

• Invest in new business ventures. 
• Hire more employees.  
• Plan for the future. 
• Meet payroll. 
• And more.

Are there different types of cash flow?

Yes, there are the three primary classifications of cash flow: 

• Cash flow from operations (CFO) 
• Cash flow from investing (CFI) 
• Cash flow from financing (CFF)

These will all appear on the cash flow statement on your company’s financial statements. 

Management accounts offer a window into your business’s financial status, aiding senior management in decision-making and implementation.

This practice holds significant value for all organisations—so regardless of your business size or industry, it facilitates comprehensive insights into past, present, and future financial standing across your entire business.

This article will provide you with an overview of how to prepare management accounts. 

First things first, exactly what are management accounts?

Management accounts, typically generated monthly or quarterly, provide a detailed overview of your company’s financial health. They include key components such as: 

• A balance sheet. 
• A cash flow statement. 
• A brief report. 
• A profit and loss account.

With accurate management reports, you can spot current business trends, address issues regularly, and track your business’s evolution.  

Although they are not a legal necessity and don’t need to be filed with HMRC, they will provide you with greater financial management than ever before and help your company expand.  

Why are management accounts important?

For any business aiming to grow and succeed, management accounts are essential.  
 
By keeping track of your income and spending regularly, you’ll gain valuable insights into your financial health and potential for growth.  
 
Continuous monitoring allows you to make informed decisions and adjust your strategies whenever necessary.  
 
Management accounts go beyond just looking at your bank balance – they take into account factors like upcoming expenses, revenue streams, and market conditions, giving you a full picture of your company’s finances.  
 
Quickly spotting sales trends helps you plan better and seize expansion opportunities, while understanding your profitability margins and trends enables you to make strategic decisions aimed at boosting your net profit.  
 
In short, management accounts provide you with the tools and information you need to thrive and succeed in today’s competitive business world.

How to prepare management accounts

Management accounts are most useful when they contain pertinent facts tailored to your business and are presented in an accessible format for colleagues throughout the company.

Here’s your step-by-step instructions on how to prepare management accounts: 

1. Gather data 

The cornerstone of management accounting rests on the quality and depth of your collected data. Without precise and pertinent data, any subsequent analysis and insights will be distorted.

You should consider:

Source identification: Determine your primary data sources, which may include accounting software, CRM systems, sales platforms, or manual records. Knowing where to extract data ensures crucial information isn’t overlooked.

Time period selection: Decide on the timeframe for which you’re preparing the management accounts. Whether it’s monthly, quarterly or annually, this will dictate the range of data you need to collect.

Data segregation: Categorise your data into sections. For financial data, this could mean segregating revenue, expenses, assets and liabilities. For operational data, segregate sales, production, inventory and customer feedback.

Automation tools: Explore tools and software for automating data gathering, saving time and reducing human error. Integrating different systems ensures seamless data flow and accuracy.

Data validation: Validate the gathered data for any anomalies, such as high expenses in a month or sudden sales spikes, to identify errors that need correction. 

2. Ensure accuracy

Ensuring data accuracy is essential. Inaccurate data can result in misguided decisions, potentially harming your business.

To ensure data accuracy you should employ: 

Cross-verification: Always verify the data collected by comparing it with external sources. For example, ensure that the bank balance in your accounting system matches actual bank statements. 

Reconciliation: Regularly reconcile accounts to identify and resolve any discrepancies. This includes verifying balances with HMRC, suppliers, and other stakeholders.

Audit trails: Maintain clear audit trails to ensure accuracy and trace any discrepancies back to their source. 

3. Produce financial statements

Financial statements form the foundation of management accounts, offering a comprehensive view of your company’s financial well-being.

You should draft a: 

Profit and loss report: This statement provides a comprehensive overview of the company’s revenue, expenses, and overall profitability within a defined period. Accurate categorisation of income and expenses is essential for understanding profit margins and operational efficiency.

Balance sheet: This document presents a snapshot of the company’s assets, liabilities, and equity at a specific moment in time. Regular updates and reviews of assets (such as inventory) and liabilities (like loans) are crucial to reflect the current state of the business accurately.

Cash flow statement: This statement offers insights into the company’s liquidity by illustrating cash inflows and outflows. It is essential for assessing the company’s ability to cover short-term liabilities and operational expenses.

4. Incorporate operational metrics

Operational metrics offer a detailed perspective on your business’s performance, enhancing the financial data.

You should consider:

Sales and production figures: Monitor monthly, quarterly, and yearly sales alongside production costs to assess efficiency and profitability.

Inventory levels: Track inventory levels to maintain optimal stock levels, minimising storage costs and ensuring timely deliveries.

Customer satisfaction metrics: Utilise tools such as Net Promoter Score (NPS) or customer satisfaction surveys to evaluate customer sentiments regarding your products or services, identifying areas for enhancement. 

5. Prepare an executive summary

An executive summary at the beginning of your management accounts can be very helpful. This section could highlight:

• Key monthly data/figures. 
• Notable changes or concerns. 
• Net profit margins. 
• Turnover ratios. 
• A departmental overview. 

6. Analyse and interpret

When analysed and interpreted accurately, data becomes actionable insights.

Consider the following:

Trend analysis: Identify patterns in sales, expenses, and other key metrics. Recognising these trends early can help in capitalising on opportunities or mitigating risks.

Budget vs. actual: Compare forecasted budgets with actual figures to pinpoint overspending or areas of savings.

SWOT analysis: Conduct regular SWOT (Strengths, Weaknesses, Opportunities, Threats) analyses to inform strategic decisions and identify growth opportunities or potential challenges. 

7. Share the insights

Communication is key. Sharing insights ensures that all your stakeholders are on the same page.

You should consider:

Regular updates: Conduct frequent meetings with key stakeholders to review findings from management accounts, promoting alignment and informed decision-making.

Visual representation: Utilise charts, graphs, and other visual aids to present data, enhancing comprehension of complex information.

Recommendations: Don’t just present the data. Offer recommendations based on the insights. This proactive approach can guide the business towards better decision-making. 

FAQs

How often are management accounts prepared?

While there’s no fixed schedule for preparing management accounts, the common practice is to do so monthly or quarterly, allowing business owners to maintain regular oversight of their finances. 

Can management accounts help secure new funding?

Yes, management accounts are crucial for securing new funding. They give investors and lenders a clear view of the company’s financial health and potential for growth, building confidence in potential funders.

How are management accounts different from statutory accounts?

Statutory accounts are primarily used for external reporting and regulatory compliance, while management accounts are internally focused, providing guidance for strategy, assessing financial position, and monitoring progress.

Make better financial decisions with Capture Expense

Effortlessly track and report on all spend with our business expense tracker—giving you an instant detailed breakdown of spending by mileage, user, total expenditure, and more. Book a personalised demo today.

 

Organisations in the UK can reclaim VAT on the fuel component of mileage expenses paid to individuals.  
 
However, navigating this process is complex and requires gathering specific evidence to meet HMRC requirements.  
 
In our blog, we’ve compiled all the necessary information on reclaiming VAT for fuel and petrol expenses during business trips, helping you choose the best approach for your organisation. 

Who is eligible to reclaim VAT on fuel? 

To reclaim VAT on business expenses, including fuel, you need to be a VAT-registered business.  
 
If your annual turnover is below £85,000, you can opt to register for VAT and claim back VAT on expenses. However, if your annual VAT taxable turnover exceeds £85,000, VAT registration is mandatory.  
 
It’s also worth noting that if you’re under the VAT Flat Rate Scheme, you can’t reclaim fuel expenses. 

How much VAT on fuel can you reclaim?

According to HMRC guidelines, you can reclaim 100% of the VAT on fuel used for business purposes.  
 
To comply with HMRC requirements, you must maintain precise mileage records and retain fuel receipts as evidence of expenses. 

How do you reclaim VAT on fuel usage? 

To reclaim VAT on fuel usage, ensure it’s used solely for business purposes (VAT can only be reclaimed on business-related expenses). 

However, as many small businesses and self-employed individuals use their vehicles for both business and personal purposes, this can complicate the process of reclaiming VAT on fuel.

There are two ways you can reclaim VAT on fuel:

1. Reclaim all the VAT paid on fuel purchases and pay the appropriate fuel scale charge for your vehicle. 
2. Claim VAT only for the fuel used during business trips by maintaining thorough mileage records to demonstrate usage exclusively for business purposes. 

How can you reclaim VAT with a fuel scale charge?

If you use a business car for personal purposes, you can reclaim VAT on all fuel usage, including both business and personal use. Then, you’ll pay a fuel scale charge to offset the personal use, eliminating the need for detailed mileage records.

Here’s how it works:

1. Reclaim VAT on all fuel used for your vehicle. 
2. Use HMRC’s VAT fuel scale tool to calculate your fuel scale charge. 
3. Include the fuel scale charge on your VAT return.

However, if your fuel usage is very low, the fuel scale charge might exceed the VAT you reclaim, making this method unsuitable for some businesses. 

Let’s take a look at an example

Imagine you make quarterly VAT submissions and your company uses a BMW 318i with a CO2 emissions figure of 146.

The road fuel surcharge for this emissions figure is £349 per quarter, consisting of a basic charge of £290.83 and VAT of £58.17.

You can deduct the basic charge (£290.83) from the total fuel costs for its Corporation Tax calculation.

For VAT purposes, your company can reclaim the VAT paid on fuel purchases, excluding the VAT portion of the road fuel surcharge (£58.17). 

How can you reclaim fuel VAT by calculating business mileage?

As you now know, you can make a claim for only the fuel you use for company purposes.

For vehicles such as pool cars, commercial vehicles, and petrol machinery, keeping an accurate mileage record is simpler, as all mileage will have been completed for business purposes.

If you use a vehicle for both business and personal use, you will need to keep a detailed record of the purpose and mileage of all your journeys. Once you have calculated the percentage of your mileage that was for business use, you can claim that percentage of VAT back from HMRC. 

How do you prove business mileage to HMRC?

HMRC requires that you keep an accurate mileage log. For this to be compliant with HMRC standards, you must include:

• Date of the journey 
• Purpose (personal or business) 
• Start and end addresses (with postcodes) 
• Total miles driven

You should request monthly mileage logs from all your employees.

It’s also worth noting that any self-employed individuals need to maintain their own records. 

How do you submit a VAT claim to HMRC? 

As a business, you can claim back VAT on fuel expenses, along with other business costs, in your VAT return. If you’re VAT-registered, you’ll need to submit a VAT return every three months, called an ‘accounting period.’  
 
HMRC requires a return to be sent at the end of each accounting period, even if you have no VAT to pay or reclaim. 

The question you’ve been waiting for: Is it worth it?

As you may have guessed, many businesses avoid reclaiming VAT on fuel and petrol due to the complexity of bookkeeping. However, it can be beneficial if you provide free fuel to employees for business purposes.  
 
If this is something you’re interested in, keep records for up to four years, as VAT on fuel can only be reclaimed within this timeframe, and remember to use Fuel Scale Charge and Flat Rate Claim to simplify VAT calculations for fuel expenses. 

FAQs 

What is a reasonable rate for fuel expenses? 

To determine a reasonable rate for fuel expenses, businesses can use HMRC’s Advisory Fuel Rates, which provide standard mileage rates based on engine size and fuel type. These rates apply to both VAT on business fuel usage and private journeys using company fuel.

For employees using company cars and fuel:

• The company can reimburse the employee at the advisory rate for business mileage and reclaim VAT on the payment. 
• Alternatively, the company can cover the fuel cost, then charge the employee for private mileage, reclaiming VAT on the fuel cost minus the employee’s contribution. 

Can sole traders claim petrol costs? 

As a sole trader, you can claim petrol costs as part of your business expenses. You’re eligible for a mileage allowance of 45 pence per mile for the first 10,000 miles when using a car for business purposes. After exceeding 10,000 miles, the allowance reduces to 25 pence per mile. If you use a motorbike for business, the mileage allowance is 24 pence per mile.

Take advantage of our business mileage tracker

If you need help calculating your fuel expenses, or with any other aspect of your travel expenses, book a demo today to see how we can help. 

In the realm of large businesses, staying abreast of the latest trends and technologies is paramount, especially when it comes to expense analytics and approval processes.

The dynamic landscape of business operations demands constant adaptation to remain competitive and efficient. Embracing cutting-edge expense analytics tools not only enhances financial visibility but also empowers organisations to make informed decisions swiftly.

With the advent of sophisticated expense approval software, large businesses can streamline their workflows, ensuring a seamless and timely validation of expenditures. Embracing these technological advancements enables companies to optimise their expense management systems, resulting in improved accuracy, reduced processing times, and ultimately, enhanced financial health.

In a rapidly evolving business environment, the commitment to integrating the latest trends and technologies becomes a strategic imperative for large enterprises aiming to maintain a competitive edge.

 

What are the latest trends in expense management software?

 

Fully customised expense approvals

Expense approval software is a crucial tool in modern business operations designed to streamline and automate the process of validating and authorising expenditure within an organisation.

This software facilitates the efficient management of expenses by providing a centralised platform for employees to submit their expense reports, and for supervisors or designated approvers to review and approve them.

By leveraging advanced algorithms and predefined business rules, expense approval software helps ensure compliance with company policies and regulatory requirements. This technology not only expedites the approval workflow but also enhances transparency, accuracy, and accountability in financial transactions.

Moreover, it often integrates with other financial systems, creating a seamless and interconnected approach to expense management within large businesses.

In essence, expense approval software is a pivotal component in promoting efficiency, control, and adherence to financial protocols in corporate settings.

 

Real-time expense analytics

Expense analytics tools offer a multitude of advantages for growing businesses seeking to optimise their financial strategies and operations.

These tools provide a comprehensive and insightful analysis of expenditure patterns, enabling organisations to gain a deep understanding of their financial landscape.

By leveraging advanced expense analytics, businesses can identify cost-saving opportunities, detect anomalies, and make informed decisions to improve overall fiscal health.

Expense analytics tools empower companies to track and manage spending trends, highlighting areas where resources can be allocated more efficiently. Real-time visibility into financial data ensures proactive decision-making, allowing businesses to respond promptly to changing market conditions.

Additionally, these expense tools often come with customisable reporting features, providing stakeholders with clear and concise insights into expense categories, vendor performance, and budget adherence.

Ultimately, the benefits of expense analytics tools extend beyond cost reduction, fostering a strategic approach to financial management that is essential for sustainable growth and success.

 

Automated corporate card reconciliation

Corporate card reconciliation stands as a crucial process for large businesses, offering a spectrum of benefits that contribute to efficient financial management. This practice involves the meticulous comparison and adjustment of corporate credit card transactions with corresponding expense reports, ensuring accuracy and compliance.

One of the primary advantages is the enhanced visibility it provides into company expenditures, allowing for a detailed analysis of corporate card usage. This transparency not only aids in identifying potential errors or fraudulent activities but also facilitates a thorough understanding of spending patterns.

Corporate card reconciliation streamlines financial workflows, reducing the burden of manual data entry and minimising the likelihood of discrepancies. For large businesses with numerous transactions, this process ensures a more streamlined and error-free financial system, fostering accountability and adherence to budgetary constraints.

Additionally, accurate corporate card reconciliation supports timely reporting, enabling large organisations to make informed decisions based on up-to-date and precise financial information.

Overall, corporate card reconciliation serves as a cornerstone for maintaining fiscal integrity and efficiency within large enterprises.

 

Tax-compliant expense reports

Tax-compliant expense reports offer substantial benefits for large businesses, particularly when integrated with efficient expense report reminders.

Ensuring that expense reports adhere to tax regulations is vital for maintaining financial compliance and optimising tax-related processes. These reports provide a structured and detailed account of business expenditures, making it easier for organisations to identify eligible deductions and credits, ultimately leading to tax savings.

By incorporating automated expense report reminders, large businesses can enhance their tax compliance efforts by prompting employees to submit accurate and timely documentation. This proactive approach not only minimises the risk of overlooking deductible expenses but also streamlines the entire reporting process. Furthermore, tax-compliant expense reports contribute to a smoother audit trail, reducing the likelihood of compliance issues and facilitating a more seamless interaction with tax authorities.

In essence, the combination of tax-compliant reports and strategic reminders plays a pivotal role in fortifying the financial health and regulatory standing of large enterprises.

 

Automated expense approvals

Automated expense approvals emerge as a transformative solution for large businesses, revolutionising the traditional workflows associated with expense management. By heavily leveraging automated expense approvals, organisations can significantly enhance efficiency and accuracy in the approval process.

This technology expedites the validation of expenses by implementing predefined rules and workflows, reducing the reliance on manual intervention. Large businesses can benefit from streamlined operations, as automated systems enable faster processing times and eliminate bottlenecks in the approval chain.

Moreover, the use of automated expense approvals ensures consistency and compliance with company policies, reducing the likelihood of errors and discrepancies. This not only accelerates the entire expense approval lifecycle but also provides real-time visibility into spending patterns.

The result is a more agile and responsive financial system, empowering large enterprises to make informed decisions while maintaining a heightened level of control and accountability over their expenditures.

 

Keeping up with HMRC approved mileage rates

For large businesses tracking vehicle mileage, staying abreast of HMRC approved mileage rates is essential for a range of benefits. HMRC mileage rates represent the approved reimbursement amounts for business-related travel, and adhering to these rates ensures compliance with tax regulations.

By keeping up with the latest HMRC mileage rates, large businesses can accurately calculate and reimburse employees for their travel expenses, fostering transparency and fairness. This practice not only helps organisations remain tax-compliant but also prevents potential discrepancies that may arise during audits.

Additionally, by using the approved rates, businesses can simplify the reimbursement process, providing a standardised approach that reduces administrative burden. Consistent adherence to HMRC mileage rates also demonstrates financial responsibility, contributing to a positive reputation and trust among employees and stakeholders.

Ultimately, staying informed about and implementing HMRC approved mileage rates is a strategic practice that enhances financial accuracy, compliance, and overall operational efficiency for large enterprises.

 

 

Ready to Revolutionise Your Business?

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As businesses embark on the exciting journey of growth, effective expense management becomes crucial for sustainable success. Monitoring and optimising expenses can significantly impact the bottom line and pave the way for long-term financial health.

In this blog, we’ll explore essential expense management metrics tailored for the unique challenges faced by growing businesses.

What are expense management metrics and KPIs?

Expense management metrics and Key Performance Indicators (KPIs) serve as quantitative benchmarks to assess the effectiveness and efficiency of business expense management. These metrics fall into two primary categories: operational and strategic.

Operational metrics centre around the procedural aspects of expense management, evaluating factors like the speed, accuracy, and compliance of expense recording and approval processes.

On the other hand, strategic metrics hone in on the results of expense management, gauging factors such as total expenditure, savings, and investments across various segments of the business.

 

Why are expense management metrics and KPIs important?

 

Metrics and KPIs related to expense management play a crucial role in obtaining valuable insights into your financial performance and well-being.

They serve as tools to oversee and regulate spending patterns, detect and eradicate inefficiencies, fraud, and mistakes, optimise the allocation of budgets and resources, enhance decision-making and planning capabilities, boost profitability and growth prospects, and align expenses with strategic objectives.

 

How can growing businesses choose the right expense management metrics?

 

When it comes to selecting expense management metrics, a one-size-fits-all approach is not suitable. It is crucial to consider factors such as your industry, size, organisational structure, and strategy, along with specific challenges and opportunities.

In general, opt for metrics and KPIs that are pertinent, meaningful, and actionable for your business. Clearly define measurable targets and benchmarks for each metric and KPI. Achieving accuracy and effectiveness requires a balanced mix of operational and strategic metrics.

The top 7 metrics growing businesses should track when managing expenses

 

1. Budget variance

What it is: Budget variance measures the difference between planned and actual expenses.

Why it matters: Understanding where your expenses deviate from the budget helps in identifying areas for improvement and making informed decisions to keep spending in check.

2. Cost per unit or service

What it is: Calculating the cost per unit or service provides insight into the efficiency of your operations.

Why it matters: As your business grows, ensuring cost-effectiveness in production or service delivery is vital. This metric helps in optimising processes and maintaining profitability.

3. Employee expense ratio

What it is: This ratio compares total employee expenses to overall operating costs.

Why it matters: For growing businesses, managing labour costs is crucial. Monitoring the employee expense ratio aids in understanding the impact of staffing on the budget and making strategic workforce decisions.

4. Travel and entertainment costs

What it is: Tracking expenses related to business travel and entertainment.

Why it matters: As your business expands, so may your travel and entertainment expenses. Keeping a close eye on these costs helps in controlling discretionary spending and ensuring it aligns with business objectives.

5. Vendor and supplier performance

What it is: Evaluating the efficiency and cost-effectiveness of vendors and suppliers.

Why it matters: For growing businesses, maintaining strong relationships with vendors is crucial. Assessing their performance ensures that you’re getting value for money and helps in negotiating better terms as your business scales.

6. Cash flow forecasting

What it is: Projecting future cash inflows and outflows.

Why it matters: As your business grows, cash flow becomes more complex. Accurate forecasting allows for proactive decision-making, ensuring there’s enough liquidity to support expansion efforts.

7. Return on investment (ROI)

What it is: Calculating the return on investments made in various areas of the business.

Why it matters: Growing businesses often invest in marketing, technology, and infrastructure. Monitoring ROI helps in assessing the success of these investments and optimising future spending.

 

How to benchmark your expense management metrics and KPIs against competitors?

 

Benchmarking involves comparing your expense management metrics with those of competitors or industry peers, offering insights into your relative performance and highlighting strengths and weaknesses.

To benchmark, start by identifying key competitors and their corresponding metrics and KPIs. Collect reliable and comparable data from sources such as financial statements, reports, surveys, or industry associations.

Analyse the data, calculating gaps and differences between your metrics and those of competitors.

Interpret the results to gain insights, and finally, implement actions to address gaps and enhance overall performance.

 

How to improve your expense management metrics?

 

Enhancing your expense management metrics and KPIs is a continuous effort that demands consistent monitoring, evaluation, and adaptation.

Achieve this by automating and streamlining your expense management process through the use of software and tools.

Enforce transparent policies and procedures, educate employees on the significance of expense management, incentivise cost-conscious behaviours, and explore innovative approaches to expense control.

Employing these strategies will contribute to more effective goal achievement.

 

How can you use metrics to improve expense approval workflows

 

Businesses utilise metrics to enhance expense approval workflows by establishing a systematic and data-driven approach. Metrics provide a quantifiable basis for evaluating the efficiency of expense approval processes, identifying bottlenecks, and streamlining workflows.

By analysing metrics such as expense approval times, rejection rates, and overall process efficiency, businesses gain insights into areas requiring improvement.

This data-driven approach enables organisations to implement targeted strategies, refine approval policies, and deploy technologies that optimise the entire expense approval workflow.

Ultimately, leveraging metrics in this context leads to increased transparency, reduced processing times, and improved overall expense management within the business.

 

Ready to Revolutionise Your Business?

 

Unlock the power of corporate card reconciliation, streamline your expense policy compliance, and experience firsthand how our integrated expense solutions can simplify your expense audit. Don’t miss out on this opportunity to shape your future.

Book Your Demo and step into the world of expense automation.