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Expense management software can greatly simplify the process of tracking your childcare business’s expenses. Staying on top of your childcare program’s expenses can be very time and labor intensive. And it is necessary. From filing your taxes, to reimbursing expenses, and to having a clear overview of the financial health of your business, expense tracking is vital to running your childcare business successfully.
Automating and streamlining how you keep track of your expenses using a business expense tracker can save you time and money - giving you the peace of mind to focus on maintaining a wonderful environment for the children, the educators, and the parents.
Learn more about the fundamentals of expense management and what to look at when considering a software solution that can best serve the needs of your childcare business by reading this article.
Table of contents
- What is expense management software?
- Why is it important to track your expenses?
- How to keep track of business expenses
- How to choose expense management software
What is expense management software?
Expense management software is a digital tool that enables you to track your daycare’s expenses, and to monitor and organize your spending. It automates the process of categorizing and tracking your expenses, streamlining it to make tracking easier, less prone to human errors, and to ensure you have an accurate overview of your spending.
A business’s expenses include all spending and costs that are needed to run your business, from the cost of goods and services to operating costs.
As a childcare business, you need to stay on top of various types of spending: Supplies for arts and crafts to keep the children engaged; snacks and meals for the children; maintenance costs to keep your facilities clean and welcoming; payroll and rent payments, to name a few. There are two important categories of expenses to consider:
Direct costs
The expenses that are directly connected to running your business and providing childcare services are your business's direct costs. Supplies, utilities, payroll, and mortgage payments all fall under this category.
Indirect costs
While not directly linked to the services you provide, indirect costs are vital to the operations of your childcare business. This includes promotional materials, marketing costs, and other expenses that help your business thrive.
A business expense tracker enables you to:
- Organize your expenses in easy-to-monitor categories, so you always have a clear picture of how money is spent, and how to set budget goals. You can learn more about how to successfully create and balance your budget.
- Maintain up-to-date records, which can speed up the process of processing reimbursements and getting ready for tax season, prepared with the knowledge of any tax deductions available to you.
- Make informed financial decisions. Having a clear overview of your childcare business spending is critical in identifying spending trends, and planning successfully for the future.
Read more on what to consider when making financial planning decisions.
Manual business tracking systems are also an option. You can download brightwheel’s daycare income and expense worksheet template, while considering a digital solution. But choosing the right expense management software can streamline the process of expense management, and significantly reduce the administrative burden for your business.
Why is it important to track your expenses?
The benefits of tracking expenses for a childcare business are significant in the short and long term. Here are some of the main ways in which your childcare business will benefit from accurately tracking expenses:
Insights into the financial health of your business
Planning for the future effectively requires having a clear view of your business’s finances. Systematically and methodically tracking expenses can create clear financial records of your transactions. By categorizing the various transactions, you will be able to identify spending patterns and trends.
By using an expense tracking tool, you have instant access to your Profit & Loss (P&L) reports, and you can customize how you categorize your expenses, so you can make informed decisions tailored to your business’s needs.
Doing your taxes and benefiting from deductions
Doing taxes can be a very time-consuming, labor-intensive and overall arduous duty. But it is also essential for any business, and it is important that it is done accurately.
Accurate and diligent tracking of expenses throughout the year means that you can save valuable time when it is time to file your taxes. Automating and digitizing the process with expense management software vastly simplifies this process, and it gives you peace of mind that your records are complete and accurate.
It can also help you identify opportunities for deductions, and take full advantage of every deduction available to you, saving your childcare business money. Tax deductions are available for different categories of expenses, such as food, supplies, and field trip expenses. You can learn more about tax-saving opportunities that may be available to you as a childcare provider.
A customizable expense management software can support you in ensuring you don’t miss out on such opportunities.
How to keep track of business expenses
Businesses of all sizes may have once tracked their expenses manually. This made the bookkeeping process very long and complicated, creating piles of paperwork, and risking mistakes. This is why more and more companies across all sectors are opting for expense management software solutions for their business, and streamlining their expense reimbursement and expense reporting processes.
Here are some key features of expense management software that can lead to great advantages for your childcare business, compared to manual methods of expense management:
Integration with other systems of your business
Expense management software integrates smoothly with other aspects and systems of your business. This ensures that information feeds more directly between them, saving you time, and protecting you from possible errors in manual data entry. Software solutions can connect directly with:
- Your bank account and credit cards: Software that can connect directly to your accounts eliminates the intermediary steps of having to manually enter data and cross-check information.
- Your Payroll and Billing systems: feeding information directly from your payroll and billing into your expense management system makes the process even smoother and faster.
This becomes even easier if you opt for automated systems, such as brightwheel’s billing product and payroll product, so all your systems work in sync, making the process hassle-free.
By enabling you to integrate the different systems across the business, expense management software facilitates your financial management across your operations, giving you peace of mind.
Efficient receipt tracking
The process of receipt tracking is significantly simplified when using an automated expense tracker. Storing and filing your receipts digitally brings significant benefits:
- Less time spent on manual entry: Digitizing and automating this process means that your team is not spending time entering this information into a spreadsheet. This saves time both when entering information, but also means you can access it quickly and efficiently at any time, instead of having to shift through piles of receipts.
- No more piles of paper receipts: This does not just save you valuable time. It also makes your childcare business files more space efficient, and less wasteful when it comes to paper files - which is also great for the environment.
Streamlined expense reimbursement
Using expense management software is also key to making your expense reimbursement processes faster and easier for you and your employees.
Since expenses can be updated regularly, they can also be approved and processed for payment much faster. This means that your administrative workload does not pile up, and you can process reimbursements on a rolling basis without it being a time-consuming process.
Speed in processing expense reimbursements is also key to employee satisfaction. Accelerating this process through the use of an expense tracking tool means that your employees know that their requests will not suffer from unnecessary delays. And when the process of filing expenses and categorizing is clear, it also ensures that your employees understand the expense policies of your business and can follow them accurately.
Accurate and secure expense reporting
Having a complete and easy-to-access record of your expenses can give you valuable insight into the financial health of your business, and enables you to stay on top of your reporting duties.
This expense reporting information is valuable insofar as it is accurate. Opting for an expense management tool means that you prevent errors. Automating data entry and calculations can ensure that your financial records are reliable, therefore also making sure that you make decisions based on accurate and up-to-date information. Specific features of expense management software, such as the P&L (profit & loss) summary, allow you to check this information according to a selected timeframe, or by category of expenses.
The volume of this information builds up quickly over time. This can provide very powerful insights for your business. But it also means that you need to trust that this data is secure. Expense trackers by reliable partners, with strong security features, ensure the security of your data from unauthorized access or data breaches, far more than maintaining paper records can.
How to choose expense management software or business expense tracker
By selecting the right expense management software for your childcare business, you can enhance your efficiency and save time, ensure compliance with tax filing and regulations, and gain valuable insight into your business’s financial health.
To do so, it is essential to consider your business’s unique needs from a business expense tracker, and the key features of the software solutions available. Here are a few key steps to guide you in the process of selecting the expense management software that is best for you:
Conduct a detailed needs analysis
The first step is to consider your unique needs. Start by mapping out your current processes of expense submissions, approvals, and reimbursements. Make sure to consider all the different outflows of your organization, so you can start with a complete picture of your needs.
Consider the integration features
A significant benefit of using expense management software is its ability to connect directly with your bank account and credit cards. This saves time, and protects you from data-entry errors. Choosing an expense tracker that integrates smoothly with your bank accounts is essential in getting the most out of it. Consider choosing a tool that can also integrate with other systems, such as payroll and billing. Even if you are not currently using automated options, knowing that they will integrate smoothly if you choose to transition to using them in the future can be very useful.
Partner expertise
While you can opt for a general expense management tool, a vendor with expertise in your specific industry will provide customization options. Opting for a partner with extensive experience in your sector also means that you will receive customer support that is based on a strong understanding of your sector.
Customize your reports
Each business has unique expense tracking needs that may change over time based on what business function you wish to serve. In choosing an expense management software, evaluate its reporting and analytics capabilities, and in particular its customization functionality. By creating categories that reflect your organization’s expenses, from supplies to payroll, you can also produce charts and analytics that will provide valuable insights for your decision making.
Finding the right business expense tracker for your childcare business will make the process faster, more accurate, and stress-free. This way, you can stay on top of your expenses, expense reimbursement requests, and any deductions available to you when you file taxes.
Brightwheel is the complete solution for early education providers, enabling you to streamline your center’s operations and build a stand-out reputation. Brightwheel connects the most critical aspects of running your center—including sign in and out, parent communications, tuition billing, and licensing and compliance—in one easy-to-use tool, along with providing best-in-class customer support and coaching. Brightwheel is trusted by thousands of early education centers and millions of parents. Learn more at mybrightwheel.com.
