The management of a successful SME in Nigeria requires in-depth knowledge, and one of the ways to achieve this is by keeping a business expense sheet. A business expense sheet is simply a detailed report that tracks all the expenses incurred in the performance of contractual obligations for a client or during the execution of a specific project for your business.
Business expenses are incurred in business; they apply to both SMEs in Nigeria and also bigger brands in every aspect of our economic sector as a country. This is an inevitable aspect of doing business anywhere in the world. It features the business’s income statement and includes your operating expenses, cash spendings for the business, charges for gas, meals, parking, travelling and lodging to mention but a few.
Your business expense sheet is a report that when prepared well, tracks all your business spendings over a given period of time; usually a month, quarter, or year. Successful SMEs in Nigeria refer to their expense reports to review their total expenses. It is not just to see if their total expenses were more or less than expected but also to analyse their results better to improve profit.
A business expense sheet details all the purchases a company makes during the time covered that are essential to running the business or executing a given task. In times of financial difficulty, it can be used to check how costs can be cut or eliminated to improve profit.
Even if your business is still young, the importance of a good business expense sheet for your SMEs in Nigeria cannot be overemphasised because as you grow, your expenses will multiply. Creating your own business expense sheet isn’t as difficult as you might imagine if you utilise this guide, collated to help you make your expense report quickly and easily.
1. Select a Good Template
The best thing about our era is that there are already business templates you’d ever need to boost your SME, you only need to know where to look. You don’t have to make your business expense sheet from scratch; it’s easier to choose from the available options because making an expense report from scratch can be time-consuming.
To make an expense report, you should use either a template or expense-tracking software. Microsoft Office has good free downloadable expense report templates for Excel; while Template.net has free downloadable expense report templates for different formats. As your business grows, you might find it worthwhile to upgrade to expense-tracking software to monitor your business expenses more closely.
2. Edit the Columns As Needed
Once you’ve found the template you want, the next step is to customise the template with your company name, the date range you’re reporting on and your name. Don’t skip this step. This is important because business expense templates sometimes contain more information than necessary for an SME in Nigeria to operate.
Your columns should reflect the common expenses in your business. If you drive a vehicle for the day to day running of your business, you need to input a “car and truck expenses” column in your business expense sheet. The standard columns you can include in your business expense sheet template are Date: when the item was bought; Vendors: where the item was purchased; Client/Project: what client or project the item was bought for; Author: who bought the item; Notes: notes to explain the expense; Amount: cost of the expense.
3. Itemize Your Business Expenses In Details
This is unarguably the most important step in the preparation of your business expense sheet because if you get this wrong, your sheet will serve absolutely no other purpose than to mislead you and lead to ill-informed business decisions. It is crucial that you add each new expense on a new line, and that you fill out as much information as possible. Expenses that should be highlighted include but are not limited to: accounting fees, commissions, contract labour costs, credit and collection fees, consultation expenses, to mention but a few.
You need to be mindful of the fixed and variable costs of doing business. Your fixed costs are your regular, consistent costs that don’t change according to how much you make—things like rent, insurance, utilities, bank fees, legal services, and equipment leasing. Your variable costs on the other hand change according to production or sales volume, and are closely related to “costs of goods sold”, i.e. anything related to the production or purchase of the product your business sells. This might include raw materials, inventory, production costs, packaging, or shipping.
Other variable costs can include sales commission, credit card fees, and travel. When you enter your expenses, do so in chronological order with the most recent expense at the end while adding the amount of each expense. Employees that submit expense reports for reimbursement should attach receipts to justify their claims. Even if you’re a business owner generating an expense report to track spending, you’ll need to keep your corresponding receipts or invoices.
4. Sum Up the Total
Each category of your business expense sheet ought to reflect a subtotal at the end, but you need to derive the grand total of all the expenses to understand how much you are generally spending. To calculate the total amount you’ve spent on a category, you can add the amounts in the column by inserting a formula, if you’re familiar with a spreadsheet program, or just use a calculator. Account for previous overpayments, underpayments, and reimbursements to get your total expenses.
Not only will this step capture an overview of your expenses for that period, but it will also enable you to quickly and see how your expenses in each category change from month to month, and how your expenses in different categories compare. It will also help you (or your accountant) to add up all expenses so they can be input into tax forms when needed.
5. Print Your Sheet for the Books
Even if you relied on a software to create your business expense sheet, this final step is crucial for you to maintain good business records. If there are receipts, when printing your completed business expense sheet, tape the receipts onto a piece of printer paper and photocopy them so you can keep the originals. If submitting the expense report electronically, scan the receipts and attach them as files. These figures will go on to become your marker to see whether you’re over or under your monthly, quarterly or annual business budget. Also, the entire process will help you become more financially aware.
Finally, a business expense sheet is a detailed plan that outlines where you spend your business monies monthly or annually. It will help you forecast what money you expect to earn, plan where to spend that revenue and see the difference between your plan and reality. But most importantly, to work well for your SME, your business expense sheet should be simple, flexible and easy to grasp. That way, if circumstances change (as they are bound to do), you would still find your footing quickly, armed with a clear picture of where you stand at all times.