Combining Personal And Business Spend Management — The Right Way

Small business accountants have a bone to pick with their clients. Actually, they have a few. A survey released by Intuit this week found that SMB accountants say the top challenges to being able to do their jobs include small businesses failing to adequately keep records, not using accounting software and not staying on top of bills.

The vast majority also said that small business (SMB) owners that mix personal and business-related expenses are making it much more difficult for their accountants to manage the books.

Today’s expense management space offers small businesses a flurry of options that they can integrate into their existing operations. But many of them, argues Erno Tauriainen, CEO and co-founder of small business expense management app SPENT Money, can’t adequately address the needs of micro-businesses, freelancers and contractors — professionals with some of the finest lines between personal and professional spend.

“You can use solutions for tracking expenses, but the problem with products like that is they are tied into a certain company,” he recently explained to PYMNTS. “But when you think of freelancers and consultants, the trend these days is that they’re working for multiple companies; they don’t want to be tied into one company’s expense management solution.”

So, while there is certainly a problem of these professionals mixing personal and professional spend, sometimes solutions separate business spend a little too much. According to SPENT Money, a lot of professionals face this pain point too: More than a third of the U.S. workforce — an estimated 55 million professionals — are freelancers.

And so, Tauriainen has launched the SPENT Money app, which acts as a single portal through which all expenses, personal and business, flow. The solution focuses on making it easier to “tag” an expense as a business-related one, a feature the executive said can have an array of benefits for professionals to gain a tighter grip on cash flow and spend management. Users have to link their credit cards, debit cards and bank account information into the app so that it can access transaction data.

Automating the capture of spend data, categorizing that spend as personal or business-related, and then being able to easily share the appropriate data when a professional needs to get reimbursed is key to helping executives let go of manual SMB accounting processes, said Tauriainen.

“Most companies, which is surprising to me, still use pen and paper to do their expenses,” he said. “But the expense management products on the market don’t fit for small businesses and freelancers.”

Another issue many of these professionals have when it comes to cash flow management is adequately tracking and categorizing for the purposes of tax filing.

“As we all know, when tax day comes, everyone starts to prepare, while they could have been preparing as they go, throughout the year,” the executive said, adding that it’s important for small businesses, entrepreneurs and the self-employed to track their expenses on a daily basis so they’re not scrambling at tax time.

The SPENT Money app, Tauriainen explained, makes it easier to remain compliant with the particular requirements of independent contractors, keeping images of receipts for transactions above $75, which the IRS requires, for instance. The accounting software solution also integrates into existing platforms like QuickBooks, he explained, and can automatically capture information from emailed receipts to integrate into its own platform.

To keep the solution free, Tauriainen said he is putting his background in retail to good use, taking advantage of the willingness of retailers to offer cash back rewards for loyalty.

“Knowing the retail space and how much money retailers are spending trying to capture the attention of consumers, I put the dots together and tied in the cash-based  rewards programs,” he said, explaining that users of the app can earn cash back when they spend at certain retailers. Soon, the company plans to roll out SPENT Travel, a travel booking platform that professionals can use to book business travel while earning similar cash back rewards based on the hotels at which they book.

Overall, though, the main goal of the app is to create a clear divide between professional and personal spend, while still bringing the two close enough that they can be managed on a single portal.

“The pain that we’re trying to solve for is for the small business owner. It is a whole lot of work to approve expenses, manage expenses and reimburse them,” said Tauriainen. “That’s the biggest pain point.”