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Now that you have identified your expenses you can determine how much you are spending and what you are spending it on. Depending upon what automation, if any you have in place you can leverage the application's reporting capabilities. This process will also help determine what changes to make to how you capture your expense entries. 

Here are a few things to look out for.

• Are large a large percentage of the expenses in a general category like Travel?  Depending upon the amount, it may be appropriate to break it down into sub categories like airfare, train, car rental.
• Are you isolating those expenses that may have different tax implications?  For example, meals for a consultant while traveling are 50% deductable, while meals while at a conference are 100% deductable. 
• Are too many expenses falling into the nefarious 'Misc' or 'Other' category.  This can be difficult because you must balance the expense of having separate categories for smaller expenses with what value there is in having this information. 
• Are expenses captured at too granular a level? Similar to having too few categories, is it worth the effort?
• Are there some projects (internal or external) that are costing much more than expected.  many times when determining the cost of a project, people costs are the main consideration.  This can be short sighted.

In general, when analyzing your expenses don't focus only on the high ticket items. In many companies there are controls in place to ensure those expenses are appropriate. However, there may be meaningful savings to be realized by taking a hard look that the expenses that are not under those controls. While the current economic climate is the impetus for this type of analysis, it makes good fiscal sense when times are good as well.  In most cases trimming expenses is preferable to trimming headcount.

Look for the next blog for some tips on managing expenses.

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