Top Software Tools to Track Business Expenses and COGS

To be profitable and in excellent financial shape, small and medium-sized companies must monitor their expenses and correctly determine their Cost of Goods Sold (COGS). With appropriate tools, keeping track of spending can be quicker, simpler, and less prone to error. Choosing the right expense tracking tools is a crucial step in every business journey, helping companies make informed decisions as they grow. The greatest instruments to enable you to monitor the expenses of your company and control cost of goods sold (COGS) will be discussed in this article.

Effectively managing money through accurate expense tracking is essential for maintaining healthy business finances and supporting long-term growth.

Expense tracking is a fundamental part of managing a successful business. It involves systematically recording every business expense, from daily office supplies to major investments and travel costs. By keeping a close eye on business expenses, companies can maintain accurate expense reports, monitor spending patterns, and ensure compliance with tax regulations. Utilizing expense tracking software streamlines this process, reducing the risk of errors and saving valuable time. With the right tools, businesses can easily track expenses, generate detailed reports, and make informed financial decisions that support long-term growth and stability.

Why Do You Need Software for Tracking Expenses and COGS?

“Why should I buy software to keep track of my costs and cost of goods sold?” companies of all kinds sometimes ask. The answer lies on how fast and well these instruments operate. The following justifies the need of tracking expenses software:

• Automation: Increase automation to cut down on mistakes and data entry by hand.

• Time-saving: Not spending as much time on numbers will help your business grow.

• Accurate Reports: Generate precise financial reports for better decision-making.

• Compliance: Stay prepared for tax season with organized and accurate records that help ensure tax compliance and reduce the risk of issues during tax time. Having organized records also simplifies preparation for tax time and helps maximize deductions.

Manual expense tracking can be time consuming and lead to inefficiencies, especially as your business grows or expense management becomes more complex. Automated software streamlines the process, making it easier to stay organized and compliant.

Benefits of Tracking Expenses

Implementing effective expense tracking brings a host of advantages to businesses of all sizes. By closely monitoring expenses, companies gain greater financial clarity, making it easier to manage cash flow and stick to budgets. Expense tracking software helps businesses identify unnecessary expenses, optimize spending, and maximize tax deductions—especially important during tax season. With accurate financial tracking, businesses can prepare for audits, improve forecasting, and make smarter decisions based on real-time expense data. Ultimately, tracking expenses empowers businesses to stay organized, compliant, and financially healthy.

Expense Tracking for Small Business

For small businesses, efficient expense tracking is especially critical. Small business owners often juggle multiple responsibilities, making it essential to have a simple and reliable way to manage business expenses. Using an expense tracker app or integrating expense tracking features into existing accounting software can help small businesses create expense reports, categorize expenses, and track business expenses with ease. These solutions are designed to be user-friendly and affordable, allowing small business owners to focus on growing their business rather than getting bogged down in paperwork. By adopting the right expense tracking tools, small businesses can streamline their financial management and gain better control over their finances.

Key Features to Look for in Expense and COGS Tracking Tools

When selecting a tool, ensure it includes these essential features:

• Integration: Ability to connect with other accounting or inventory systems.

• Customization: Adaptable to your specific industry needs.

• Automation: Features like auto-categorization of expenses and real-time tracking.

• Reporting: Detailed and customizable reports for financial analysis.

• User-Friendly Interface: Easy to navigate for all team members.

Top Software Tools for Tracking Business Expenses and COGS

1. QuickBooks Online

Large and small businesses alike love QuickBooks Online, which is one of the best bookkeeping programs out there. This tool makes monitoring expenses, managing cost of goods sold (COGS), and general accounting easier. It is known for having a lot of features. There are features and options in QuickBooks Online that can be changed to fit your needs, whether you run a small store or a service-based business that is growing. QuickBooks Online allows users to create custom rules for expense categorization, scan receipts, and upload receipts directly into the platform. You can also link your bank accounts for automatic transaction updates, run detailed reports, and store expense records for easy audit and tax preparation. These features help small business owners and employees manage transactions, receipt information, and facilitate the approval process for employee-submitted expenses.

• Key Features:

  • Monitoring of costs in real time.

  • Accounts can be linked so that transactions are updated automatically.

  • Custom rules for expense categorization.

  • Scan receipts and upload receipts directly into the platform.

  • Flexible tools for reporting COGS and profit margins.

• Pros:

  • Easy integration with third-party apps.

  • Suitable for businesses of all sizes.

  • Extensive support and tutorials.

• Cons:

  • Higher cost compared to some competitors.

  • Can be overwhelming for beginners.

• Best For: Small businesses looking for an all-in-one accounting solution.

2. FreshBooks

Small service-based businesses can use FreshBooks, an easy-to-use cloud-based accounting program. Independent contractors and business owners like it because it’s easy to use to keep track of time, costs, and invoice clients. FreshBooks is great for people who don’t know much about budgeting because it is designed to be easy to use. The mobile app allows users to scan receipts and submit expenses on the go, making it a great solution for freelancers and small business owners who need to track mileage and manage receipt information efficiently.

• Key Features:

  • Expense tracking with receipt capture.

  • Time tracking and integration for labor costs in COGS.

  • Automatic invoicing and payment reminders.

  • Mobile app for scanning receipts and submitting expenses.

  • Track mileage and manage receipt information.

• Pros:

  • Intuitive and user-friendly design.

  • Excellent customer service.

  • Integration with time tracking for service-based industries.

• Cons:

  • Limited inventory management features.

  • Not ideal for larger businesses with complex needs.

• Best For: Freelancers and small service-based firms.

3. Xero

Small and medium-sized businesses can use Xero, a modern cloud-based accounting tool with a lot of good features. Xero is great for businesses that need a flexible and powerful tool to handle their finances. It has a clean interface and a real focus on integrations. People love it for thorough financial analysis because it can produce strong reports. Xero offers a mobile app available on Google Play and the App Store, supporting scanning receipts, uploading paper receipts, and managing global expenses for businesses with international operations. It also helps manage transactions, store detailed expense records, and streamline the approval process for employee-submitted expenses.

• Key Features:

  • Real-time bank feeds for expense tracking.

  • Comprehensive reporting for COGS and operating expenses.

  • Integration with over 800 third-party apps.

  • Mobile app on Google Play and App Store.

  • Scanning receipts and uploading paper receipts.

  • Global expenses management.

• Pros:

  • Affordable pricing for small businesses.

  • Strong integration capabilities.

  • User-friendly interface.

• Cons:

  • Expanding businesses can’t use it as much as they’d like.

  • Free tools have more advanced options.

• Best For: Businesses and companies that want free help should use this.

4. Wave

Many companies and small businesses on a tight budget choose Wave because it is one of the few free accounting programs out there. Wave is a free app that can help you with important financial tasks, but it lacks some advanced features. For example, it doesn’t have a lot of very advanced features. Wave offers a Lite plan for essential features, and its free plan is not billed annually or as a monthly plan. Wave is a great solution for startups and small business owners who want to digitize paper receipts, scan receipts, and manage expense records without extra cost. It also helps manage transactions and store receipt information for audit and tax purposes.

• Key Features:

  • Free tools for expense tracking and invoicing.

  • Lite plan for essential features.

  • Simple interface for easy navigation.

  • Secure cloud storage for financial data.

  • Digitize and scan paper receipts.

• Pros:

  • Completely free to use.

  • Ideal for startups and entrepreneurs.

  • No hidden fees or charges.

• Cons:

  • Limited scalability for growing businesses.

  • Basic features compared to paid tools.

• Best For: Entrepreneurs and small startups looking for no-cost solutions.

5. Zoho Books

Zoho Books is a part of the Zoho suite of business applications, offering seamless integration and a variety of features for tracking expenses and managing COGS. It’s an excellent choice for businesses already using other Zoho products and looking for an interconnected financial management system. Zoho Books offers a deduction finder feature to help identify potential tax deductions, supports virtual cards and corporate cards for employee expenses, and allows employees to submit expenses and managers to approve expenses. As your business grows, Zoho Books is suitable for scaling and adding more advanced features. It also helps manage global expenses, transactions, and detailed expense records, making it a comprehensive solution for small business owners and their employees.

• Key Features:

  • Real-time expense tracking with customizable categories.

  • Deduction finder for tax optimization.

  • Inventory management integration for precise COGS calculations.

  • Automation of recurring expenses and transactions.

  • Support for virtual cards and corporate cards.

  • Employees can submit expenses; managers can approve expenses.

  • Global expenses management.

• Pros:

  • The price plans are reasonable.

  • Seamless integration with other Zoho apps.

  • Highly customizable features.

  • Scalable as your business grows.

• Cons:

  • Steeper learning curve for new users.

  • Some advanced features require additional costs.

• Best For: Businesses already using Zoho products for seamless integration.

Read More: Operating Expenses vs Cost of Goods Sold

How to Choose the Right Tool for Your Business

Ask yourself these questions when selecting the best software for tracking expenses and COGS:

1. What’s my budget? Some tools, like Wave, are free, while others require a monthly subscription.

2. Do I need integration? If you’re already using other accounting or inventory software, choose a tool that integrates seamlessly.

3. What industry am I in? Certain tools are better suited for specific industries, such as retail or service-based businesses.

4. How complex are my needs? If you manage large inventories, opt for tools with robust inventory and COGS tracking features.

Practical Tips for Using Expense and COGS Tracking Software

• Start with a Trial: Many tools offer free trials. Test a few to see which suits your needs best.

• Train Your Team: Ensure all users are familiar with the software to maximize its potential.

• Stay Consistent: Regularly update your records to avoid end-of-year headaches.

• Leverage Reports: Use the software’s reporting features to analyze your financial health and make data-driven decisions.

Implementing Expense Tracking Software

Getting started with expense tracking software is easier than ever, even for businesses with limited technical know-how. Most leading expense tracking software options offer a free trial, so businesses can explore features and ensure the solution fits their needs before committing. When choosing the best expense tracking software, it’s important to consider how well it integrates with your existing accounting software, as well as its scalability and ease of use. By selecting a solution that minimizes manual data entry and automates routine tasks, businesses can boost efficiency and accuracy in their financial processes. The right expense tracking software can transform the way businesses manage expenses, making it simpler to stay organized and compliant.

How Irvine Bookkeeping Can Help

Choosing and managing the right software can be overwhelming, especially for small and mid-sized businesses. That’s where Irvine Bookkeeping steps in. We specialize in bookkeeping services and can help you select, implement, and manage the best tools for tracking expenses and Cost of Goods Sold (COGS).