Expenses

Tracking and managing your business costs

Expenses are the costs incurred to run your tailoring business. Properly tracking expenses is essential for accurate financial reporting, tax compliance, and understanding your profitability.

Common Tailoring Business Expenses

Materials

  • Fabric (wool, cotton, silk, synthetic)
  • Thread and needles
  • Buttons, zippers, and fasteners
  • Linings and interfacings
  • Trims and embellishments

Equipment

  • Sewing machines and maintenance
  • Cutting tools and shears
  • Pressing equipment
  • Mannequins and dress forms
  • Measuring tools

Overhead

  • Shop rent or mortgage
  • Utilities (electricity, water, internet)
  • Insurance (liability, property)
  • Business licenses and permits
  • Professional services (accounting, legal)

Labor

  • Employee wages and benefits
  • Contractor payments
  • Training and education
  • Payroll taxes
  • Worker's compensation insurance

Marketing

  • Advertising (online, print)
  • Website maintenance
  • Social media promotion
  • Business cards and brochures
  • Promotional events

Transportation

  • Delivery costs
  • Business travel
  • Vehicle expenses
  • Parking fees
  • Fuel costs

Recording Expenses

Steps to Record an Expense

  1. Go to Finance > Expenses
  2. Click "Record Expense"
  3. Enter the expense date
  4. Select the expense category (e.g., Materials, Rent, Utilities)
  5. Enter the amount
  6. Select the payment method (cash, credit card, bank transfer)
  7. Select the bank account or payment source
  8. Add the vendor/supplier name
  9. Add a description of the expense
  10. Attach a receipt image or document (optional but recommended)
  11. Add any tax information if applicable
  12. Click "Save Expense"

Mobile Receipt Capture

The Finance Module includes a mobile app feature that allows you to take photos of receipts on the go. The system can extract key information from the receipt image, making expense recording faster and more accurate.

Managing Recurring Expenses

Many tailoring businesses have regular expenses that occur monthly or quarterly, such as rent, utilities, or subscription services. The Finance Module allows you to set up recurring expenses to save time and ensure these costs are consistently recorded.

Setting Up a Recurring Expense

  1. Go to Finance > Expenses
  2. Click "Recurring Expenses"
  3. Click "Add Recurring Expense"
  4. Enter the expense details (category, amount, vendor)
  5. Set the recurrence pattern (monthly, quarterly, etc.)
  6. Set the start date and end date (if applicable)
  7. Click "Save Recurring Expense"

The system will automatically create expense entries based on your recurrence settings. You'll receive notifications when recurring expenses are created, allowing you to review and approve them.

Expense Reporting and Analysis

The Finance Module provides several ways to analyze your expenses:

Expense by Category

See how your expenses are distributed across different categories. This helps identify areas where costs are highest and might need attention.

Expense Trends

Track how your expenses change over time. Identify seasonal patterns or unexpected increases that require investigation.

Expense by Vendor

See how much you're spending with each supplier. This can help with negotiating better terms or identifying opportunities to consolidate purchases.

Budget vs. Actual

Compare your actual expenses against your budget to see if you're staying on track with your financial plans.

Expense Approval Workflow

For tailoring businesses with multiple employees, the Finance Module offers an expense approval workflow:

  1. Employee submits an expense with receipt
  2. Manager receives notification of pending expense
  3. Manager reviews and approves or rejects the expense
  4. If approved, expense is recorded in the system
  5. If rejected, employee is notified with reason

To enable expense approval workflow:

  1. Go to Finance > Settings > Expense Settings
  2. Enable "Expense Approval Workflow"
  3. Set approval thresholds if desired (e.g., expenses over AED 1,000 require approval)
  4. Assign approvers for different departments or expense types
  5. Click "Save Settings"

Best Practices for Expense Management

  • Record Promptly: Enter expenses as soon as they occur to maintain accurate records.
  • Keep Receipts: Attach digital copies of all receipts for tax purposes and audit trails.
  • Categorize Correctly: Use consistent expense categories to make reporting more meaningful.
  • Separate Personal and Business: Never mix personal expenses with business expenses.
  • Review Regularly: Analyze your expenses monthly to identify trends and opportunities for cost reduction.
  • Set Budgets: Create expense budgets and monitor actual spending against them.

Real-World Example

"Ahmed runs a tailoring shop with five employees. He's set up expense categories that align with his business needs: Premium Fabrics, Standard Fabrics, Notions, Equipment, Shop Rent, Utilities, Employee Wages, and Marketing. When he purchases silk fabric from his supplier, he immediately takes a photo of the receipt using the mobile app, which automatically creates an expense entry categorized as 'Premium Fabrics.' At the end of each month, he reviews his Expense by Category report and notices that his fabric costs have increased by 15% compared to the previous month. He investigates and discovers that a particular supplier has raised prices. He uses this information to negotiate better terms or find an alternative supplier. By tracking expenses diligently, Ahmed maintains tight control over his costs and can make informed decisions to protect his profit margins."

InvoicesJournal Entries