Lendio offers a self-service app for small business owners to manage their books for free without getting overwhelmed. Many of our customers use this tool to send invoices, collect digital payments, and denote important expenses. These expenses can be categorized manually or automatically, depending on user preference. While there are some benefits to reviewing each expense individually, there are significant perks of using the auto-categorize option. Here are a few reasons you should try it out. Save Time Recording Different Costs The Lendio app uses an algorithm that gets smarter the more you use it—it’ll learn how to read your expenses and categorize them into different sections. For example, if you pay “ABC Marketing” a monthly fee to manage your social media campaigns, our system can quickly identify that vendor name and which category it falls under. This rapid identification and auto-categorization can be a significant timesaver for business owners trying to organize their books. Instead of searching for categories, saving expenses in different files, or manually labeling charges, you can consolidate all your business expenses in a single place. Track Budgets for Different Spending Categories Improved categorization can help you to set clearer budgets for your business operations because your expenses are automatically labeled and filtered when you pay for something, rather than when you add a label retroactively during your bookkeeping process. By simply glancing at your ledger, you can get an idea of how close you are to exceeding set budgets for different categories. This allows you to limit your spending and work on optimizing your profitability. If you work with hands-on investors who want to know where their money goes, these clearly sorted categories can help you to present the different costs of running a business. You can prove that you’re a responsible steward of their money and a smart manager. Spend Your Time on More Strategic Bookkeeping Tasks As a business owner, you sometimes have to be a marketer, accountant, lawyer, negotiator, and even plumber. When you invest your time into something, it means you’re taking it away from another activity—so you need to make sure you maximize your productivity. Once your expenses are sorted, focus on pulling together profit and loss (P&L) statements and reviewing your income statements. This insight will allow you to make strategic decisions for your business backed by financial reporting. Easily Train Other Team Members to Use the Software As your business starts to grow, you’ll likely take on additional help to handle various tasks. For example, you can hire a part-time accountant or work with a bookkeeping service. The first few weeks and months of working with this help will be slow as you onboard them to your needs and expenses. However, by setting up an auto-categorizing system, you don’t have to worry about whether your bookkeepers are tracking your expenses appropriately or whether they understand the nuances of your business. It’s much easier to ask a bookkeeper to review expense categories afterward for accuracy than having them assign expenses piecemeal. Sync Similar Expenses From Different Payment Methods If you work with multiple vendors—even for the same services—you may find that they wish to be paid differently. You might use a business credit card for some payments and then cut checks for others. Auto-categorizing can help you to consolidate these different payments into the appropriate place. The right tool can pull expenses from a variety of sources and then sort them by their relevance, not where they came from. Instead of comparing your credit card statements to your bank withdrawals, look at all of your expenses in 1 place to better understand your spending. Consolidating your expenses—regardless of payment method—can also help if you change banks or credit card providers. You don’t have to worry about losing data from your monthly statements if you ever close an account. Auto-Categorizing Still Needs Some Human Help While algorithms and machine learning tools can go a long way to categorize expenses, you don’t have to relinquish complete control over your ledgers. We recommend reviewing your expense sheets and making any necessary corrections that the system might have missed or labeled mistakenly. Making these corrections can help the system to make fewer mistakes in the future. If you haven’t tried Lendio's software yet, we encourage you to give our system a shot. It only takes a few minutes to set up before you can start uploading expenses and using the auto-categorization feature. You can also sync our system to your bank to track expenses and charges automatically. Let us show you how easy our system is to use and how it can move your small business forward.