What is Spend Management? Spend management is turning out to be a big game in every business arena. Despite the size of the organization, every business comes across expenditures and payments that involve a series of steps. Ranging from seeking approval for the expenditures from higher authorities to making the payments, maintaining the records, tracking, processing the transactions, and analyzing the same, the entire process forms a long chain. This can prove to be an uphill task if adopted traditionally but with the advent of technology, spend management is the current trend that can handle all such expenditures and transactions in an automated format. Spend management can be thought of as fine art that triggers efficient planning and management of expenses besides cutting down unnecessary wastage of money. This newly coined terminology is all the rage these days because it aids in doubling your achievements besides streamlining your work process.
With businesses facing an inclination towards data-driven technologies, spend management has become highly popular amongst different business enterprises and is being adopted almost everywhere. Want to know how spend management proves to be beneficial for businesses? Read further to find out more spend management:
Improves Operational Efficiency
Taking approvals and getting a green flag can be lengthy and time-consuming. This can further cause loopholes in the operational activities and overall workflow as there are numerous factors that a finance team has to pay heed to before giving a nod for payment release. Ranging from scrutinizing the person who is making a purchase and their objective behind the buying process to purchase category, overall budget, and other relevant documentation, the finance team has to cater it all. Using spend management for managing the data can help enhance the transparency and visibility of your spend, further simplifying the approval procedure practiced in a business. Adoption of such a spend management system offers the finance team and managerial level staff with real-time data, which simplifies the purchase process and makes way for some quick decisions. Further, it minimizes the friction caused due to manual approval and allows efficient management of the expenditures.
Acts as Money Savior
Spend management also aids in cutting down costs during the procurement process. Leveraging analytics and data can help save you oodles of money as it lets you to track your spending pattern besides providing you a crystal-clear insight about your suppliers. Such an approach proves to be a cost savior as it brings into light all the company expenses, which aids in identifying duplicate purchases and also helps in negotiating bulk orders wherever possible. Also, when you get to analyze the pricing and deals offered by various suppliers, you get the advantage of picking someone who best suits your budget and can prove to be beneficial for your business in the long run. Moreover, by streamlining the process and optimizing the spend management workflow, you can reduce labor costs, which can be further utilized for other essential business activities.
Improves Accuracy of Financial Data
Another critical factor that has made spend management highly popular among businesses is the fact that it allows the collection and categorization of a business’s spend data before real-time data. Spend data can be thought of as data of truth and accuracy that is spread over a single centralized platform. Hence, companies can watch for some real-time data analysis and gain an insight into how their funds are being spent in their firm.
Enhances Risk Management Ability
Spend management is more of an alarm call that cautions you beforehand. Business is all about making profits while taking risks at the same time. Though certain risks are unavoidable, there are some that can be avoided if you can manage them at the right time. Various risks come along while making purchases, and predicting how it can direct itself can help in your company’s growth. Precaution is better than cure is what you should think of while implementing spend management for your business so that you can calculate the risks before it gets too late.
Enables Smart Decision Making
A data-driven approach enhances the decision-making process, which is imperative for every business. Every firm has to make some or the other decision at various intervals and having some real-time facts and figures can help you make the right decisions without falling prey to your gut feelings and predictions. Spend management data allows you to visualize the spending and post spending effects that can help chalk out better strategies for your business firm.
Having an efficient spend management system in place can help identify and categorize procurements that witness excess money. Further, you can keep a close watch on those specific areas to reduce the unnecessary expenditures leading to a better decision-making process to direct your money in the right pots minimizing its wastage at the same time.
Minimizes Duplicate Payments
There are chances that you may end up paying the same bill twice without even noticing that you have paid it beforehand. Sometimes such a thing may occur due to negligence and failure of a proper audit system, and sometimes it may be due to dishonest stay who tend to play such games with the owners of the business firm. Whatever the case, duplicate payments can cause unnecessary money drain from your company. Thus, having a spend management system allows a thorough audit of the expenditures and maintains accurate data that can reveal any sort of duplicate payments. With the adoption of spend management, you can save yourself from paying checks unnecessarily.
Prevents Late Fees and Penalties
Another big advantage of spend management is that it helps in mapping data of your company and hence nudge you about any pending payments. Making timely payments can help in fending off penalties and late payments and also aids in building a good relationship between your company and the suppliers. Additionally, such an act builds a good reputation for your firm, enhancing your credibility. It can also reap credit benefits from your suppliers just in case you require it at any point in time. Though this may vary based on the choice of the supplier, the more prompt and timely you make the payments, the more or the chances that you can purchase goods on credit.
Spend management uses the best practices for the maintenance of spend data across various segments. Its implementation makes tracing and collation of expenditures and other documentation a lot easy. It enhances the spend visibility and thus makes way for improved compliance and other regulatory requirements.
Reduced Chances of Fraud
Honest employees are an asset to a company, but dishonest employees are everywhere, and the perils of having them in-house are huge. There have been cases where the company employees indulge in buying their personal stuff using corporate business cards and funds. However, everyone who does such an act may not have a wrong intention of duping the company and may plan to return it back at a later stage. But who knows that the intentions are always right?
Also, when you have no such system in place to track expenses and accounts, the employees may zip up such expenditures as if nothing happened, putting everything in the backburner. Such a continuous trend may bring doom and cripple the company talking in terms of wasted funds.
And we are pretty sure you would definitely not want to experience such perils of having dishonest employees in your firm, right? If yes, then it is imperative to have a dynamic spend system in place to keep track of all such out-of-policy expenditures. A spend management system ensures that you only pay for what you buy for the company and not what the employees enjoy ordering. By having such a system, you can stay rest assured from falling prey to such fraudulent activities.
With automated spend management systems, it is easy to access data from anywhere and everywhere. There are times when you might need to pull up a transaction record to verify something important. But what if you are not in the office and need the details urgently? It’s no more a reason to worry because you are no more required to hunt through files and documents as you can gain access to all the relevant documents at any point in time, irrespective of your location. Spend systems have customized dashboards that allow flexibility and permit the users to gain access even while being on the move.
From a purchase price point of view to supplier diversity to items purchased across the enterprise, there are actionable insights in almost every area from the spend analysis process. This powerful data can lead to smarter, data-driven, business decisions regarding the purchases made in every part of an organization.
Business owners need to be conscious and vigilant at all times to run their business efficiently. With that said, installing a spend management system is a boon as it is a tried and tested practice that can enhance company relationships and boost automated spending activities. Not only does it help you trace all your cashflows, but it can render a helping hand in driving the company’s success.