Business Spend Management: What is It and Why You Need It
Managing business expenses is a key concern for all companies and one that’s difficult to orchestrate with manual processes, paper receipts and handwritten notes. By using a business spend management software to track and monitor employee spending, companies can speed up the expense management process, reduce errors and distribute reimbursements faster.
What is spend management?
Business spends management not only tracks employee spending but also determines how the organisation will reimburse the costs incurred. It also applies the procedures and policies used to control this type of spending. For example, if employees are given daily allowances for meals when travelling, then the expense management process accounts for those limits when generating reimbursements for workers.
Why is spend management important?
All companies must be able to pay their bills on time to stay in business, and employee expenses are one of those bills. For any company with employees who conduct business outside of the office, expense management will always be vital. Even something as simple as a client lunch paid for by an outside sales manager needs to be documented, approved and reimbursed.
With effective spend management processes in place, companies can issue those reimbursements quickly and accurately. Employees do not like waiting months after they cover an expense to get reimbursed.
The benefits of the software platform
Improved efficiency and productivity
Did you know that businesses waste hours because of inefficient, paper-based payment processes? Unfortunately, many organisations still handle spend management with this traditional model leading millions of invoices to be written out by hand, sometimes even on simple notebook paper like the image below. With this system in place, invoices or other documents are more likely to get lost or misfiled, and even a small misfiling is costly. A misfiling rate of one in a four-drawer cabinet can lead to many misfiled documents.
Utilising a solution for spend management boosts productivity by implementing simple automation that drives efficiency and removes the need for paperwork. As for an example, moving requisition requests to an automated form that submits the request and notifies appropriate approvers. Cloud services have given them a competitive advantage because of the ease and speed. As information is hosted in the cloud, this also makes remote access easier for stakeholders through mobile applications. This way, if an error occurs or a request must be handled immediately, employees can still access the system to provide a quick response.
With the heightened visibility of cybersecurity disasters over the past few years, many businesses assume that, once data is in the cloud, it is more likely to fall into the wrong hands. One more thing, when money is involved, this concern becomes even more prevalent.
Organisations that run manual processes have limited or no view of the budgetary impact that a requisition may have. Worse still is that the impact against the budget is typically only visible in a budget variance report that gets generated a few weeks after month-end. At this point, intervention is impossible. While a tremendous amount of effort goes into building a budget, if organisations are not able to operationalise the budget insight into the approval process, the efforts of the company are wasted.
Improved cash flow oversight
Cash flow can make or break a business. Often, businesses see budgetary discretions because of unapproved spend or overestimated funds. In reality, the overall lack of visibility into what the business is spending day to day can add up to the total spend. A spend management platform operating in the cloud provides greater control over cash flow through the automatic authorisation of suppliers, enforcement of budgets and recommendation of approval processes before any costs are incurred. Cloud-based systems provide a comprehensive audit trail and detailed view of the entire process, providing stakeholders with greater insight into each step. It helps create a more efficient and regulated spend management process. Which is vital to business success, especially when you consider that companies lose revenue every year due to unwanted inefficiencies and unfortunate errors.
Detailed reporting and analytics
Leveraging a platform for spend forecasting allows businesses to shift from the management of spend to the enablement of smarter spending through improved visibility into needs, budgets and costs. Analytics and back-end insights are vital for the success of a cloud system. As data is gathered with each requisition, approval and transaction, these management platforms can provide detailed analytics that can help identify spending trends and augment forecasting. The ability to effectively forecast leads to long-term bottom-line savings through more effective management of the dollars in and out of the business.
With the heightened visibility of cybersecurity disasters over the past few years, many businesses assume that, once data is in the cloud, it’s more likely to fall into the wrong hands. Also, when money is involved, this concern becomes even more prevalent. However, this is not the case. Paper-based or on-premise processes are much more likely to face security threats since there is not an established and visible trail of spending in place.
With a business spend management software, data remains safe from damage or loss of physical storage like a mobile device, laptop or paper documentation. It is because the cloud provides the opportunity for comprehensive data backups that can still be recovered in case of an emergency.
Effective spend management is vital for the success of businesses across various industries. By utilising a spend management system, businesses can see improved productivity, greater visibility into spend, more control over policies and procedures, improved forecasting and better data security. To maximise operational effectiveness, it is time for businesses to move away from the outdated, paper-based processes of the past and dive into the future with an online platform.
If you are looking for a business spend management platform for your needs, visit our website and let us help you today.