Businesses of all sizes are waking up to the reality that spend management is something absolutely vital to an organization. We’re not talking about bookkeeping; we’re referring to the modern, automated processes businesses implement to expedite, streamline, and control their spending. As businesses scale, accurately keeping track of all financial operations becomes more difficult, as well as more important. Let’s explore how to choose the right spend management tool for your organization.
What is spend management?
Sometimes referred to as spend data management, effective spend management is usually a software solution that helps finance teams track business spend and closely monitor all financial activities in an attempt to gain visibility, insights, and avoid maverick spend. This usually includes all purchasing as well as procurement activities a company will participate in. Moving away from the merely operational practices of the past, modern spend management focuses more on speeding up these processes while promoting strategy building and flexible planning.
Successful businesses understand the importance of data visibility. The right spend management tool will put your spend data front and center so you can make informed decisions every step of the way. Finance teams often plan budgets in advance without much insight into whether spending will, or is staying on track. With real-time budget data, teams can make appropriate adjustments to meet their budgets instead of realizing they’ve gone over-budget when it’s already too late. This simple benefit can change the entire way a business operates, with the ability to strategize and participate in data supported forecasting.
Why does your business need a spend management tool?
With a spend management software in place, finance teams can automate all manual tasks that have been slowing them down. From matching, processing, and invoicing, among other back and forth communication, the need for emails and direct messages will be eliminated. All actions are sped up, creating far fewer silos. Employees and vendors alike will have more time to focus on important tasks. This increased efficiency allows for the ability to handle a heavier workload and in turn, grow the business faster.
Like we touched on above, the access to your spending data lets you breathe a bit easier. Knowing that purchases are not going unnoticed or lost lets your team accurately plan and use budgets. With comprehensive reports, necessary business data can being counted towards your decision making processes and affect future transactions.
Full audit log access
Having the ability to easily look back at any purchase is vital. Whether your team needs to recall important information about a vendor or an approval process, or just wants to study the process in order to improve it – having a complete audit log is not just a helpful benefit, it’s essential.
Overall spend visibility
Time and time again, it comes back to visibility. When finance teams and procurement managers know that spend has been properly approved, consolidated purchase requests and clear approval flows become the norm. This streamlined, transparent process supports a healthy purchasing flow that leads to money saved and accountability all around.
Mitigating risk is a part of spend management too. With a good spend management tool you’ll be able to receive updates regarding supply market trends, supplier performance, contracts and agreements, and more. Additionally, being able to track in real-time when goods have been delivered and received, and to confirm that vendor information is accurate can help prevent many types of AP fraud.
What to look for in a spend management software solution?
You need a solution that can bend to the needs of your stakeholders. If a tool is rigid or limited in its functionality, teams may find it difficult to carry out each of the functions they need. Before choosing a spend management software, determine the specific needs of your team, as well as of each stakeholder.
This goes hand in hand with a flexible solution. Teams need to be able to customize their workflows so they can achieve a seamless, supportive process. A customized workflow also needs to be able to adapt to changing times in a growing company.
Simplified User Experience
If you’re introducing a new tool to your team, you want them to be able to hit the ground running and use it with ease. Spend management tools have a lot of variations and features involved, and if the user experience leaves something to be desired, employees may shy away from using valuable features altogether. Make sure the solution you select is easy to use so you and your employees get the most out of it.
Top 5 spend management tools
A contender for enterprises, this solution is a good option for technology companies and large organizations who want a unified way to manage multiple channels of spend. A powerful system that can handle a lot, it can sometimes encounter difficulties with various integrations.
Replacing modern systems, Brex provides users the ability to sign up for and open bank accounts, receive routing numbers, and corporate credit cards. This cash management platform can help save time by avoiding the onboarding and integration required with most systems. It’s interface is straightforward and user friendly, however limits and policies can change frequently which can be frustrating for users.
Great for mid-market organizations, Approve.com is a robust solution that simplifies purchasing, procurement, and spend management. Purchase requests, approval flows, and purchase orders are all streamlined, and vendor onboarding is a breeze. It integrates quickly and easily with a company’s existing ERP, SSO, or other systems. But there is not the ability to use virtual credit cards.
A receipt and expense management software ideal for SMBs, Expensify gives users a straightforward way to track expenses, make purchase requests, and get reimbursed. Uploading photos of receipts is very easy, and the mobile app has praise as well. A down side however, is that a lot of banks and credit cards are not supported, so users should research thoroughly before making a decision to purchase.
Enterprise resource planning tools are common software packages used by all types of organizations who want to manage business functions, like spending, with a centralized system. A popular ERP is Netsuite, which offers a lot of customization options, has searchable spending data, and easy reporting. However, so much customization requires a lot of maintenance, and customer support is not 24/7.
Pro tip: Approve.com integrates seamlessly with Netsuite. To see how a requisition process completes Netsuite, check out this article.
Ultimately, the spend management tool you choose for your company needs to expedite the processes you already have in place, keep track of spending in real-time, and give your team the ability to make the right adjustments so you continue to meet your budget. By investing in spend management solutions, your business will be in a better position to save time and money, becoming more profitable as you continue to work and scale.