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4 Strategies to Improve Your Company’s Spend Management Process
Managing business expenses can be tedious and time-consuming. Read this article to streamline your company’s spend management process.
Companies of all sizes should employ strict financial controls to survive and thrive in the long run in today’s modern world. For instance, traditional expense management methods can no longer help with this since they often cause delays and errors, which can be costly for your business.
One way to resolve the problem is by automating your spend management process. This strategy can help you manage company spending more effectively and avoid potential financial fraud.
This article discusses the spend management process, including how you can optimise it for your organisation.
What is Spend Management?
Spend management involves collecting, organising, and assessing spend data from credit card use to acquisition expenses and accounts payable to enable better procurement and sourcing decisions. It includes strategic activities—budgeting, spend analysis, sourcing, and supplier and inventory management, among others.
A spend management system helps companies track costs and expenses, optimise spending, and streamline spending processes. It also allows businesses to mitigate financial risks and maintain data accuracy.
Companies could risk mismanaging funds with inaccurate data and miss cost-saving opportunities without an organised spend management system. Poor spend management could also lead to siloed work cultures and departmental miscommunications. These repercussions highlight the importance of implementing an efficient spend management process.
4 Ways to Optimise Your Company’s Spend Management Process
Spend management can be a lifesaver, especially if you’ve previously had problems with costs and expenses. Here are some tips to help you get started if you’re new to spend management or want to update your existing processes.
Assess your current spending processes
This step entails assessing your organisation’s existing processes, technology, and information systems that support procurement decisions and activities.
A typical spend assessment includes a review of the company’s current practices, policies, and procedures to determine if they align with the organisational goals, objectives, and business strategies. Inventory, requisition, and contract management may also be part of this process.
In addition, the assessor should identify opportunities for improvement, recommend changes where necessary, and provide a roadmap for future initiatives.
Identify areas where you can optimise spending
Here, you identify the company’s sources of expenses and categorise them. Employee payroll, office supplies and utilities, property taxes, and insurance are common examples.
Identifying business areas that consume substantial funds is also essential to this step. It helps to develop recommendations to optimise managing such expenses. One way to do this is by analysing purchases from vendors manually or automatically through software tools like spend management software.
Using expense management software helps you automatically track spending patterns and trends, analyse and interpret numbers faster, and maintain accurate expense records.
Validate transaction entries and related data
Not all company transactions and expenses are authorised. Suppose you don’t have an efficient spend management process in place. That could give rise to employees declaring personal expenses as business costs and requesting reimbursement. You might also receive inaccurate expense claims misrepresenting the value of a particular business transaction for profit.
Remember that false, missing, or inaccurate data often lead to unnecessary business costs. As such, it’s crucial to validate spending transaction entries and related data—contracts, purchase orders, and invoices, among others—through an efficient expense management system.
For one, your expense management software lets you gain visibility over employee spending. You could also issue corporate cards to employees with pre-approved budgets to prevent overspending or unauthorised expenditures.
Analyse all spend data for better forecasting
Spend analysis allows you to gain visibility over your business finances for better forecasting and budgeting. The procedure also enables you to maximise cost reduction opportunities and manage supplier relationships.
You can seamlessly analyse your organisation’s spend data with a spend management system like Spenmo. The software helps you consolidate corporate card spending data, bill payments, invoice information, employee reimbursements, and payroll disbursements into a single interface. It also facilitates faster expense claim approvals for a more streamlined spend management process.
Take Your Spend Management Process to the Next Level
Spend management is an essential aspect of business administration. It helps prevent unauthorised spending, minimises financial risks, and improves profitability.
You could improve your spend management process with Spenmo. This end-to-end payables solution brings internal spend management, automated bill payments, custom approval flows, and accounting reconciliation into an integrated view.
Spenmo's vision is to provide businesses with visibility, comfort and control over how, when, and why money leaves your company. Book a demo today to see how the software can help optimise your spend management process!