Companies of every size are waking up to the reality that spend management plays a vital role in the financial health of a business. We’re not talking about bookkeeping; we’re referring to the modern, automated processes implemented to expedite, streamline, and control spending. Accurately tracking financial operations becomes increasingly difficult as you scale.
Here, we’ll explore the concept of spend management, why it’s important, and how to choose the right spend management tool for your organization today.
What Is Spend Management?
Sometimes referred to as expense management or spend data management, effective spend management is a technology or software solution that helps finance teams stay informed, track what is spent, and closely monitor all financial activities. This helps them gain visibility, create insights, and avoid maverick spend.
Spend management typically includes all purchasing, business expenses, and procurement activities (procure-to-pay) a company will exercise. Moving away from the manual 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 to manage expenses. The right spend management process will put your spend data front and center so you can make more informed, data-driven decisions.
Finance teams often plan budgets without much insight into spending patterns. With real-time budget data, teams can make appropriate adjustments to meet their goals, instead of realizing they’ve exceeded the budget when it’s too late. This simple benefit can change the entire way a small business operates, with the ability to strategize and participate in data-supported forecasting for things like travel expenses and virtual card spend, way ahead of time.
Why Does Your Business Need a Spend Management Tool?
For every investment in new technology, there has to be some way to gain easy opt-in from stakeholders. The best way to do this is to show how spend management tools can optimize current processes, and benefit the organization as a whole. Here are some of the main reasons your business needs a spend management platform right now:
Faster Processing
The right spend management and AP automation tool can help your finance team automate all manual tasks that have been slowing them down. From matching to invoice processing and approval workflows, the need for emails and direct messages will be eliminated. Tasks like the purchasing process, writing expense reports, consolidating employee expenses, and scheduling reimbursement, will all be accelerated.
Employees and vendors alike will have more time to focus on value-added tasks. This increased efficiency allows for the ability to handle a heavier workload and in turn, grow the business at a faster and steadier pace, while realizing cost savings around every corner.
More Strategic Sourcing
Effective spend management helps support healthy supplier relationships by expediting the strategic sourcing process and eliminating the back-and-forth required for selecting, onboarding, and managing new suppliers. With superior supplier management, companies can maintain longer, trustworthy, and cost-efficient relationships that contribute to less company spending.
Accurate Analytics
Access to complete spending data lets you breathe easier. Accurate, real-time expense tracking helps finance teams gain insights into their spend, allows companies to facilitate the supply chain, and leads to better planning/use of budgets. With comprehensive reports, essential business data is counted towards your intuitive decision-making processes and affects future transactions.
Complete Audit Trail
The ability to easily look back at any purchase is vital for refining any end-to-end process. Whether your team needs to recall important vendor data, has a complex approval process, or just wants to improve systems – having a complete audit trail is beneficial and essential.
Greater Spend Visibility
Time and time again, it comes back to real-time 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, leading to better cash flow, greater accountability, more accurate spend analysis, and stronger spend controls.
Risk Protection
Mitigating risk is a broader part of spend management and smart procurement software. With a good business spend management tool, you’ll be able to receive regular updates on market trends, supplier performance, contracts, pricing, and more. Tracking exactly when goods have been received, and confirming the vendor information is accurate, can help prevent all types of AP fraud.
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What to Look for In Spend Management Software Solutions?
Flexibility
Intelligent spend management requires a solution that can bend to the needs of your stakeholders. If a tool is rigid, has a confusing dashboard, or is limited in functionality, teams may find it difficult to carry out important functions they need to manage spending. Before choosing a spend management software, determine the specific needs of your team, critical benchmarks, and the requirements of each stakeholder.
Customization
This goes hand in hand with any flexible, cloud-based SaaS solution. Teams must customize their workflows to achieve a seamless, supportive process. A tailored workflow must also 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 employing valuable features altogether. Ensure the solution is easy to use so employees get the most out of it.
Top 5 Spend Management Tools
#1) Tipalti Procurement
Great for high-growth organizations, Tipalti Procurement 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. You can also take advantage of the Tipalti Card program. It is a corporate card feature that allows teams to use both physical and virtual credit cards.
#2) Coupa
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 be overkill for smaller organizations.
#3) Brex
Brex allows users to sign up for bank accounts, receive routing numbers, and integrate corporate credit cards. The cash management platform can help save time by avoiding the onboarding and integration required with most systems. Its interface is straightforward and user-friendly; however, limits and policies can change frequently, frustrating users.
#4) Expensify
A receipt and expense management software ideal for SMBs, Expensify offers a straightforward approach to the procurement process, giving users a way to track expenses, make purchase requests, and get reimbursed. Uploading photos of receipts is easy, and its mobile app is highly reviewed. A downside, however, is that a lot of banks and credit cards are not supported, so users should research thoroughly before deciding to purchase.
#5) ERPs
Enterprise resource planning tools are common software packages used by all types of organizations that want to manage payable 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: Tipalti Procurement integrates seamlessly with Netsuite. To see how a requisition process completes Netsuite, check out our TipaltiNetsuite integration demo.
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 better positioned to save time and money, becoming more profitable as you continue to work and scale.
Interested in implementing a spend management system that simplifies and streamlines your business’s existing process? Get started with Tipalti today!
