Effectively handling your finances is one of the most crucial components of any business. There are many different ways a business can do this, but more often than not, it’s achieved through a process known as spend management.
This important process is vital to your company’s success, and due to this, it’s essential you know exactly what it is and how it works.
Read on, where we’ll explain what spend management in your business is, and how it can be optimized to work most effectively within your company.
What is spend management?
Spend management is a process which involves the complete handling of every payment and transaction which occurs across your entire business.
In every company, there are often many different transactions taking place on a daily basis, all within multiple areas of the business. For instance, this could range from subscription services and resources, to travel expenses and business lunches.
With all these payments being made, it’s important to have an efficient system of monitoring, tracking, and controlling each one.
With spend management, the relevant team – most often the finance department – will consistently record every single transaction made, and log all the surrounding data. This can include how much was spent, what was purchased, and what company received the payment.
To optimize the process, many businesses use spend management software. This is an expert tool which handles all your spend management for you, all within one central platform.
Many of the common practices in spend management, such as recording payments, logging receipts, etc., are completed for you. The software also adds additional features to help you make the process more effective – spend controls, insights, and much more.
How does spend management work?
Spend management can be conducted in a variety of ways, but as mentioned above, none are arguably as effective as using spend management software. Here’s some of the ways spend management software can work to fully optimize your business:
Automated and streamlined processes
Spend management software can offer your business a more streamlined process for handling payments, through the many automated features it provides.
For instance, you can set up automated approval processes within areas of your business. This will allow for any transactions which fit within a certain criteria to be automatically approved, without the need for your intervention.
This can be to approve transactions from certain teams, or payments of a certain limit, or within a particular period.
This will help your spend management process – and your company overall – run more efficiently.
More control over spending
The software can also work to give you more control over how your company spends money, down to every individual transaction. It does this through a range of spend controls it offers you.
For example, one of the features you can incorporate into your process is applying spend limits to payments.
This will mean that any transactions which exceed a specified limit will be automatically prevented, and you’ll also be alerted of the transaction.
This can help you better control how much is being spent in your business – between different teams, for instance – and ensure all necessary budgets are being kept to.
Useful spend insights
Spend management software can also provide you with highly useful insights into your entire corporate spend, to make you aware of all the different ways you could be more cost-efficient.
For example, the software can offer you alternatives to certain payments your business is making regularly, which will be much cheaper to pay for, but offer a similar service. This could be a particular software your company uses.
With this information, you’ll constantly have a full picture of how efficiently your business is spending money, and more importantly, all the different ways this spending can be optimized.
Now that you know what spend management is, and how this expert software can help you conduct it more effectively, you should consider the benefits of implementing it into your own company approach.