Looking for ways to save? Our latest post explores ways to identify cost-saving opportunities using spend analytics tools and how to realize savings...
Part 1 | Spend visibility: Informed decision-making
As companies continue to face unprecedented economic headwinds, rising inflation, disruptions, and uncertainty, finance leaders are faced with challenges that necessitate a move to leaner and more agile operations.
The role of the chief financial officer (CFO) has evolved, and a new set of responsibilities have come to the fore. The rapid development of process automation, data analytics, and artificial intelligence (AI) have changed the way day-to-day business processes are performed and optimized. The CFOs purview now extends beyond financial management to include digital transformation, operational efficiency, risk management, and strategic planning; a critical aspect given the looming risk of a recession. As companies increasingly rely on CFOs to steer a business to long-term success, it’s imperative to develop the necessary competencies and equip teams with adequate tools to manage, oversee, and adjust processes and spending where required.
To assist CFOs and finance leaders in navigating uncertainty in the current economy and beyond, we have created a comprehensive Business Resilience Guide. In Part 1 of the series, we will explore the importance of spend management, and the key role spend visibility plays in achieving the financial oversight required to make informed and impactful decisions.
What is spend visibility?
Spend management is crucial for organizations to optimize costs, improve profitability, and drive financial success. At the core of effective spend management lies spend visibility.
Spend visibility refers to the ability to track and manage all business spending in real-time. It involves having a system of records, oversight, and understanding of exactly how funds are allocated and spent in a company. Having full visibility of when and where all costs are occurring is crucial to gain control and optimize business spending.
Understanding the impact of poor spend visibility
When companies have no way of overseeing how business spending occurs until after the fact, it can lead to overspending, exceeding budgets, unreasonable expense, and travel claims, making duplicate payments, paying for goods not received, and wasting money on unnecessary purchases. A lack of visibility and control can lead to financial distress later down the line.
There are many reasons why some companies lack the necessary visibility into spending; most causes are rooted in inefficient processes that are outdated and reactive. Manual or paper-based processes offer no insights into what has been requested, approved, ordered, or spent. Tracking down relevant employees across dispersed office locations, or remote home offices further exacerbates this issue when tracing purchasing records, orders, goods, and receipts.
Gaining spend visibility
To achieve complete spend visibility, companies need to implement an efficient digital process. Procurement and spend management solutions can provide real-time tracking of purchasing and spending against budgets, enabling transparency and control at each stage of the process. Such solutions can provide deeper spending insights, supported by AI-powered analytics and reporting capabilities, providing more granularity and insights into spending behavior, enabling finance leaders to identify cost-saving and efficiency enhancing opportunities.
Begin your journey to business resilience
As the role of CFOs shifts towards a more advisory role, spend visibility becomes increasingly important to implementing effective spend management strategies, redirecting cost savings to growth initiatives, and reinvesting in the business to achieve long-term objectives.
Having a holistic view of a company’s spending enables informed decision making and the necessary data to reduce the right costs. The ability to track and manage business spending in real-time is a crucial component of effective financial management, empowering financial leaders with the agility to pivot decisively, when needed. CFOs who adopt technology to achieve spend visibility can better navigate uncertainty and improve their company's financial health and prosperity.
For a deep dive into spend visibility, download Part 1 of our comprehensive Business Resilience Guide here. You’ll gain a detailed overview of the importance of spend visibility with actionable tips to achieving it in your business.
What to expect in the Business Resilience Guide series:
• Strategic cost containment: Reducing the right costs, managing spend categories, eliminating overspend, and mitigating maverick spend.
• Fortifying financial governance: Internal controls and policy compliance.
• Risk management: Safeguarding your business with proactive processes.
• Unlocking operational efficiency: Digital transformation and process optimization.
• Pursuing growth: Igniting potential and driving success.
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Providers of procurement solutions for proactive spend management for over twenty years, Fraxion is trusted by mid-size companies worldwide, with over $15B of spend under management. Engineered for finance teams, Fraxion empowers leaders and CFOs to establish company-wide procurement policies, and internal spend controls, while gaining complete spend visibility, analytics, and reporting power to make informed, astute spending decisions. Get in touch to discuss your spend management and resilience-building needs.