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How to leverage your spend management system to excel in your role: Finance
It's no secret that a spend management system is a valuable resource for any finance department. Proactively controlling your organization’s spending behaviors to protect working capital and maintain positive cash flow is key to increasing your department’s performance and building a profitable financial business model.
Spend management systems are designed to track, guide, control, and analyze spending habits of employees and their departments. By proactively managing spending processes, implementing internal controls, and ensuring compliance and accountability, you can reduce costs and risks, and eliminate the need for costly reactive processes.
In this blog post, we'll explore the benefits of spend management systems and how leveraging technology can give you an edge in your financial role.
The importance of spend management
Organizations spend much of their revenue sourcing goods and services that support day-to-day business operations. By mastering spend management, you're ensuring that your organization and all of its employees are requesting, approving and optimizing funds and allocations.
In most cases, budgets are tight, and failure to keep track of your organization's spending habits will leave you at a disadvantage when it comes to tasks like:
- Business planning
- And more
Robust spend management systems offer visibility of your organization's spending, so CFOs or finance professionals like yourself can control it to drive business profitability and growth. And with defined spend policies that maintain financial discipline, you can create a cost-conscious, efficient organization.
Additionally, with fast and simple guided processes, you can increase employee satisfaction and adoption levels as you save time, improve purchasing operations, and reduce the risk of fraud and overspending.
5 Benefits of modern spend management systems
Spend management systems can help you establish a framework for spending policy management and cost control to achieve your business objectives.
Below are some top benefits of modern spend management systems:
1. An instant overview of all expenditures
Finance departments need an efficient spend management system for better transparency and visibility into organizational spend. After all, how else can you maintain budgets and know that all spend has been allocated to what it was intended for?
To prevent losses, you should account for every dollar spent. Spend management systems track all of your organization’s spending against budgets, with instant overviews and configurable expenditure reports by category and time period. You can analyze and compare historical fiscal periods.
It should also provide a clear overview of how different departments and individuals manage company resources and which suppliers they are purchasing from. You can report on spend by employee, total spend by vendor, and price variations between vendors to identify top performers.
This data and visibility enables you to make informed decisions when it comes to budget cuts, supplier consolidation and reducing the right costs to eliminate wasteful spending.
2. Budget control
Spend management systems offer budget insights and controls that help you drive strategic business savings and eliminate overspending. Authorized users can access real-time budgets at decision points to gauge the impact of spend against a particular budget before approving or committing to it. A spend management system can help you identify trends and preemptively plan for future budgets and financial periods.
Optimal spend management systems are cloud-based and enable on-demand access from any internet-connected device without requiring installation or maintenance by end-users. This service is part of what makes it possible for organizations with limited IT resources to effectively deploy and use advanced enterprise-level spend management solutions across their organization.
3. Reduced operational costs
With a spend management system in place, you can reduce operational costs by making informed purchasing decisions and ensuring that all spend is approved, on-contract, policy compliant, and in budget. By purchasing from contracted suppliers, you can be certain that you’re getting goods and services at pre-negotiated prices and the best value.
You can even create an easy shopping experience for all employees with PunchOut, where they can access millions of accurately maintained catalogs and cost-effective products from approved vendors. Alternatively, you can host your own internal catalogs with selected authorized suppliers.
Not to mention, automated approval workflows and compliance checks are present throughout the requisition-to-PO process to accelerate and control all requests, approvals, and transactions.
4. Time savings and improved operational efficiency
With a system in place to manage and analyze your organization’s expenditure, you’ll have the ability to optimize your company's spending processes and increase operational efficiency, for easy time savings.
For instance, modern spend management systems automate multi-level approval workflows that route requests from one user to another. In the case of an approver being out of office, they can receive their request via email or a mobile app, or enable a proxy to approve on their behalf.
These features ultimately all work together to speed up the procure-to-pay process by preventing bottlenecks and delays.
Finally, spend management solutions significantly free up your AP department’s valuable time, setting the team up for success. Traditionally, this department is inundated by time-consuming administrative tasks like manual invoice matching and locating purchase orders. Inconvenient but necessary tasks that mitigate the risk of duplicate payments.
However, you can completely bypass this problem and eliminate payment errors with automated two and three-way invoice matching to purchase orders and receipts. Other productivity enhancing AP benefits include:
- Centralized document uploads
- Electronic pro-forma invoices
- Invoice approvals
- Bulk updating capabilities
- Variance or exception alerts and internal control within AP workflows
- Seamless integration with accounting or ERP systems
With these features removing any points of friction in the AP process, paying on time and achieving early settlement discounts become realistic goals! Lastly, modern spend management systems should seamlessly integrate with your existing ERP or accounting system, so you can monitor costs and financial records without having to use and update two separate systems. This in turn helps you maintain accuracy, improve efficiency and further streamline AP processes.
5. User-friendly interface and ease of use
One key advantage of using a modern spend management system is the ease of use it offers to employees. In addition to being convenient, an easily navigable user interface is proven to increase healthy adoption levels, a key driver in achieving time-to-value and ROI.
Intuitive interfaces streamline onboarding and non-finance and non-procurement professionals quickly adopt the solutions, meaning you can save time and costs that would otherwise be spent on system training. Employees simply follow your organization’s procurement policies with ease, thanks to configured rules, workflows and policies.
A mobile solution maintains control of your organization’s spend, no matter the location or size of the organization, with automated workflows for:
- Purchase requisitions
- Expense reports
- Vendor approval
- Multi-level approvals
- Purchase orders
- Change orders
- Invoice approvals
- Vendor PunchOut and internal catalogs
- Receipt of goods
- And more!
Plus, you can further enhance simplicity and adoption if your system is available via a mobile app. The ability to request, review budgets and approve on-the-go will reduce your processing times and costs significantly.
Leverage your spend management system in finance
By now you’ve learned how digital spend management systems grant you the mobile productivity, visibility, and financial control that you need. So, what features can you take advantage of to excel in your role?
Daily business processes like requisitions, expense reports and approvals can be automated, fast-tracked and simplified with a spend management system.
Eliminating overspending can be challenging for finance departments, especially if they’re cutting costs blindly with no visibility into organizational spend. By leveraging a spend management solution's spend analytics and reporting capabilities, you can strategize cost containment initiatives, prioritize improvements, and streamline reporting to boards and regulatory bodies.
You can take advantage of multiple reporting structures to gain a holistic view of your organization’s spend. Track spend against budgets and by category to inform strategic decisions and drive maximum spend reductions.
Your department can leverage comprehensive audit trails that detail all transactions that occur within your spend management solution. Having a reliable log of spending activities with date and time stamps, user activity, approvals, changes or rejections provides a useful resource for verifying financial activity during the auditing process.
Audit trails assist finance departments to:
- Increase transparency
- Promote accountability
- Reduce the risk of fraud
- Improve auditability
- Improve compliance
Having visibility into every transaction’s life cycle and centralized data makes running even the largest financial departments manageable.
Thanks to the transparency they provide, audit trails also happen to act as a strong internal control that holds everyone accountable.
However, you can gain even more proactive control of your organization’s spend by configuring your spend management system to:
- Manage user permissions
- Enforce policies and spending limits
- Implement delegation of authority
- Route and escalate approval workflows based on defined parameters
- Enforce pre-approval for travel requests
- Ensure segregation of duties
- Set up alerts and notifications to flag non-compliance and potential risk
These internal controls govern to every step of the procure-to-pay cycle and employee travel and expense reporting to drive compliance and mitigate risk.
Once you configure your solution to enforce your organization’s spend management policies and processes, you’ll have the peace of mind that financial control will prevail. These automated workflows and proactive controls do the heavy lifting for you, alleviating the burden on your team and freeing up capacity for more strategic initiatives.
It’s a win-win for everyone involved, your business reaps the rewards of effective spend management and your team is well prepared when it’s time for an audit.
Choosing a spend management system that exceeds your finance department’s needs
Effective spend management could be the catalyst for success in your role and growth for your business. And with a spend management solution that enables you to make informed data-driven decisions, accelerate processes, and reduce costs, you'll be on your way to achieving key KPIs. From maverick spend control, financial efficiency, and cost reductions to operating cash flow, to resource utilization, and more.
Want to learn what to look for when choosing a solution to achieve the ultimate return on investment?