Last Update: June 2025
‘Where can we cut waste without compromising performance?’ is a common question among finance teams, especially when margins are tight. The key isn’t across-the-board cuts or reactive cost-slashing. The answer lies in pinpointing exactly where money is being lost: duplicated purchases, bloated vendor lists, underused subscriptions, and manual processes that drain time and resources.
This article shows you how to uncover cost-saving opportunities through spend analysis, reduce maverick spending, and build long-term financial resilience with automation and data-driven controls.
Is your company overspending without realizing it?
Uncontrolled spend doesn’t always show up in big, obvious ways. It’s often the quiet, recurring costs (like duplicate subscriptions, one-off purchases, or low-value approvals), that quietly drain budgets over time.
Finance teams that prioritize proactive spend optimization are gaining visibility and setting their organization up for more resilient financial decisions. With a spend management tool, it’s easier to prevent overspending, protect margins, and focus on driving strategic growth.
What are the risks of poor spend management?
The consequences of not managing spend actively go far beyond going over budget. The risks are wide-ranging and can affect everything from your day-to-day operations to long-term financial stability.
Poor spend management can lead to:
- Overspending: Unnecessary or unapproved purchases often go unnoticed, causing businesses to exceed budgets and hurt profitability. Without the right controls in place, wasteful spend can quickly spiral.
- Compliance issues: Failure to follow tax laws, industry regulations, or internal accounting standards increases the risk of fines, penalties, and failed audits (especially when processes are manual or decentralized).
- Inefficient processes: Time-consuming purchasing workflows lead to bottlenecks and duplicated effort. Manual tasks like handling tracking and approvals drain productivity and increase operational costs.
- Cash flow problems: It’s difficult to forecast cash needs or prevent shortfalls without real-time visibility into spend. This can impact your ability to meet financial obligations or make timely investments.
- Reduced resilience: In periods of economic pressure, businesses with poor spending discipline often struggle to adapt. Without full control over costs, there's less flexibility to reallocate funds or respond to market changes.
- Missed growth opportunities: If cost-saving measures aren’t prioritized, capital gets tied up in low-value or unnecessary purchases. So there’s less room for innovation, hiring, and initiatives related to strategic growth.
- Decreased investor confidence: Stakeholders expect financial discipline. When costs aren’t controlled, it can damage your reputation and make it harder to secure funding or maintain board trust.
The risks are not only financial, but also operational, strategic, and reputational. Businesses that fail to manage spend effectively open themselves up to instability and missed potential.
How to conduct a spend analysis to identify savings opportunities
A detailed spend analysis is the foundation of any cost-saving strategy. It highlights inefficiencies and helps you make better financial decisions. Let’s take a look at how to approach it.
1. Collect spend data
Gather current and historical data from across your organization. This includes purchase orders, invoices, expense reports, and credit card statements. Make sure you're capturing spend from all departments, locations, and payment methods.
2. Categorize spending
Organize the data by department, vendor, spend category, cost center, or funding source. Categorization helps surface purchasing patterns, such as which teams spend the most or which vendors are used most frequently.
3. Analyze trends and outliers
Look for signs of overspending, duplicate vendors, price fluctuations, and recurring charges that don’t align with budgets. Compare similar departments or vendors to spot inefficiencies or inconsistencies.
4. Identify cost-saving opportunities
Focus on areas where spend can be optimized. This could include consolidating vendors, eliminating underused subscriptions, negotiating better rates, or enforcing internal purchasing policies that have slipped through the cracks.
5. Create an action plan
Once key opportunities are identified, assign owners, set timelines, and define measurable goals. You may also need to update budgets based on your findings to align future spending with business priorities.
6. Track progress and report savings
Use spend analytics dashboards to monitor progress, measure actual savings, and track compliance. Ongoing visibility helps reinforce accountability and refine your cost-saving strategies over time.
Spend analytics software makes this entire process faster and easier to maintain. Finance teams can drill into spending at every level with centralized data and customizable reports.
5 ways to optimize spending with spend management and analytics software
Once you’ve analyzed spend, the next step is to put internal controls and automation in place to keep costs low and spending visible. You can use spend analytics software to:
1. Automate purchasing processes
Manual purchasing leads to too many errors and off-policy spending. Automation eliminates these gaps by speeding up approvals and giving teams visibility into every transaction. Fraxion, for example, routes requisitions to the right approvers, flags duplicate orders, and generates digital audit trails for full accountability.
2. Establish internal controls
Automated workflows enforce your policies (like quoting requirements, budget checks, or multi-level approvals), without needing constant oversight. This ensures only necessary, compliant, and approved purchases are made.
3. Implement clear expense and travel policies
Set spending limits, require pre-approvals, and define approved vendors for travel and reimbursements. Finance software applies these rules automatically. It reduces fraud risk and minimizes issues related to reconciliation.
4. Manage vendors strategically
Analyze vendor spend to consolidate orders and negotiate better pricing. Fraxion’s supplier management tools help businesses steer spending toward preferred vendors and maximize contract value.
5. Uncover hidden spend insights
Real-time analytics reveal patterns and opportunities that manual reviews miss. Track spend by employee, department, or category, and compare budget versus actuals to identify risks in advance.
Not sure which software supports these strategies best? See how the top spend management tools compare.
Reduce costs and start improving spend control with Fraxion
As you know by now, spend optimization is an ongoing strategy. Fraxion gives finance leaders the tools to track, manage, and analyze their spending proactively. With built-in controls and real-time visibility, it’s easier to stay on top of purchasing activity and make confident, timely decisions.
If approvals are stalling, purchases are slipping through unnoticed, or you’re struggling to keep spend aligned with budget, it’s time for a better way to manage costs.
Book a custom demo today to see how Fraxion supports teams in gaining control and building lasting financial discipline.
FAQs
How do you identify cost savings in procurement?
Start with a detailed spend analysis. Gather spend data from across departments, categorize it by vendor or cost center, and analyze for patterns like duplicated purchases, unmanaged subscriptions, or off-contract spending. From there, you can spot areas to consolidate vendors, renegotiate pricing, and enforce policy controls. Spend management software accelerates this process and improves accuracy.
What is the best spend management software for finance teams in 2025?
The best tools for finance teams are those that offer full visibility, built-in policy enforcement, analytics, and approval automation. Top platforms like Fraxion combine real-time dashboards, ERP integration, and mobile-friendly workflows to help teams control spend before it happens.
How does Fraxion help finance teams identify cost-saving opportunities?
Fraxion gives finance teams real-time insights into spend by department, vendor, or category. With automated workflows and embedded analytics (powered by Microsoft Power BI), teams can uncover patterns, prevent maverick spending, and spot inefficiencies early. This allows leaders to act before costs spiral and redirect spending where it matters most.
How long does it take to implement spend management software for finance teams?
Implementation timelines vary, but most mid-sized organizations can get up and running with Fraxion in a matter of weeks. The platform is cloud-based, with minimal IT lift, and includes onboarding support to configure workflows, train users, and integrate with existing financial systems.
How does Fraxion ensure compliance in spend management for finance teams?
Fraxion enforces compliance through configurable rules, automated approval workflows, and real-time budget checks. Every transaction is tracked and audited, helping finance teams stay aligned with internal policies and external regulations. This ensures accountability, reduces risk, and simplifies audit preparation.
What are the risks of not optimizing business spend?
When spend isn’t actively managed, businesses face overspending, compliance failures, missed savings, and limited financial agility. Poor spend control also weakens investor confidence and makes it harder to scale. A structured spend management approach helps avoid these risks while improving efficiency and resilience.