Finance is a key department in every organization, with responsibilities that include paying salaries, accounts payable processes, budgeting, forecasting, and providing investment capital.
However, controllers and CFOs, supported by their finance teams are taking on a new, challenging function: managing the strategic direction of the business.
This is a vital partnership between the CEO and the finance lead and requires smart financial decision-making. This is exactly where a spend management system’s value lies; it helps finance teams implement an organization-wide compliance framework for purchasing processes to contain costs, and gain complete spend visibility to make better informed decisions as they operate and scale.
What the modern finance department does
Before looking at how a spend management system can help you attain your goals, let’s first uncover the current landscape.
Today, 77% of CFOs believe it is their job to drive business-wide transformation, and 81% consider identifying and targeting new areas of value their top responsibility. These goals go hand in hand because both require steady cash flow.
CFOs must ensure sufficient funds to meet financial obligations and provide for new endeavors. These responsibilities require complete oversight and proactive control of purchasing processes to manage spending and generate business savings that can be redirected towards their goals.
In addition to this, finance leads are responsible for sourcing long-term financing from internal and external sources. Externally, financing can be acquired via a range of sources; private lender debt, banks, angel investors or venture capitalists, to name a few.
Internally, strategic spend management supported by effective processes goes a long way in enabling a cost-effective organization. Ensuring that your business is making optimal purchasing decisions and that operational spend is always tracked, approved, and compliant with your organization’s budgets and purchasing policies.
How a spend management system enables the capabilities a finance team needs
Making the decision to automate purchasing processes is the first step to achieving efficiency, spend visibility and control; key components for growth, and a vehicle for driving transformation and identifying areas of value.
By removing the constraints of manual and paper-based processes, you can start to accelerate your goals. From delays caused by tracking down paper copies of purchase orders, escalating email approval threads that get lost in unattended inboxes, to cross-checking budgets against multiple spreadsheets, automation can replace these routine inefficiencies.
Instant automation of daily tasks within the purchasing process means all users across an organization can work faster and smarter. A spend management system is configured according to your chart of accounts, budgets, business rules, and procurement policies, with automated internal controls and purchasing workflows that guide spending behavior and ensure compliance.
Whether your organization is small or midsize and you need to institute a sound purchasing and expense management process to protect your resources, a spend management system will be instrumental in automating processes, providing visibility, and ensuring adequate control. So too for companies that are not large enough to require the function of a procurement team; a spend management system assumes the role of implementing best purchasing practices and ensuring compliance.
Insights and analytics
With finance leaders influencing the future of businesses, there is an urgency to turn data insights into action. Knowing the numbers isn’t enough, you must understand their implications to the business, identify problem areas, and implement changes or solutions.
A spend management system with insights and reporting offers an in-depth view of the goods and services your business is buying, and which suppliers you’re buying from. You’ll understand transactional costs, spend by employees, companies, or entities, with cost allocation and budget tracking granularity. It also gives you the data you need to make informed decisions, budget accordingly, and forecast with more predictability.
With a 360-degree view of operational spend, you can easily identify new saving opportunities and where to apply budget cuts. This visibility helps you decrease the right costs that will reduce wasteful spending without impacting operational efficiency.
You can also channel spend to high-performing suppliers that offer your organization the best value for money. By purchasing from fewer contracted suppliers, you stand to reduce costs by negotiating more favorable terms, bulk discounts, free shipping, and more.
With digital transformation top of mind, and an imperative accelerated by the impacts of the pandemic and subsequent market disruptions, many finance teams are at the helm of transformation, driving cloud or digital-first strategies forward in their organizations. This means implementing systems that ensure business continuity, more convenience, greater resilience, and adaptability to change.
Organizations and team members are becoming more geographically dispersed or choosing to work from home rather than traditional office-based operations. In these evolving times, finance teams face even more challenges if relying on manual processes. Having a cloud-based spend management system offers multi-device accessibility from any location to support any workplace model.
The agility and automation enabled by a cloud spend management system connects your team, processes, and policies. You can streamline the way your team requests items, reviews spend against budgets, approves, orders, receives, matches, and approves for payment, regardless of where they are based. With centralized digital records and automated internal controls, the accounts payable process is fast-tracked and significantly simplified. This improved procure-to-pay process accelerates business operations while preventing wasteful expenditure, giving finance teams their time back to focus on new areas of value.
Connecting your tech-stack takes efficiency a step further. Selecting a spend management system that enables integration with your accounting or ERP solution will further streamline efficiency and accuracy, ensuring that all spend is approved, policy compliant, and in budget before it’s released by the financial system.
Empowering your team with the tools to be more accountable, productive, and make smarter decisions faster will accelerate your transformation and value driving goals, steering your organization's future to new digital efficiency heights.
Today, risk management is a top priority for finance teams. With increasingly impacted supply chains, rising inflation, and political and economic uncertainty, there is more opportunity for risk to occur. And it continues to be the responsibility of finance departments to manage it, according to 64% of CFOs.
Fortunately, digitizing purchasing, and expense management processes provides more transparency and spend control, which in turn promotes accountability and improves auditability.
Spend management systems remove the risk of fraud, unauthorized spending, overspending, and non-compliance with spending policies. With complete audit trails for each transaction, budget visibility at decision points, multi-level approval workflows, delegation of authority, centralized digital documentation, reporting capabilities, and supplier onboarding and approval processes, finance teams are well-equipped with preventative and detective internal controls to successfully mitigate risk.
To blunt the impact of inflation, finance teams must analyze their expenses, identify opportunities to save, and minimize discretionary spend. A spend management system extends control to the edge of an organization, scaling as the organization grows, and ensuring visibility and control across each employee-initiated purchase or expense while guiding their purchasing habits and making them accountable for what they spend.
Empower the evolution of the finance department
To empower your finance team to succeed in their evolving role, you need to have effective tools in place to streamline, manage, understand, and act on your organization's spending.
With a spend management system in place, finance teams can effectively lead the charge in transforming the way their organizations spend, operate, and ultimately, succeed.
Fraxion is helping finance teams in small to medium-size organizations worldwide to reach their spend management goals. To explore how the cloud spend management system can support your finance team’s requirements, book a demo customized to your organization’s needs today.