What Exactly Is Spend Management? And More Importantly – How Can You Improve Things In Your Company?

Effective spend management – the art of monitoring, analysing, and controlling company spending– is crucial for small and mid-size businesses (SMBs). In a world where profit-making tends to hog most of the limelight, any savvy business owner will keep strict tabs on the money going out as well as the money coming in.

Why is it so important for SMBs? With tighter budgets and smaller teams, how you manage expenses can have a big impact on your company’s profitability. And before you start slashing all of the purse strings, it’s important to know that spend managementgoes beyond cutting costs. Understanding where your money goes is key to makingsmarter decisions and building better supplier relationships.

Join us to discover the true meaning of spend management and how you can make it work for your company.  Interested in upgrading your spend management workflows? Book a demo with us today.

What does spend management actually mean?

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Spend management is about taking control of your company’s spending while striving to optimise it through transparency and accurate analysis. From employee expenses to supplier payments, it involves everything finance teams do to keep spending efficient and aligned with business goals. Taking this level of active control helps businesses to stay ahead of the game and grow sustainably.

Why small and mid-size businesses should care

While spend management is essential for businesses of every size, it can have an even more significant impact on SMBs. As well as cost savings, spend management can offer the following benefits:

Improved spend visibility

Maximising your spend management often involves ditching tiresome – and not always accurate – manual processes for real-time data. This allows your finance teams to keep a keen eye on where your money is going.

Stronger supplier relationships

Another important part of spend management involves analysing relationships with suppliers, helping you to secure better terms and reducing supplier risk.

Smarter decision-making

Do you sometimes wish you had a crystal ball for your business? The analysis aspect of spend management can do just as good a job, helping you to forecast and budget.

Operational efficiency

Going digital and taking an analyst stance by reducing manual processes saves time and minimises errors.

How can you improve spend management in your company?

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Now you know about spend management and the effect it could have on your business, it’s time to put all of that knowledge into action and reap the benefits.

Set clear expense policies

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Vague – or even worse, non-existent – expense policies often lead to overspending, especially in SMBs. As mentioned by Forbes, expense policies also provide a ‘roadmap for compliance with tax laws and regulations’, reducing the risk of penalties.

Clear guidelines help employees understand what expenses are acceptable and what they’re entitled to, reducing unnecessary claims and improving compliance. Pair these policies with spend management software to automate approvals and keep processes efficient.

Invest in the right spend management software

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To make things easier for your staff and more cost-effective for your company, you should consider investing in modern spend management software. The right software solution should:

● Provide real-time spend data and insights

● Integrateseamlessly with existing accounting software

● Enable mobile-friendly expense submissions

● Offerbusiness intelligence tools for deeper spend analysis

According to a survey conducted by Forrester and SAP Concur, 63% of respondents named travel and expense management software as one of the most important tools when it comes to good employee experience.

If you’re looking to streamline your expense tracking, our mileage tracking app and receipt scanner app offer simple, automated solutions to manage employee expenses on the go.

Focus on supplier management

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Good or bad, supplierrelationships can impact profitability more than you might think. Strong supplier management often results in better pricing and reduced supplier risk. Regular contract management reviews and performance assessments ensure you’re always getting the best value from your suppliers.

Embrace real-time expense tracking

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Waiting for month-end reports to analyse spending? That’s pretty old-school! Real-time expense tracking gives you up-to-the-minute insights, allowing you to catch overspending before it becomes a problem. Modern spend management software makes this level of spend visibility achievable for SMBs.

Make spend analysis a routine practice

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Spend analysis isn’t just for big businesses. Regularly reviewing spend data helps you to identify patterns and highlight areas for cost savings. This, in turn, informs future spending decisions.

Top tip: Breaking down company spending into key categories like salaries and wages, office supplies, marketing, business expenses, etc., also supports more strategic budgeting.

Automate manual processes

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Although your predecessors may have sworn by it, manual spend management processes can slowdown approvals and increase the chance of errors. Automating tasks like expense reporting, approval workflows, supplier payments, and spend pattern analysis reduces admin work and accelerates decision-making.

Common spend management challenges and how to overcome them

Getting your team on your side

New processes can meet resistance, especially in established teams. Win over any sceptics by highlighting the time savings and reduced admin burden that spend management software can provide. It’s also a good idea to provide training and support for your employees to show how it can make their lives easier.

Ensuring integration with existing systems

Your spend management software should work seamlessly with your accounting software. Smooth integration prevents data silos and reduces duplication, allowing your finance teams to access reliable, real-time data.

Staying compliant

Regulatory requirements can’t be ignored. Stay above board and avoid costly mistakes by choosing management solutions that simplify compliance and provide audit trails.

How effective spend management = profitability

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When executed thoughtfully, spend management can directly impact your business profitability by:

● Improving spend visibility: Clear insights into spending patterns can help you to identify opportunities for cost savings

● Strengthening supplier relationships: Solid supplier management reduces risks and keeps pricing competitive

● Reducing operational risks: Efficient, automated processes limit disruptions and cut operational costs

● Supporting smarter decisions: Real-time data and business intelligence tools inform accurate strategic planning

The final say

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Spend management is key to running a smarter and more profitable business. For SMBs, it’s not about adding complexity – it’s about simplifying processes and making better and more informed decisions.

By getting a handle on real-time data, supplier management, and automating manual tasks (like expenses), you can enjoy cost savings and improved profitability.

ExpenseOnDemand provides easy and efficient expense management, taking any expense stress off your plate so you can focus on the things that matter to your business. Book a demo today to see how simplifying your expense management can help your business grow.