Spend management is a business process that uses data analytics to identify, track, and control costs. It helps to optimize business processes and maximize spending to achieve efficiency. In the corporate world, spend management covers the entire purchasing lifecycle beginning from the identification of an item or service to the actual purchase and monitoring of the post-purchase performance.
Having a great spend management solution is essential for businesses, large and small. Utilizing the right spend management strategy can be key to success in today’s world, where technology plays a major role in monitoring spending patterns. Investing time, money, and resources into spend management options give companies a major advantage—and it’s worth exploring what they are! Here let us dive deeper into what is spend management, why it is important, and the top 10 spend management solutions.
Let’s get started.
What is Spend Management?
Spend management is a business strategy mainly concerned with the strategic administration of spend and associated business activities such as procurement, purchasing, contract management, supplier management, and inventory control. Spend management enables organizations to optimize the cost of their operations, streamline processes, and enhance overall financial performance.
At a high level, the core principles of spend management include: understanding current spending patterns, utilizing spend data to proactively identify areas with potential for improvement, and implementing strategies to control expenditures. The principal objective of spend management is to create the most benefit for organizations through wise investment in resources. Essentially, it aims at maximizing returns on financial outlays while curtailing their costs as much as possible. This encompasses proper analysis and forecasting activities so that expenditure can be prudently managed to produce optimum results.
Why is Spend Management Important?
The goal of effective spend control management is to reduce costs. By tracking expenditures closely and evaluating how suppliers perform, businesses can make purposeful decisions when allocating resources. This can include evaluating suppliers’ performance and using analytics to negotiate better prices. All of these measures help organizations minimize the time spent requisitioning, ordering, and receiving goods and services.
Poor spend management can cripple a business by reducing its potential to thrive and grow. It can include cash flow issues, inefficient use of capital and unsuitable spending habits. Poor spend management can impose costly constraints on a business resulting in delays, mismanaged costs and, ultimately, failure to keep up with the competition.
It’s, therefore, necessary for businesses to carefully control their expenses and stay competitive in an ever-evolving market. By strategically investing in spend management solutions and staying focused on the long-term, businesses can successfully optimize costs, enhance profits and maintain their competitive edge.
Spend Management vs Expense Management: What the Difference?
Expense Management | Spend Management |
| Managing employee expenses | Managing the entire procure-to-pay process |
| Corporate cards and expense reports | Requisitions, purchase orders, and invoices |
| Budget for the employee | Budget for the employee and based on company structure (Departments, etc.) |
| Approved after the purchase | Pre-approved spend |
| Ad-hoc purchasing often from one off suppliers | Guided buying to preferred suppliers with best prices and terms |
| Relies on employee discretion | Enforces compliance with policies such as ESG |
Spend Management vs. Expense Management is a common question for those looking to track and control their company’s spending. Although they are sometimes spoken of in the same way, distinctly different aspects separate them.
Spend Management is a more general term for the processes and disciplines associated with controlling the outflow of money associated with an organization. This includes tasks such as setting spending limits and ordering goods and services, while in Expense Management, the emphasis is on tracking and classifying each expense transaction to gain insight into the financial status of the organization.
Spend management can help organizations optimise spending, find the best deals, and negotiate better prices. Additionally, it aids in identifying any purchases that are not adhering to an organization’s objectives or budget plan. On the other hand, Expense Management ensures companies remain organized with mobile financial control and accurate tracking of expenditures. Further analysis of trends monitored through expenses is also possible while preventing overspending dues with this system that allows carefully planned budgets ahead of time.
From a practical standpoint, spend management requires the overseeing, tracking and analysing expenses and may include such tasks as setting spending limits and managing procurement processes. It is also involved with identifying and classifying each transaction. Meanwhile, Expense Management is concerned with the actual tracking and recording of expenses and is often used as a tool for financial reporting.
Combining SaaS Spend Management and Expense Management is the key to maximizing financial efficiency. This allows businesses to optimize their outflow of money, tracking expenses for greater insight into the company’s monetary situation so that resources are managed wisely and kept within budget limits. With these two strategies combined, companies can maximize effectiveness in utilizing finances.
How to Improve Spend Management in Procurement?
SourceStrategic procurement is an important aspect of the spend management process and is often an area that organizations can significantly improve. If you’re looking to improve spend management in procurement, here are a few helpful tips –
1. Identify Expenses and Company Spending
The first step is to accurately identify both company and individual expenses by creating a centralized database or system of accounting which details all expenditures. This will enable the easy tracking of expenses across your business and give visibility over how much money is spent by each employee.
2. Centralize Spend Data
Businesses should create an easily accessible centralized storage hub to track all monetary outlay costs. This will give them the ability to thoroughly analyze where money is being spent and enable assessment of potential cost-cutting strategies in the future. By second-guessing budgets, companies have more control over their spending habits now and ahead of time.
3. Verify Data
Verifying your data is essential in keeping procurement and spending management processes running smoothly. Double-check all expense data for accuracy before making any decisions, as this will help you get the most out of tight budgets.
4. Create Spend Categories
Creating spend categories can help you manage your procurement process more effectively. By setting classifications to expenditures, you can gain a better understanding of your spending patterns and drive smarter decisions for future purchases.
5. Analyze Spend Data
When overseeing your organization’s expenditure, analyzing spend data is a great place to start. By reviewing past spending records, you can get an overall picture of where money has been going and identify areas that could be improved so you can save money in the future.
6. Define a Strategy
Devising an effective strategy for controlling procurement spending involves taking the time to define clear objectives and policies. This will create expenditure boundaries while enabling sound decision-making that can help lower costs. Having a definitive strategy enables your team to make informed decisions regarding procurement spending without compromising organizational goals or values.
7. Forecast and Plan Accordingly
One tip to maximize your spend management success is always to plan and forecast accordingly. Companies should proactively forecast future spending and make necessary changes to optimize their spending. Anticipating difficulties and researching changes within marketplaces – are all important pieces needed for effective forecasting, which helps with sophisticated cost-saving strategies.
Tactics to Improve Your Spend Management Process
SourceOnce companies have established a spend management strategy, plenty of methods can be used to refine and enhance their operations. By consistently adopting these below tactics, organizations can stay fiscally responsible while optimizing their spend management processes.
1. Automation
Automation is a great tool to help improve the efficiency and accuracy of your organization’s spend management process. Automated expense reporting systems, for example, enable organizations to establish control over budget compliance without tedious manual comparisons or audits – saving both money and resources.
2. Transparency
Transparency should play a pivotal role in any organization’s spend management process, requiring communication between departments and decision-makers to be open and clear. This will help ensure financial decisions are made responsibly and for the organisation’s best interests. With transparency in play, all stakeholders can understand where money is spent to manage resources effectively.
3. Collaboration
Collaboration between all stakeholders involved in the process can help ensure that spending decisions are being made collaboratively and in the organisation’s best interests. Sharing insights across departments – whether financial data, market research findings or otherwise – helps organisations create smarter strategies for long-term value creation and boosts transparency in the workplace.
4. Spend Analysis
By taking the time for periodic analysis of spending patterns, businesses can identify possibilities for improvement in their spending management process. Through spend analysis, they can gain actionable insights on where money is being spent that should be stopped or redirected towards more productive investments.
5. Negotiation
Negotiation and price comparison should be used whenever possible to ensure organizations are getting the best deal possible on their purchases. Companies can use price comparison tools, expert advice, local market conditions or supplier feedback when entering into negotiations with vendors to get the best deal possible.
Top 10 Spend Management Software
Now that we’ve discussed the importance of spend management and how to improve spend management operations, let’s take a look at the top 10 intelligent spend management software solutions.
1. TripActions
TripActions is a modern traveler-focused travel and spend management software. It helps companies to manage better and bring visibility to their expenses, enabling them to save money, be more efficient and gain control of business travel and T&E spend. It has features such as an integrated chatbot to keep both the HR and finance teams on the same page and communicate efficiently, policy-based booking for smarter travel and expense decisions, real-time alerts to assist with forecasting cash flow, and direct integration with major accounting software.
Features:
- Integrates with leading accounting software
- In-app chatbot
- Real-time flight alerts
- Audit-ready records
- Controller approval
Pros:
- Automates reporting and approval processes
- Enhances compliance and control
- Allows for tracking spend patterns
- Simple to use
Cons:
- Can be costly
- Navigating the app can be slow and arduous at times
- Not very flexible
Pricing: Custom Pricing (Quotation Based)
2. Zip Intake-to-Procure
Zip Intake-to-Procure is a cloud-based corporate spend management software that helps in automating and streamlining the entire expense management process. It is designed to streamline the entire procure-to-pay workflow and make it more effective. It is highly compliant with SOX, HIPAA and other industry standards and is backed by cutting-edge technology for secure cloud hosting.
Features:
- Fraud detection
- Receipt scanning
- VAT/GST tracking
- Data analytics
- Integrations with ERP
Pros:
- Eliminates manual input
- Makes it easy to keep track of expenses
- Improves expense reporting accuracy
- Simplifies audit process
Cons:
- Insufficient interface options
- Significant time frame needed to learn the system
- Can be slow and glitches
Pricing:
Subscription Model : Custom Pricing
3. Airbase
Airbase is an integrated corporate spend management software that helps finance teams gain better control over their corporate spend. It allows for the digitization of corporate cards and the simplification of expenses for organizations, automating payments and reimbursements, along with receipt entry and bank integrations.
Features:
- Company Spending
- Automatic Payments
- Reimbursing Employees
- Smart Spending Approvals
- Data Visualization
Pros:
- Quick and easy setup
- Expedites payments
- Data-backed insights
- Automates corporate spending
Cons:
- Can be limited when it comes to travel and expense links
- The interface can be quite tricky
- Complicated setup
Pricing:
- Essentials Plan: Free
- Growth Plan: Custom Pricing
- Enterprise Plan: Custom Pricing
4. Emburse Certify
Emburse Certify is one of the leading spend management tools that helps organizations gain control over their spending processes. It has an intuitive user interface and offers audit-ready reports. It helps improve the visibility and accuracy of expense reports, streamlining the accounts payable process, and simplifying the process for employees to file for reimbursement.
Features:
- Audit-ready reports
- Real-time analytics
- Integrated Desktop Scanner
- Corporate Card Integrations
- Mobile App
Pros:
- Visibility of financials
- Eliminates manual errors
- Supports multiple currencies
- Improve accuracy
Cons:
- The user interface can be confusing
- Significant learning curve
- Lack of industry-specific features
Pricing:
- Certify Now! (1-25 employees) – $12 per user/month
- Professional (25-200 employees) – Monthly service fee
- Enterprise (200+ employees) – Annual fixed pricing
5. Ramp
Ramp is a cloud-based corporate card and spend management software that helps in managing corporate spend. It helps in providing companies with real-time visibility into spending and optimizing their cash flow. Ramp provides companies with a central platform to set expenditure policies, issue virtual corporate credit cards and receive comprehensive spend analysis data in real-time.
Features:
- Real-time analytics
- Policy-Based Booking
- Robust Approval Rules
- Integrated Virtual Cards
- Corporate Credit Cards
Pros:
- Easy to configure and use
- Features a flexible approval system
- Integrates with most accounting software
- Offers detailed reporting capabilities
Cons:
- Expensive for small businesses
- Limited customization options
- The user interface can be confusing
Pricing: Per Feature
6. Brex
Brex is a corporate card provider and spend management software. It helps companies to securely handle corporate spending, enhance cash flow management, and keep track of their expenses through real-time tracking and analytics. Brex also offers virtual cards with cutting-edge security features and a range of integrations with other finance solutions.
Features:
- Advanced Fraud Protection
- Integrations with SaaS ERP
- Integrated Dashboard
- Real-time Analytics
- Integrated Expense Receipts
Pros:
- Feature-rich corporate card program
- User-friendly interface
- Robust security
- Integrations with ERPs
Cons:
- Limited international options
- Expensive
- Delayed payments
Pricing: Free Trial, Quotation Based
7. Spendesk
Spendesk is one of the top spend management tools used to facilitate expense claims and reimbursements. Its platform helps companies to control their budgets more efficiently by automating their admin workflows, simplifying employee expenses, and preventing accidental overspending.
Features:
- Real-time expense tracking and management
- Multi-currency support
- Integrates with ERPs
- Robust reporting functions
- Bulk payments
Pros:
- Secure and compliant system
- Automated expense and claims management
- Integration with accounting software
- Multi-currency and payments support
Cons:
- Can be difficult to troubleshoot
- Limited customization options
- User interface can be confusing
Pricing:
- Starter Plan: Custom Pricing
- Essentials Plan: Custom Pricing
- Scale Plan: Custom Pricing
8. Center
Center is a cloud-based spend management software that provides CFOs and finance teams with an easy and secure way to gain full visibility into company spending. It offers features for tracking, categorizing, and reporting on financial transactions, thereby reducing time spent managing corporate spend from hours to minutes.
Features:
- Credit Card and Bank Reconciliation
- Vendor Payments
- Financial Budgeting
- Multi-currency support
- Employee Spend
Pros:
- Eliminates manual labor
- Cost Savings
- Improves accuracy
- Better forecasting capabilities
Cons:
- Can be slow and laggy
- Significant learning curve
- Poor customer support
Pricing: Free
9. Precoro
Precoro is cloud-based spend management software that helps companies to get better visibility, control and insights on the total spend across their organization. It is designed to facilitate the entire purchase-to-pay process, from vendor selection to invoice tracking.
Features:
- Requisition Management
- Vendor Payments
- Integrations with ERPs
- Purchasing Approvals
- Data Analytics
Pros:
- Integrates with leading accounting software
- Advanced data analytics
- Eliminates manual labor
- Enhances compliance and control
Cons:
- Can be slow and glitchy
- Limited customization options
- High price point
Pricing:
- Standard Plan (Small ? 20 users) – $35 / month per user
- Enterprise Plan (Large >20 users) – Custom Pricing
10. Divvy
Divvy is a comprehensive spend management software that provides real-time visibility into total spend across an organization. It helps in automating their financial processes and provides enhanced compliance and control over spending.
Features:
- Integrations with Popular Software
- Real-time Spend Analytics
- Audit-Ready Reports
- Global Payment Support
- Receipt Scanning
Pros:
- Simple setup and implementation
- Robust security and privacy
- Improves accuracy and compliance
- Multi-currency support
Cons:
- No free trial
- Limited customization options
- Poor customer support
Pricing: Custom packages
Wrapping Up
Managing expenses is an integral part of any successful business strategy. But that doesn’t mean finding the right spend management software needs to be a complex process. The above-mentioned softwares provide you with all of the necessary tools for effective and efficient spend management.
With this kind of software, businesses can save time, money and hassle while also gaining complete visibility into their financial operations. This also makes decision-making easier – ultimately allowing companies to become more profitable by managing their finances better overall. Takeaway: Investing in reliable spend management software will help make sure that budgeting runs smoothly so your business has more resources left over at the end of each month or quarter.
Spend Management FAQ's
Organizations of all sizes can benefit from tracking, monitoring and controlling their spending. Spend management platforms are designed to help make this process easier by providing features like spend analysis, budgeting and payment automation.
A compelling spend management strategy is critical for a company's financial stability. It typically involves comprehending current spending patterns, interpreting the data to uncover areas of improvement, and executing strategies to control spending.
The foremost step in effective spend management is accurate expense tracking. It can be done by devising a centralized database where each and every expense can be tracked and accounted for, either manually or through integrated accounting systems.
Business Spend Management is an umbrella term used to describe the management of all expenditures related to business operations which includes procurement, purchasing, contract management, supplier management, and inventory control.
A Spend Management solution is a software-based platform that helps organizations manage and control their expenditures more effectively. With its suite of ample features, firms have access to cost analysis and budgeting tools, hassle-free payment automation, as well as real-time tracking of their expenses.
Updated : January 13, 2023
