Controlled and Automated Expense Management

Spend control is a group of policies and processes a company uses to monitor and manage spending. Viewed holistically, it’s a measure of how well a business handles its costs: a high level of spend control gives companies maximum visibility over what’s spent, and lets them adjust quickly when necessary. A low degree of spend control describes companies that have little idea where money goes, and struggle to make changes when required.

More tangibly, spend controls are the limits and oversight placed on individual employee expenses. This requires a balance between overly restricting spend and offering too much leeway. If only a few select managers can spend, they become a bottleneck for the whole company. If everyone can spend with no controls, they can accidentally (or intentionally) expose the company to financial risks.

The goal is to give relative freedom to team members to spend where necessary, without losing control.

Great spend management systems combine all your key payment methods and give you one source of truth. This is crucial - you can’t rely on controlling invoice payments only, when huge chunks of spending also happen through credit cards.

The payment methods themselves aren’t important - it’s who spends, why, where, and on what that really count.

Spendesk manages non-payroll spending through the following:

• Prepaid corporate cards. Every employee can have one, which means no more shared credit cards or relying on employees’ own money.

• Virtual cards. These are the safest, fastest, and easiest way to pay for anything online. They can be single-use or recurring, perfect for SaaS subscriptions.

• Invoices. Upload and pay any invoice through Spendesk, so you don’t need to create a whole different procurement process to confuse your teams.

• Expense reports. On the odd occasion where employees use their own money, they can claim reimbursement instantly with just a photo of their receipt.

Again, the crucial thing is that the process and approval workflow is the same for all methods. Employees only need one set of rules and have one process to learn. As a result, you have almost no human error.

Too many companies don’t truly know where their money goes until they close the books at the end of a quarter or year. This is particularly true where the finance team doesn’t hold the purse strings, and where employee expense claims or credit cards are widely used.

In these cases, it requires manual human work to collate spend data. Until that work is done, you don’t really know what’s been spent. And those expense claims are often filed months after the purchase took place. Which means you have a future liability but no way to measure it.

Monitoring all spend in real time lets you create forecasts faster and make smart decisions to adjust budgets. This is often not possible with a more traditional expense management approach.

And at a more basic level, real-time monitoring helps you spot fraud, duplicate payments, and other financial risks. If you always wait until the end-of-month reconciliation, you can easily go weeks before fixing these potential harms.

Finally, quick checks throughout the month lead to smaller piles of work at the end, and less need to fix big problems all at once. As the saying goes, “a stitch in time saves nine.”

While closely related, spend control and cost control aren’t exactly the same thing. Cost control usually means cutting costs, while spend control means confidently managing spending whether it increases or decreases.

Naturally, good spend control helps you manage costs in a few key ways:

• You can’t control what you can’t see. Having real-time visibility over all spending helps identify unnecessary or maverick spend. Spend management systems identify common issues, like duplicate expense reimbursements or SaaS subscriptions with no owner.

• Take more control over team budgets. Finance teams can see all company spend at a glance, and dive deeper into individual teams or projects. Managers also have better cost control and can ensure that all spend is justified.

• Foster an educated spend culture. CFOs and finance teams should teach the wider company how to make the right decisions. Spend management solutions let you build your company spend policies into the tool, so people make the right choices by default. You also have all the spend data you need to report back to key stakeholders.

How does spend management affect procurement?

Building a strong procurement process is often tricky. Procurement teams need control and visibility over purchases, which can create roadblocks for other employees.

Instead of slowing things down, spend management software lets you empower employees to make smart choices, without losing control. They have access to classic tools like corporate cards, expense reports, and virtual cards, but can’t just use them wildly. Small discretionary purchases are made quickly, while more significant ones need approval.

And because every payment is tracked closely - automatically - you have the spend data to review supply chains and make better spending forecasts.

The bottom line is the company moves faster, while spend control increases.