Smarter spending and increased savings are two goals shared by all companies, regardless of their size or industry. Spend management software helps companies take a big-picture view of their spending and identify opportunities to reduce procurement costs on services, raw materials, and supplies.
With so many spend management systems on the market, it can be hard to identify the product that's right for you. This buyers guide explains the features, benefits, and factors to consider when choosing a spend management software solution.
Here’s what we’ll cover:
What is spend management software?
Spend management software is a tool that helps businesses track, report, and manage their expenses quickly and conveniently. It provides a centralized source of expense data, integrating and automating all spend-related activities. The software helps control expenditures through rules and workflows for purchase and payment approval. Analyzing historical data identifies spending trends, which helps companies improve accounting and avoid overspending.
Common features of spend management software
While features vary from product to product, spend management software typically offers some or all of the following functionality:
||Increase data visibility with real-time expense tracking. Reduce time spent on administrative work with automatic import of receipts, invoices, and other expenses.
||Review expenditures to identify cost reduction opportunities, improve strategic sourcing, and reduce procurement costs. This feature consolidates procurement spending data in one location, eliminating the need for tedious spreadsheet and paper form management.
|Budgeting and forecasting
||Analyze financial data to estimate future organizational trends, expenses, and revenues. Create budgets and forecasts to allocate resources for future business activities.
||Organize and manage all processes and procedures involved in purchasing goods and services. Automate the procure-to-pay process to eliminate complex manual workflows while enhancing spend visibility and management.
||Capture and categorize receipts in a central database. Automating this task supports accurate expense calculations and categorizations.
What type of buyer are you?
Whether you're a growing startup, midsize, or established enterprise, the right spend management software will help you save time and money. Although tools and features are typically the same across industries, different organizations have unique priorities and requirements in finding the right solution. Most buyers fall into one of these categories:
Small businesses: Startups and small companies need a straightforward system to manage expenses. Look for a pay-as-you-go spend management system that offers basic features such as expense tracking, spend analysis, and receipt tracking.
Midsize businesses: Midsize organizations and growing businesses have increased expenditures that come with additional employees, customers, and vendors. Look for solutions that support complex functions such as spend control, procurement management, and forecasting. These tools will help predict future growth based on historical data.
Large businesses: Large organizations often have numerous departments, hundreds or thousands of employees, and complex spend processes. Enterprises benefit from systems that can handle multiple types of expenses, revenue, and currencies. Look for features such as approval workflows, spend control, and procurement management to effectively manage all supplier relationships and company purchasing.
Benefits and potential issues
Spend management solutions provide real-time visibility into company spending. Here are some of the key benefits that managing spend can bring to an organization.
- Increase spend transparency and control: Track and report spend data across the company, eliminating departmental spending silos. A single, centralized spend management platform increases spend visibility and accountability.
- Automate time-consuming and repetitive tasks: Better workflows and automation make it easier to manage the entire procure-to-pay cycle and they minimize the need for data entry with automated purchase order creation, invoice processing, and approval workflows. Workflows limit cycle times, eliminate duplicate payments and purchase requests, and reduce the risk of missed payments and other human errors.
- Improve risk management and avoid needless expense: Expense tracking and spend analysis tools eliminate unnecessary purchases and simplify financial forecasting and reporting. These data insights help benchmark internal performance, discover cost-saving opportunities, and leverage trends in spend data.
- Enhance supplier relationships; Understanding and improving supplier relationships can lead to lower prices, discounts, and additional savings opportunities. Supplier management also helps companies identify underperforming and non-compliant vendors, which protects the company against unwanted expenses.
Market trends to understand
Cloud-based spend management software enables remote and flexible work practices. The recent pandemic has increased the number of distributed teams and remote workers. Cloud solutions for spend management allow employees and stakeholders to access the system remotely, no matter the location.
Machine learning improves spend management processes. Machine learning algorithms automate data categorization, which eliminates the need for manual data input and increases visibility into spend. Machine learning can also find patterns in data, reduce forecast errors, and decrease financial risk. Budgeting and forecasting with machine learning helps companies identify profitable opportunities and avoid hidden risks.