Spend Management: What It Is & Why It Matters

What is Spend Management?

Spend management is a business process put in place to process, track, and control business expenses. The more data that can be captured with respect to each transaction, whether it be accounts payable, employee reimbursements, or credit card spending, the more valuable the insights you can derive. These insights will keep you informed and drive real-time business decisions.

Why Does Spend Management Matter?

Without proper controls in place and defined budgets, policies, and limits, business spending can escalate very quickly. If your spend management process consists of reviewing bank and credit card statements after the fact, it may already be too late to prevent out of policy spend. Decision makers and employees incurring expenses on behalf of an organization should adhere to a pre-defined set of policies (i.e., multiple levels of approval for transactions over $X), and a budget that applies specifically to their department rather than having a “seek forgiveness, not permission” mindset. Having these policies in place allows business owners and leaders to identify out-of-policy spending so that it can be addressed in real time to maintain financial wellness.

What is Spend Management Software?

Spend management software helps organizations track, automate, and streamline spending. From purchasing supplies to paying vendors, spending solutions reduce human error and create efficiencies for businesses of all sizes.

Fortunately, we live in a world where technology can handle many of the manual financial tasks businesses were once faced with. A willingness to adopt these new technologies is something our Outsourced Accounting Solutions (OAS) team recommends regardless of your organization’s size or industry. Not only does spending software simplify day-to-day processes, but it also frees up time for more strategic initiatives.

What Features Do I Look for in a Spend Management Solution?

To help your organization find the right spend management solution, there are non-negotiable functionalities to consider. Below are the top features our Outsourced Accounting team recommends prioritizing:

• Integration to your accounting platform: Syncs all transactions originating in the spend management platform to your accounting platform and records them to the general ledger. This reduces the need for double entry, saving time and reducing the possibility of human error.
• Expense policy enforcement: Enters parameters around your expense policies, restricting spending to only those expenses of an allowable type and amount. This reduces the risk of fraudulent or out-of-policy expenses that could go undetected by a human.
• Credit card spend limits: Sets controls on corporate cards for certain vendors or categories (i.e., meals, entertainment, travel).
• Mobile application: Allows employees to submit expense reimbursements easily in real time from their mobile devices.
• Approval workflows: Ensures the appropriate budget owner must approve any expense paid on behalf of the organization. Employees within the organization can then approve or deny company spending based on their knowledge of the applicable budget and the goods or services purchased.
• Streamlined vendor management: Automates the collection of necessary vendor data upfront, ensuring the organization can meet all of its information reporting obligations at year-end.

Streamline Spending with Outsourced Accounting Solutions

Don’t have time to find a solution on your own? We’re here to help. Wolf & Company’s Outsourced Accounting Solutions team supports organizations of all sizes with custom-fit solutions. From process improvement to tech automation, we’ll set your organization up with the tools to make informed spending decisions. Reach out today to discuss how we can help you get started.