Managing business expenses is often a tedious process, but it’s absolutely necessary to ensure the financial wellbeing of your company. Traditional methods of expense management have included tools like expense reports, which include business-related spending data and saved receipts. In these circumstances, employees are often waiting weeks to be reimbursed for purchases, which can create unnecessary financial stress.
Spend management is the practice of managing all supplier relationships and organizational purchasing to track every dollar that is spent in real-time. This process integrates and automates all spend-related activities to ensure that buying occurs as planned and suppliers get paid in an accurate and timely manner. However, mastering the process of effective spend management is far from easy. It takes careful planning, development, and adaptability.
If you’re considering implementing spend management practices for your own business, onboarding a new spend management software, or you’re simply looking to improve your existing spend management strategies, here are a few tips to get you going.
- Centralization of Data
The first step in ensuring effective spend management is to centralize your spending data for every purchase across all your company’s departments. It’s no secret that data is a key component in making sound business decisions, including purchasing decisions, so why not ensure that your data is consolidated? By centralizing your data, you are making this data accessible to authorized personnel at any point, which allows them to make important purchasing decisions without delay. Centralization also improves visibility, transparency, and organizational communication, which can lead to cutting costs and help you forecast future budgets more efficiently.
- Aggregate Knowledge to Boost Negotiating Powers
A significant component of effective spend management is making better purchase decisions, and you can achieve this through education. By learning about a particular commodity or product category, familiarizing yourself with its ins and outs, and sharing that information with purchasing departments within the organization, you’re aggregating knowledge on a company-wide level, and with aggregated knowledge comes more negotiating power.
- Break Down Your Tasks
Oftentimes, when developing a spend management strategy or updating current policies, companies fall into the trap of attempting to solve too many problems all at once. Whether it’s a lack of centralization, a fear of transparency, or simply human error, there will inevitably be problems that arise in this process. However, rather than trying to solve all these problems at the same time, tackle them one at a time by breaking your goals down into smaller, more manageable tasks. Doing this will minimize both your stress and your struggle when it comes to improving your spend management.
There’s no question that it takes a concerted and conscious effort to ensure effective spend management within an organization. While it is a challenge, it is far from impossible. By centralizing your company’s data, aggregating knowledge, and breaking down your tasks to be more manageable, you’ll facilitate the process of improving your spend management. Once you do, you’ll boost your business’ overall financial wellbeing and set yourself up for success.