In today’s fast-paced, cost-conscious business world, every pound counts. But managing business spend isn’t just about cutting costs: it’s about gaining control, improving efficiency and making smarter decisions that align with your company goals – and that’s where business spend management (BSM) comes in.
More than just expense tracking, BSM offers a strategic, tech-driven approach to managing all business spend – from supplier payments and software subscriptions to employee expenses and beyond.
We’ll break down what BSM is, why it matters and how to build a high-impact strategy to drive savings, boost visibility and set your business up for success.
Key takeaways:
- BSM goes beyond expense management. It covers all company spending – direct and indirect – to create full visibility and control across your organisation.
- The benefits of BSM extend far beyond cost reduction. From improved compliance and efficiency to better supplier relationships and data-driven decisions, BSM helps drive smarter growth.
- A strong BSM strategy is built in layers. Start with visibility, define clear goals, invest in the right tools, automate processes and continuously optimise based on real data.
- Adoption is just as important as strategy. The best tools and policies only work if your teams understand them, support them and actually use them.
- BSM is not a one-and-done project. It’s an ongoing practice that adapts with your business, helping you stay agile in the face of change.
What is business spend management (BSM)?
Business spend management (BSM) is the set of processes, tools and strategies organisations use to manage, track and optimise all business-related spending.
BSM is more than simple expense tracking. It’s about creating full visibility and control over every aspect of company expenditure – direct and indirect – helping businesses reduce costs, ensure compliance and improve operational efficiency.
It’s worth noting that business spend management is sometimes confused with expense management – but they’re not the same thing.
Expense management typically refers to employee-related costs like travel and reimbursements. BSM, on the other hand, is broader and more strategic. It covers everything from procurement and invoicing to supplier management and cash management.
Core areas of BSM include:
- Strategic sourcing and procurement
- Supplier and contract management
- Invoicing and accounts payable
- Inventory and office supplies
- Software and technology subscriptions
- Marketing and advertising spend
- Employee expenses and travel
- Cash and liquidity management
In short, BSM is about managing all company spend holistically, improving control, boosting savings and aligning spending decisions with business goals.
The benefits: Why business spend management matters
Business spend management isn’t just about controlling costs: it’s a strategic lever for improving financial health, streamlining operations and making smarter business decisions.
Here’s what BSM brings to the table:
- Cut costs and drive savings: Identify waste, uncover cost-saving opportunities and negotiate better supplier deals. BSM helps you streamline spending and achieve more with less.
- Gain full financial visibility: With real-time insight into every pound spent, you can budget better, forecast more accurately and make confident strategic decisions.
- Boost operational efficiency: Say goodbye to manual, error-prone processes. BSM automates routine tasks, freeing up your team to focus on higher-value work.
- Ensure compliance, minimise risk: Built-in controls and automated workflows help you stay aligned with internal policies and external regulations, reducing the risk of errors, fines or reputational damage.
- Make data-driven decisions: BSM tools turn spend data into insights. Spot trends, flag inefficiencies and act fast to optimise performance across your business.
- Strengthen supplier relationships: Timely payments, clear performance metrics and better communication help you build stronger, more strategic supplier partnerships.
- Scale with confidence: As your business grows, BSM provides a flexible, scalable framework that keeps your spend under control – no matter how complex things get.
In short, business spend management helps you spend smarter, move faster and stay in control – all whilst aligning every pound spent with the bigger-picture to support your business goals.
5 steps to building a high-impact business spend management strategy
Rolling out an effective BSM strategy doesn’t happen overnight. It takes a structured approach, the right tools and a mindset geared towards continuous improvement.
Here are five essential steps to set you up for success:
1. Get total visibility into your spend
You can’t manage what you can’t see. Start by auditing your current spend – every invoice, every purchase, every approval process.
Group spending into categories like software, travel, supplier payments or office supplies. Pinpoint where money is leaking, where delays happen and which manual processes are slowing you down.
Pro tip: A BSM tool with spend analytics and category-level reporting – like Pleo – can help you speed things up.
2. Set clear, measurable goals
What does success look like? Define your goals early – whether it’s reducing supplier costs by 10%, cutting invoice approval times in half or improving budget adherence.
Align these goals with broader business objectives and pick KPIs to track your progress. These could be:
- % of spend under management
- Average invoice approval time
- Cost savings achieved
- Policy compliance rates
3. Choose tools that do the heavy lifting
Your tech stack makes or breaks your BSM strategy. Look for solutions that:
- Automate workflows (approvals, invoicing, expense claims)
- Integrate with your ERP or accounting software
- Provide real-time dashboards and insights
- Offer mobile access for on-the-go approvals
Scalability and ease of use are key – pick tools your team will actually adopt and get value from.
4. Standardise, streamline, automate
Clunky, inconsistent processes are the enemy of control. Map out clear, standardised workflows for purchasing, expense submission and invoice approval.
Automate wherever possible – no more chasing receipts or manually entering invoice data. Build in policy controls and approval thresholds to keep spending in check without adding red tape.
5. Monitor, learn and optimise
Don’t set and forget. A strong BSM strategy is built to evolve. Use your tools’ analytics to track performance, flag issues and surface opportunities for improvement.
Check in regularly against your KPIs, gather feedback from users and iterate as your business grows. Stay informed on industry best practices so your strategy stays ahead of the curve – not behind it.
Bottom line: A strong BSM strategy gives you control today and agility tomorrow. Build it right, and it’ll pay off in cost savings, efficiency and smarter decisions across the board.
Best practices for smarter business spend management
Want to get the most out of your BSM strategy? Here are some best practices to keep in mind:
- Centralise spend data: Bring all your spending into one place – across departments, teams and geographies. A centralised view eliminates silos, improves reporting and ensures everyone is working from the same data.
- Get stakeholder buy-in early: Finance can’t do it alone. Involve department heads, procurement and even IT early in the process to encourage adoption and align goals across the business.
- Prioritise policy clarity and enforcement: Clear, simple spending policies reduce confusion and help ensure compliance. Automate policy enforcement in your tools so the rules are followed without slowing things down.
- Review supplier performance regularly: Suppliers impact cost, quality and timelines. Use BSM tools to track performance, spot risks and renegotiate contracts where needed.
- Keep your strategy agile: The market changes fast – your spend strategy should, too. Revisit your goals and processes regularly, especially during periods of growth, volatility or change.
- Think long-term value, not just cost-cutting: Savings matter – but so does value. Use BSM not just to reduce spend, but to reinvest in the right areas: innovation, people and growth.
- Train your teams: Even the best systems fall flat without the right training. Make sure users understand both the tools and the ‘why’ behind your BSM processes.
And that’s it – you're all set to build a high-impact BSM strategy to take control of your spend and support your business goals.
Final thoughts
Business spend is happening everywhere – across teams, tools and time zones. Without the right strategy in place, costs can spiral, visibility disappears and opportunities are lost.
Business spend management brings order to the chaos. It’s not just a finance function: it’s a business-wide mindset that empowers you to spend smarter, move faster and stay in control.
Whether you’re scaling up or tightening the belt, now’s the time to put a modern BSM strategy in place. The result? Less friction, more savings and better decisions – at every level of the business.
