Keeping a close eye on company spend is one of the most important aspects of running a successful business. Enter spend management: the process of managing and continually improving your company’s expenditure.
Data-driven spend management enhances visibility, improves operational efficiency and helps you gain control of your spending. And with the right tools, you can make smarter, more informed decisions that improve your bottom line and drive long-term success.
In this article, we’ll explore what spend management is, why it’s important and our picks for the top five benefits of data-driven spend management. Let’s get into it.
What is spend management?
Expanding a bit more, spend management is the practice of monitoring, controlling and optimising how your company allocates its financial resources. It’s all about overseeing and optimising your spending to save money, be more efficient and enhance your overall financial performance.
The process of spend management covers everything from travel expenses to supplier management. To effectively manage what your business is spending every day, you should be negotiating contracts, streamlining procurement processes, monitoring employee expenses and reimbursements and forecasting future spending – to name a few.
There’s a lot to consider. However, effective spend management plays a crucial role for the success of your business. That makes it important to get it right – and the right spend management solution can make it a whole lot easier. But more on that later …
Why is spend management so important?
Business spend often happens in silos. For example, IT and Marketing might both be chipping away at the company budget at once, and without a clear understanding of who is spending what, it doesn’t take much for a company to run into financial trouble.
Put simply, spend management is the best way to get the most out of your money. It provides a level of transparency and control over your spend that can help you optimise your resources, mitigate risks and be more agile as a business.
After all, if you don’t know what you’re spending and when, how can you cut costs and reallocate budgets? For example, you could be wasting money on subscriptions you don’t use, and you’d have no idea.
That’s why having a detailed view of your daily spend is crucial to making more informed decisions and staying competitive in an ever changing economic landscape.
Top 5 benefits of data-driven spend management
Data-driven spend management cuts down on waste, makes processes smoother and saves time. It’s like upgrading from a clunky legacy system to a sleek, modern one: you can get the same job done quicker and with fewer headaches in the process.
Besides a significant boost to your overall efficiency, there are many other tangible benefits your company stands to gain from data-driven spend management. Below, we’ve compiled a list of the top five benefits you’ll want to know about.
1. Real-time visibility into company spend
One of the most important benefits of data-driven spend management is real-time visibility. It’s like having a live feed of where your money is going at all times.
Instead of waiting for a monthly report to see how much everyone has spent, you can check in and see what’s happening with your company finances whenever needed. It helps you stay on top of your spend – and react faster if something is off.
Looking to future-proof your company spending? Get the insights you need to make smarter business decisions with Pleo’s Analytics dashboard.
2. Enhanced control over company finances
With better data, it’s much easier to control where your money is going. This means you get a full picture of who is spending, on what and when. But this doesn’t mean you need to hold people back from doing their best work.
Centralised control allows you to minimise rogue spending by ensuring all purchases are approved, documented and aligned with your company goals. With real-time tracking, you can see if a project is about to go over budget or if a department is underspending.
In short, more control means tighter, more proactive management. Think of it as driving a car with a very responsive steering wheel: you can quickly adjust your spending if needed and make sure everything stays on track and that nothing is spiralling out of control.
Want flexible control, visibility and a cleaner, neater overview of expenses? Learn how Pleo’s spend controls can help you create business spending symphony.
3. Cost-saving opportunities
One of the most valuable benefits of a data-driven spend management system is that it helps you identify opportunities to save money. With detailed, organised data on spending, you can spot where money is being wasted and where you can optimise your spend.
For example, you might realise that you’re consistently paying late fees that could be avoided, or that you might be able to consolidate certain purchases and get a better price on bulk orders. If you notice you’re spending a lot on a particular vendor, you might have enough leverage to negotiate a better deal.
By giving you clear, actionable insights into your spending patterns, a spend management tool can help you uncover hidden opportunities to save money – a benefit few would turn down.
Want to see how much you could save with Pleo’s spend management solution? Try out our ROI calculator.
4. Better decision-making and better forecasting
Having the right data helps you make smarter decisions. The more accurate and up to date your spending data is, the better your decisions will be.
With a good spend management solution, you won’t be making guesses or relying on incomplete information. Instead, you’ll be basing your decisions on real-time, detailed data and hard facts.
What’s more, with consistent data over time, you can identify spending patterns and trends, plan ahead and avoid unpleasant surprises. Put simply, you’ll know what’s been spent and what’s likely to be needed in future, – and that lets you plan better.
5. Enhanced compliance and risk management
In addition to everything we’ve already covered, real-time visibility supports compliance and risk management. With good spend management, it’s easier to follow the rules and keep things above board. When everyone has their own card, it’s much easier to notice spend abnormalities before they get out of hand.
If you notice weird expenses on a company card, you can simply lock that card fast before it causes bigger problems. It’s like having guardrails on your financial processes so you don’t accidentally cross any lines.
An expense policy can set the foundation for spending compliance and risk management at any company. Use our Expense Policy Builder to get started.
Wrapping up
Effective spend management helps you optimise your resources, mitigate risks and be more agile as a business – and with the right tools in your kit, you’ll make smarter, more informed decisions that improve your bottom line and drive long-term success.
