Spend smarter, not harder: The benefits of spend optimisation

In today’s business landscape, where competition is fierce and markets are dynamic, spend optimisation is important to consider for any company looking to drive sustainable growth.

Spend optimisation is about having real-time visibility into your spend. It gives you the insights you need to make active decisions to improve how you manage spend and expenses, improving efficiency and strengthening your financial position.

Optimised spending isn’t just for large corporations – it’s something businesses of all sizes should be thinking about. For start-ups, it means stretching limited resources and building a solid financial foundation. For larger enterprises, it keeps operations lean and competitive, improving margins and building resilience in uncertain times.

Spend optimisation helps businesses grow more sustainably and profitably, so it’s important to make sure it fits effortlessly into your everyday workflow.

What is spend optimisation – and why does it matter?

Spend optimisation is the process of evaluating and adjusting expenses to maximise value. Simply put, it’s about getting the most value from every pound a company spends. This includes examining costs, understanding where the money is going – and where you might be spending more than you need to – and finding ways to maximise the impact of each investment.

At a glance, it may look like simple cost-cutting, but it’s a lot more than that. Cost-cutting is often a reactive, short-term fix. It can help bring costs down in a hurry, but it’s not always strategic.

Spend optimisation, on the other hand, is about looking at the big picture to find areas where spending can be made more efficient – about maximising return on investment (ROI) and building a sustainable spending structure that benefits the business long term.

So what does it look like when a company isn’t prioritising its ways of spending? When you don’t have a clear view of what you’re spending – both across expenses and business spend – you can’t optimise your spend.

This lack of visibility comes with the risk of missing out on certain gains:

• Funds disappearing in the shadows: You can’t fix what you can’t see. When spending isn’t optimised, companies often allocate resources inefficiently. Think money spent on redundant processes, tooling, or low-value services – it all adds up quickly, draining funds that could otherwise be used to enhance the core business.
• Missed growth opportunities: Without visibility, it’s easy to miss out on growth opportunities. Inefficient spending means fewer resources for investing in initiatives to drive growth. Funds that could be directed towards innovative projects, market expansion or product development instead get locked into low-value expenses. This can delay scaling efforts, hinder competitive positioning and limit market reach.
• Low ROI: A lack of visibility into your spending means it’s just as easy to overspend as it is to keep pouring funds into activities that don’t give meaningful results – and that means you’ll automatically see less return on investment. When ROI is low, the company doesn’t see a proportional benefit for each pound spent. If this issue isn’t caught quickly, these little inefficiencies can erode profitability and limit financial flexibility.

With no clear view of where your money is going, you might have resources tied up in tools, activities and other investments that aren’t giving you what you’re looking for – resources that could instead fuel sustainable, profitable growth for your company.

In short, the visibility spend optimisation provides is more important than you’d think.

The benefits: Why you should prioritise spend optimisation

We’ve covered some of the risks of unoptimised spending –  but what do you stand to gain from prioritising spend optimisation?

Improved profit margins

Optimised spending has a direct impact on profit margins. By gaining clear visibility that enables you to eliminate wasteful spending and focus your funds on high-impact areas, you can reduce your operational costs – without compromising strategic goals.

For example, if marketing expenses are streamlined to focus on channels with the highest ROI, the same budget can be stretched further, and generate higher returns. In essence, allocating efficiently boosts profitability without needing to increase revenue, and that’s great for your bottom line.

Enhanced cash flow and liquidity

When your spending is streamlined, your cash flow becomes more predictable and manageable. Cutting down on unnecessary expenses gives you that oh-so-important visibility of when money is going in and out, creating a healthy cashflow and improving liquidity.

This healthy cash flow works as a cushion for your finances. It helps you meet your short-term financial obligations, seize opportunities and navigate unforeseen challenges.

Strong liquidity is crucial for any business – especially in uncertain economic times. It allows for flexibility to adapt and helps ensure core operations aren’t disrupted. In short, it’s a buffer for steadier and more strategic growth.

Increased investment in growth and innovation

Optimised spending unlocks resources that can be directed to strategic areas – e.g. research and development (R&D), talent acquisition or technology investments.

With more budget available, there is more opportunity to explore innovations that drive future growth, such as developing new products, expanding into new markets or adopting the right digital solutions to boost your efficiency. This reinvestment in growth-orientated initiatives helps the business stay competitive and supports long-term success.

Steps for effective spend optimisation

Spend optimisation doesn’t just benefit your bottom line in the present: it strengthens the financial foundation of a business, positioning it for positive month-end results, resilience and sustainable growth.

Here are three strategies you can implement to start your spend optimisation journey:

1. Data-driven decision-making

Data is essential for identifying trends, inefficiencies and opportunities in the way your business is spending. Examining historical spending data allows you to spot patterns – like consistently underperforming investments or seasonal cost spikes – and address them strategically.

Technology, such as data collection and analysis tools, plays a big role in making this possible. Advanced analytics platforms can break down spend data by category, project or team, giving you granular specific insights that traditional accounting methods might miss.

Relying on accurate spending data means you have the freedom to create a culture that encourages responsible spending, cross-collaboration and drives long-term financial success.

To help you with this at Pleo we have developed a sophisticated dashboard regrouping all your recurring spend, that gives you immediate visibility of company spending in real-time, allowing you to optimise costs and make smarter spending decisions across the business.

2. Leveraging technology for efficiency

Nowadays, there exists a range of tools and platforms for expense tracking, management and optimisation. Many companies use spend management software that offers real-time visibility into expenses, automated reporting and user-friendly dashboards.

These intelligent tools can provide deeper insights by analysing spend data, identifying anomalies and suggesting adjustments. At Pleo we have built the Spending Insights feature, which gives you automatic insights into spending habits and provides alerts for opportunities where spending can be optimised.

With Spending Insights, you get four different types of real-time insights populated straight in the overview of the expense in question. Spending Insights alert you to:

• When double payments occur
• When you’re paying for two solutions of the same kind – e.g. Zoom and Google Meet
• When you’ve paid more than usual for a plan or subscription
• When you’re paying less or more than similar businesses*

*Based on Pleo’s spending data of more than 37,000 customers 

Through automation, our Spending Insights feature helps finance teams understand when they’re overpaying, allowing you to make active calls about the changes needed to save money and optimise spend.

3. Regular review and adjustment

Effective spend optimisation isn’t a one-time project: it’s an ongoing process. It’s important to regularly revisit your spending strategies to ensure they align with your goals and market conditions as they evolve.

Setting up periodic audits and reviews of employee expenses and business spend – quarterly, biannually or annually – can help you catch inefficiencies and adapt spending based on what’s currently working and what isn’t. Pleo’s centralised overview can help finance teams keep track of all contracts and vendors in one dashboard, helping you quickly identify ways to save money with every review.

Frequent reviews also help you stay agile. They allow you to shift resources quickly to meet emerging demands or opportunities – for instance, if a particular supplier’s costs have increased significantly without delivering additional value, you might want to renegotiate terms or explore alternative vendors to optimise spending.

Better spending, better business

Optimised spending isn’t just about saving money – it’s about maximising efficiency and building a sustainable, competitive business. It helps improve your profit margins and enhance your cash flow and liquidity, and it enables you to invest in growth and innovation.

In short, by optimising spend, you’re fuelling the future, setting yourself up to sustain your profitability and stay relevant in the market.

The strategies above – data-driven insights, tech-driven efficiencies, and consistent review – work together to help you create a responsive, efficient approach to spend management, optimise your spend and pave the way for a healthier, more agile business.