With an unclear economic picture for 2023, it’s important to take advantage of opportunities to make your business more efficient. But your spend management – which may be hindered by manual processes, and paper receipts, card statements, expense reports and invoices – can be a humongous speed bump on the road to efficiency.
If your current financial management system doesn’t offer digital receipt/invoice capture, spend visibility besides at month-end close, and proactive spend policy compliance controls, it could be costing you more time and money than necessary.
Automating spend management
Many organizations are turning to automation software to streamline their spend management. A study by the Controller’s Council found that the top finance and accounting systems your peers are automating right now are related to expense management, purchasing and accounts payable (A/P).
Spend management automation solutions can help Finance teams save time and cut costs by using algorithms to track expense claims and invoices. It reduces paper filing and the related risks of human error, provides real-time insight into cash flow status, and saves A/P from having to police company spending while keeping employees within company policies.
For example, Houston-based manufacturer Cardtronics was able to eliminate excessive spending and fraudulent charges by setting soft-stop and hard-stop approval thresholds in the platform it chose. And when employees use the app to book business travel arrangements, it directs them to preferred hotel, airline and car rental partners so the company can leverage a 10%-20% volume discount.
Spend management solutions on the market can also automatically reconcile transactions, minimizing the manual calculations required by your Finance team.
In addition, it streamlines the reimbursement process since employees can enter their expenses directly into the software. Spend management solutions often allow employees to scan in receipts and other supporting documentation, or take photos of them.
Spend management software helps companies control costs in other ways, as well. Particularly, it can help A/P avoid paying for the same invoice twice. Some solutions can even help you keep track of your petty cash.
When spend management is automated:
- the CFO/Controller gets more visibility into, and better control over, all company spend, gaining better insight for accurate budgeting and forecasting
- accounting teams can cut the time spent on month-end closing
- managers only have to review expenses that are flagged by the system, thanks to proactive spend policies tailored to your business
- reimbursements happen much faster, and
- employees no longer have to save receipts or manually provide expense report data.
The University of Alabama’s move to an automated spend management solution shortened expense report and invoice processing times. Expenses are now paid within 2.5 days. The university also reported that digitizing purchase order invoices cut the time staff spent processing those transactions in half. And by reducing manual processes, at least three full-time employees could be reallocated to other, more strategic functions.
And the university isn’t the only organization that’s saved hours of work in the Finance department. According to management consulting firm Analysis Mason, after automating spend management, the businesses it surveyed “saw savings of 530 hours annually per Finance employee.”
Meanwhile, at Penn State University in Pennsylvania, a spend management automation upgrade optimized system performance by standardizing expenses, dramatically reducing the number of expense types from 1,000 to 200.
What’s right for you?
To stay competitive and optimize resources and efficiency, manual, paper-based spend management and retroactively approving business-related expenses are no longer going to cut it. But not all solutions out there will be right for your business.
For instance, when the marketing company Avocados From Mexico in Irving, Texas, started vetting vendors, it was looking for a solution that could be customized with existing modules.
Here are some (but probably not all) of the questions you’ll want to ask prospective software vendors when shopping for a spend management solution:
- Will your solution work with my existing ERP system?
- How will it help us to cut costs?
- How much employee training will be involved on how the system works?
- How fast is the reimbursement process?
- Are there mobile capabilities for capturing expenses on the go?
- Is it a scalable solution with enough functionality to grow with my company’s evolving needs?
- How do my Finance team members access approvals, receipts and email chains within the system?
- How quickly can users access spend data?
- Fraud protection is a top priority, so how secure is the platform?
- Because not every employee needs access to the same funds, can I make spend rules specific to certain departments?
- Are there auto-categorization, amortization, payment scheduling, general ledger syncing or other special capabilities that would help our business?
- What can be customized for our Finance team?
- What are the vendor’s deployment options and implementation processes?
- What’s the customer support experience like if there’s a problem?
- Is the pricing model easy to understand?
In addition, BetterBuys.com offers insights on accounting software platforms that include expense management solutions as major features.