Spend management has proved to be a game changer for many organizations in streamlining their overall operations. It benefits them in many ways, from streamlining procurement practices to improving product catalogs. Since it is multi-tiered management involving lots of operations areas, organizations need spend management software applications to execute related tasks.
Spend management is still an emerging concept in the corporate world. Many organizations haven’t fully grasped the idea of what it is. If you want to learn how it works and when a spend management platform comes in handy, continue reading this article.
Here, we will briefly go over the concept of spend management. We will also touch upon one of the most robust spend management software in Canada for the local enterprises.
No, Spend Management (Software) Is Different from Expense Management (Software)
This is one of the most recurring confusion about spend management. Many decision-makers think that it is just another term for expense management. Similarly, they don’t make any distinction between spend management software and expense management applications. Let’s first spell out the difference between these slightly different monetary management practices.
Expense management is about keeping track of all the outlays that don’t entail any return. Traveling, dining, and other similar expenses that only indicate “cash outflow” come under expenses and managed accordingly.
On the other hand, spend management represents a broader concept of monetary management. Apart from all the regular expenses, it also takes into account all the cash outflows that go into building out products and services. Spend management also entails supervising the procurement strategy and supply chain operations.
This detailed and insightful analysis of organizational spending helps organizations in carrying out strategically-sound decision-making. Spend management also allows an organization to streamline its compliance measures, improve sourcing operations, and save money by cutting down costs that seem unnecessary.
It is worth mentioning that a robust spend management software is at the core of good spend management practices due to the enormity of the given tasks.
Understanding the Flow of Spend Management Process
Spend management is not a one-time task or a series of iterations. An organization has to establish an environment where spend management process flow can be taken care of. Here, we will outline the salient ingredients of the spend management process.
Identifying Sources of Expenditure: A Spend Management Software Might Help
The first thing you need to do to put spend management into practice is to identify all spending points. It seems easier said than done to pin down all the sources of expenditure. However, in a practical setting where expenses branch out in multitudes of visible and hidden streams, adding up all the outlays to come up with an accurate figure becomes a tall order. Delegating the task to respective departments and connecting them through spend management software might will improve this thorough identification process.
Collecting Relevant Data into a Central Database
This is the second phase in the spend management process and helps consolidate all the collected data in one centralized repository. This collection process can become a breeze if you are using a spend management platform that enables you to store documents on its cloud-based interface. Establishing the spend data repository on a centralized cloud-based platform will make sure all the remotely-working stakeholders can easily access it.
Cleanse, Categorize, and Analyze Spend Data
This is the most important phase of the spend management process. In this phase, the identified and collected spend data will be processed to offer meaningful insights. First, you will need to cleanse the collected data by ensuring there are no transposition errors and duplications. Moreover, you will have to take into account back-recorded expenses and standardize the expenses in the same currency.
After cleansing the spend data, you need to categorize it to improve its visibility. For instance, you need to classify all sorts of procuring outlays into a single column. Similarly, utility overheads and maintenance overheads will be displayed separately. This categorization will help your people read spend data more efficiently.
In the last phase, the analysis of all this cleansed and categorized spend data will tell you how you are spending your monetary resources. As an ongoing process, comparing this data with the established KPIs will enable you to understand which spends are worthwhile and which ones you may need to reconsider.
Good Spend Management Practices
After picking up the steam, this spend management process will help you make more educated expense-related decisions. However, if you complement the process with these measures, the results will improve.
Devising and Implementing an Expense Policy
You can create an expense policy in the light of your initial spend management groundwork. This policy will ensure every department and employee follows the decision-makers’ recommendation after analyzing the spend data. A strong policy will be a better device for controlling spending rather than manually controlling every expense from the top.
Conducting Internal Audits on a Regular Basis
Good spend management demands better transparency, which is unattainable without regular internal audits. Make sure all your departments and spending channels undergo the audit’s microscope. It will help you identify discrepancies and rectify them right away. The data gathered in the spend management process will come in useful in running those audits.
Leveraging a Robust Spend Management Software Tool
Last but not least, make sure that your teams are using a state-of-the-art spend management tool. A spend management application with multiple features will help you in executing many tasks discussed in this article. Above all, spend management software enables you to maintain clean and categorized spend data on a single virtually-accessible location.
SimplyPurchasing by Microsys is one of the most suitable spend management software in Canada for small-to-medium-scale enterprises. As mentioned earlier, spend management is strongly connected with the procurement process, and SimplyPurchasing lets you streamline the procurement work with minimal effort. The software, in particular, will improve the spend visibility of your procurement operations.
Microsys is a seasoned and cost-effective IT support service provider for SMEs. The firm is committed to providing superior network, computer, and business application support services to the corporate sector in Canada.