What Does It Mean To Change Your Spend Culture?
How do you deal with uncontrolled spending?
Managing spend is a huge problem for companies. Unfortunately, many don’t find out just how much of a problem it can be until ridiculously high numbers start coming to light in company expenses. And you don’t want a situation like what happened when people found out that the government was paying $640 each for plastic toilet seats.
We try to handle these sorts of problems by taking steps to curtail maverick purchasing, stop cash leakage, and enforce company policy. But while those steps can be important, they don’t address underlying issues that cause uncontrolled spending. When we talk about a company’s Spend Culture, on the other hand, we’re getting at a concept that includes every aspect of how and why companies spend money.
Defining Spend Culture
When we talk about companies having a “spend culture,” we’re including everything that influences how a company spends money, capital, resources, and energy. It’s a broad, overarching concept. And it means focusing on the root cause of how you spend money
Let’s use the $640 toilet seat as an example. A knee-jerk reaction might be to fire the employee who let that purchase slip through. But that won’t solve the problem. If we’re thinking about spend culture, we’d look at what factors led to purchasing of that sort. We’d consider conditions within the company and behaviors among employees that led to out-of-control spending in the first place.
Looking At Spend In A Different Way
Thinking of company spend being influenced by an overarching culture is a pretty new concept. What we’re calling spend culture has always been around. Companies just weren’t thinking about it in those terms. But if you want to take control of your spending it’s time to recognize that goal will require more than just adding a few new policies.
It’s important to take a look at company-wide spending habits. Don’t ignore anything. For example, Indirect Spend is often considered a secondary priority, but it can account for nearly 80% of a company’s purchases. It’s also important to address smaller issues like executives ordering expensive meals on business trips. You’ll need to get the entire company on board at every level to make real, lasting changes in how your company thinks about and spends company resources.
Making Lasting Changes
As you start defining your current spend culture, you’ll also want to think about changes to make in the future. And you’ll need tools to support your company’s commitment to approaching spending in a more enlightened way. Spend management platforms won’t alter your company’s spending practice for you. But they do give you the tools you need to make lasting changes.
NextProcess offers a suite of programs that work together or separately to help you manage company spend. Capital project management, accounts payable, procurement, and expense reporting all become easier when you have user-friendly tools to help get the job done. Contact us today to learn more about how our products can help you change your spend culture for the better.