Why Is Spend Management So Important, and How Can Automation Help?
Simply put, spend management is the strategy companies use to control their spending. This strategy does not only involve purchasing and procurement, although that department plays a vital role. It can also involve collaboration between several different departments and financial activities, including accounts payable, procurement, capital project planning, and travel and expense management.
To get a clear picture of where and how your company spends money, you need a reliable and accurate method for managing finances. That method also needs to produce records that are easily accessible when you need to answer questions about spend, budgeting, and cash flow. The best way to do that is with business process automation.
The Importance of Spend Management
Managing money is a vital part of every business. Without an overall spend management plan, spending happens in silos. Departments like marketing, IT, CapEx, and more spend money all the time, often without communicating with each other. Some of these expenses might go through a centralized purchasing system, but not all.
This sort of spending makes it difficult to get a clear sense of company finances. It also makes implementing and sticking to a budget challenging. Worst-case scenario, uncontrolled spending can leave your company broke.
Benefits of Spend Management
A good spend management system will provide real-time visibility into your company’s financial state. It provides accurate financial data that’s constantly updating to include the latest information on spend. With a good spend management system, you’ll be able to improve risk management and tighten internal controls, while at the same time making it easier for employees to make necessary purchases.
Long-term, spend management enables your company to develop clear policies related to expenses, and enforce those policies. The insight provided by your spend management system also lets your company improve operational efficiency, increase profits, and plan for the post-pandemic future. Improved spend management also improves budgeting and forecasting. The more insight and control you have over company spend, the better equipped your company is to craft forward-thinking strategies.
The Role of Automation
If the idea of coordinating and overseeing all your company’s financial processes as part of a unified spend management solution sounds daunting, you’re not alone. Getting a clear picture of company finances may be near-impossible with paper-based processing or outdated, clunky automation software.
That’s where cloud-based business processing automation (BPA) comes in. Modern business process automation is fast, user-friendly, and cost-effective. Implementing accounts payable, procurement, capital project, travel and expense, and document management software immediately gives your company increased insight into and control over finances. As implementation of your software progresses, you’ll be able to customize the automation software to meet your company’s exact needs.
More specifically, automation helps with spend management in very practical ways. Accounts Payable automation ensures you never miss payments, so there are no more late fees. Procurement automation helps your company lock in the best prices and eliminate maverick spending. Travel and Expense software makes reimbursing employees for legitimate business expenses simple and speedy. Also, since these software systems are cloud-based, they can be accessed securely from any location with internet, making them ideal for companies that implemented remote work during the pandemic.
Bringing Financial Processes Together
Procurement and accounts payable are two halves of the Procure-To-Pay (P2P) process. Though it makes sense for them to work together, these two processes are siloed in many companies. Bringing procurement and AP together has a variety of advantages, including more efficient sourcing, increased negotiating power, and improved spend analytics.
Something similar is true for aligning procurement and AP with T&E expenses and capital project management. While the departments handle different sorts of financial tasks, making collaboration possible can provide increased insight into company spend and better planning for purchases and expenses.
An Integrated Software Suite
One of the most significant advantages that NextProcess can offer your company is the ability to automate your financial processes with a suite of software programs that work well together. When you automate your business processes with programs from the same supplier, there are no software conflicts. Plus, with NextProcess, the software works even better together than it does on its own.
For example, let’s imagine your company uses NextProcess software to automate accounts payable, procurement, and capital projects. If an employee clicks on an invoice in the accounts payable module, they’ll see a link to access the associated purchase order. They can also see if that transaction is associated with a capital project, and if it is they can go to the CapEx software with just one click. It’s far simpler than trying to switch between programs or walk between different offices to retrieve paper files.
The Move to Automation
Switching to automation is relatively easy. However, there are some important steps you should take to help ensure implementation goes smoothly. Begin with a plan for implementing automation. This plan should answer questions such as “What will this cost?”, “What are the benefits?”, and “What will employees do with the time saved by automating routine business processes?” Answering these sorts of questions will help you get important stakeholders onboard with automation and provide guidelines for implementation. For more information, check out these articles:
- Here’s How To Get Accounts Payable Automation Right The First Time
- How To Avoid the Most Common Mistakes That Companies Make When Implementing New e-Procurement Software
If you have any questions or you’d like to schedule a free demonstration of our software, click here to contact NextProcess. We’ll be happy to answer your questions or set up a time to show you first-hand how our software can help your business manage spend.