Get Smarter About your Expenses with Spend Management Tech

Businesses where expenses are not handled efficiently can feel like a bucket with holes - the minute money comes in, it seems to be pouring out. This is where getting smarter about money or the act of spend management, becomes critical for the survival of a business. 

Spend Management has three main advantages:

1. You’ll understand more about the way you spend - Every expense is a risk for loss just as much as it is an opportunity to make a profit. The primary function of any spend management software is to generate an analysis of all your sources of expenses, and to evaluate whether the way you spend is in line with your business goals and your strategy to achieve them. You will also spend better when you have deeper insights into the various ways in which you can reduce your cost of production or cost of service, and when you identify the best suppliers for your business.
2. You’ll get tighter control over spending in every business process - Numerous business processes involve varying levels of expenses, payment cycles, and methods and require coordination between departments and vendor partners. A spend management software helps you gain tighter control over this draining task that needs high visibility and precision so that you end up saving more by spending less and spending smartly.

Some of these key Business Processes are:

1. Sourcing and Contracts - Every business owner has to keep track of multiple contracts at a time - both with customers as well as with suppliers. Ensuring that the timelines and the tasks enlisted in the contracts are honored is time-consuming and expensive to handle manually. By moving the entire process online and automating contracts, you can develop, manage and store legal documents digitally.                     

Sourcing, both direct and indirect materials is another source of worry for business owners, as it is the first step involved in eliminating the supply chain crisis. With spend management software that has an inbuilt universe of vetted suppliers, you can reduce business risk by choosing the right supplier, reduce time to market and other related costs.

For manufacturing companies, spend management also allows them to have a better grip on product sourcing by creating high-value, low-cost sourcing agreements.

2. Procurement - Anyone who handles the procurement function will tell you the importance of having a smooth and safe buying experience. Spend management tech equips you with the necessary tools to create better collaboration between suppliers, provide a catalogue of validated products, services, and suppliers to enable employees to buy right and buy better. 

You’ll also be able to trim down inefficiencies by automating the procurement process and linking it with your back-end and Enterprise Resource Planning (ERP) software so that any cost advantage you get in the procurement process actually touches your bottom line.

3. Invoice and Payment Management - Working capital is the lifeblood of an MSME owner. The delayed payments crisis in India, particularly during COVID-19 has demonstrated the harsh effects of mismanagement of working capital. 

A spend management software helps you overcome these difficulties. With stronger control over account payables and cash flow, you can manage supply chain risk by freeing up more working capital. Digitalising the invoicing procedure also allows you to spot and claim early supplier discounts and strengthens your case to enforce payment compliance. 

4. Supplier Management - Getting the right product or material at the right time is crucial for businesses, especially time-sensitive ones. While a small business may not have an army of suppliers to contend with, there are still several vendors to deal with. 

A spend management software acts like a needle that threads your supplier network with the procurement department so that you can have the most efficient outcome for your business. Further, you can maintain one digital, automated ledger for all your suppliers, which gives you the ability to allot your spending to your preferred suppliers, or those that will give you the most profits. Suppliers can also collaborate with you by keeping up-to-date records, which will help you manage your inventory. 

5. External Workforce and Services - If you are an MSME that has operations in several cities, or that employs an external workforce or services, then it is crucial for you to source the right talent and keep an eye on their performance. Further, you will also have the responsibility to set up a payment schedule, depending on the type of labour you employ. 

A spend management software takes care of this task for you by automating the management of the records and payment of all your external workforce. With this advantage, you’ll be able to achieve a lot more oversight on your talent pool and a better understanding of the type of support you need. This is especially helpful for businesses that have seasonal demands for labour. 

6. Travel and Expense - When your employees need to travel on business, it is cumbersome and expensive to manage their bookings and reservations without a proper system in place. Spend management technology addresses this often-overlooked area too. You can simplify business travel by approving costs from anywhere at any time, as long as it is within the limits of the travel policy that you have set for your company. 

Losing receipts becomes a thing of the past, with the expense management function. Not only will you be able to see all your expense data on one platform, but you can digitise and automate capturing, storing, and paying for reimbursements, so that travel and other expenses incurred by your employees for work can be reimbursed accurately, on time. 

8. You’ll be able to build and scale a forward-looking business - We’ve seen above how spend management tech will give you a better understanding of your expenses and help you gain better control over them. The third advantage of using spend management software is that you can customise the software to your particular industry and business size, so that as you grow and scale, the software is able to accommodate for the expansion and increased complexities. As we’ve seen, spend management is one of the preliminary stages to ensure the smooth functioning of the supply chain and working capital flow. 

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