Small and medium businesses are typically nimble organizations where money is spent as needed to propel the company forward. Makes perfect sense, right? Unfortunately as businesses grow, spending gets more complex and this common sense plan doesn’t work for the long haul.
Essentially, organizations tend to leave a lot of money on the table without a formal spend management process in place:
- Overspending by employees who are unclear on budgets or acceptable expenses
- Unpredictable cash flow
- Slower company growth resulting from spending that is not aligned with organizational goals
- Untapped discount opportunities from suppliers
- Costly process inefficiencies that are wasting time and money internally
To offer solutions to these common challenges, Proformative and SAP Concur authored a white paper: 5 Steps to Strategic Spend Management. Short on time but still interested in guiding your company towards a more strategic approach to expense and invoice management? We’ve provided this handy two-minute-read version of the white paper below!
5 Steps to Strategic Spend Management:
1. Understand your expense management process
Is it acceptable to book business class flights 100% of the time? Can employees book with vendors that offer them personal rewards points (what about when lower-cost options exist)?
If you don’t have an up-to-date Expense Policy, you’re missing one of your greatest opportunities to manage spend. An Expense Policy is an easy way to communicate allowable expenses, reduce disputes and give you more control over how employees spend company money.
Don’t know where to start or need to update your policy for 2020? You can create a customized Expense Policy in minutes for free with the SAP Concur Expense Policy Builder tool.
2. Build flexibility into your spend management strategy
Growing business need agility to thrive and policies should always fuel, not hinder, profitability. Any system should enable appropriate variances. For instance, if one department is under-budget this quarter, business leaders should be able to see that in real-time and re-allocate those funds where they will have the most impact. Similarly, your Expense Policy should have a section on exceptions and managers should be empowered to meet strategic business needs on the go.
3. Hold business leaders accountable for spending and budgets
With the right tools and processes, spend management can become a source of growth for the company, rather than strictly a cost centre. To be successful, there has to be an open line of communication between business leaders and the finance team. Sharing information through regular meetings, via technology or both is critical to understanding why costs may be rising or where savings could be achieved.
4. Communicate spend policy, review periodically and alert employees to changes
While a spend policy is indispensable, it can languish if it is relegated to the back of the employee manual. If your policy is on paper, review and re-communicate it often, highlighting any changes. Better still, use technology to integrate policy right into the tools employees use when booking travel, choosing vendors or making other business-related purchases. An integrated policy enforces itself and saves everyone a lot of time.
5. Align spend management strategy with business goals
Likely your company is always planning for the future and it’s just common sense to ensure your spending is in step with achieving those goals. Your evolving objectives should always drive your spend management strategy.
One of the most effective ways to ensure that spend management and business strategy are aligned is by optimizing vendor invoice management and implementing technology that connects you to spend—no matter how or where it happens.
Want to dig deeper into improving spend management? Read the full white paper: 5 Steps to Strategic Spend Management for more detailed insights and expert commentary on these five steps. Or, watch this video to learn how SAP Concur solutions connect all of your spend for greater visibility and control.