In Deloitte’s 2020 Chief Procurement Officer Flash Survey, cost management was identified as the top priority for CPO’s, requiring 8 times more of their time and attention in day-to-day operations. The survey results confirmed what many organizations already know – the impact of the ongoing economic downturn is making effective spend management more essential than ever before.
What is Spend Management?
Spend management refers to the systems and processes that an organization puts in place to maximize the value of its purchasing and procurement activities.
By equipping managers with the tools needed to accurately track, analyze, report, and coordinate the costs of doing business, spend management software does more than help organizations lower operating costs – it maximizes the value of every dollar they spend.
How Can Spend Management Software Help My Organization?
Spend management software helps organizations lower costs, increase productivity, improve cash flow, minimize risk, and enhance spend visibility. By automating and refining the spending process, spend management software systems guide organizations toward optimal procurement actions, better sourcing decisions, and improved resource allocation. Spend management software can help organizations strengthen and streamline purchasing activities in various ways, including:
- Sourcing Optimization (where is our money best spent)
- Robust Spend Analysis (where is our money going)
- Enhanced Compliance & Visibility
- Streamlined Expense Review & Approval
- Improved Cash Flow
As organizations grow, so do the prices of the raw materials and contract costs they need to operate. Spend management software helps organizations ensure that all purchases are made through authorized vendors, at the best prices available.
Using a process known as optimization, spend management software helps managers evaluate hundreds, or even thousands, of potential vendors to find the option that’s most likely to meet the organization’s needs.
Whether an organization’s primary concern when sourcing raw materials is unit price, minimum/maximum order limits, or any other quality, spend management software does most of the heavy lifting involved. By sorting through mountains of supplier data and applying targeted algorithms, spend management software helps organizations make the best sourcing and procurement decisions in any given scenario.
Depending on the organization’s specific needs, spend management software can be tailored to compile, summarize, and breakdown purchasing data to tell management exactly what it needs to know.
By automating the labor-intensive, time-consuming processes required to turn large amounts of raw purchasing data into actionable, quality information, managers can spend more of their time acting on the sourcing, procurement, and payment insights obtained through spend analysis, and less time attempting to collect, sort, and organize the data themselves.
Spend analysis quickly slices and dices purchasing data in whatever way management chooses. By breaking down exactly how much the organization is spending, where it is being spent, and the value that spend adds to the organization, spend management software can provide management with valuable, accurate, and data-driven insight to strengthen and streamline the organization’s operations.
Enhanced Compliance & Visibility
By automating the bulk of the expense review and approval process, spend management software provides more visibility and control overspend. This helps organizations ensure that materials are being properly sourced and purchased from approved vendors and that payments are made on time and following contract terms. Automating these processes works to minimize errors while maximizing productivity – a win-win situation
Spend management software provides management with a bird’s eye view of the organization in real time by compiling, reporting, and analyzing the organization’s spend activity as it occurs.
Streamlined Expense Review & Approval
The high-speed nature of business today has led many organizations to grant purchasing authority to more of their employees than ever before. Department managers shouldn’t have to wait days for the district manager’s approval to repair or replace a broken cash register. Doing so would bring business to a screeching halt.
Spend management software effectively automates most of the tedious, repetitive tasks commonly associated with expense review and approval. Preventing unwanted purchases on the front end is much more effective than hoping for management to catch them after the fact. By linking employee purchasing cards with the organization’s spend management software, organizations can implement targeted spending restrictions and rules within their existing procurement, purchasing, and accounts payable processes. Purchasing cards with built-in limitations on their use help organizations minimize the risk of employees paying their power bill or buying their kid’s school supplies with company funds.
Improved Cash Flow
One of the main draws for organizations looking to implement spend management software is its potential to impact cash flow positively. Spend management software helps organizations avoid late fees by making sure vendors and suppliers are paid on time. Another major benefit of spend management software is its ability to schedule and coordinate vendor invoice payments based on what’s best for the organization’s cash flow position. Spend management systems can also make sure organizations take advantage of early-payment discounts and beneficial invoice terms whenever possible.
Which Spend Management Software is Right for Your Organization?
Every organization is unique and there isn’t a one-size-fits-all Spend Management software solution. Use Solugence’s ‘software matching algorithm‘ to automatically analyze dozens of solutions against hundreds of data points to receive free recommendations on which solutions stack-up best with what YOUR business needs.