Over the last few years, companies across industries have had to deal with a pandemic, supply chain issues, inflation, the risk of a recession, and rapid changes in consumer purchasing behavior. Through all these challenges, many companies have come to the same conclusion: spend management is a key part of building resiliency into business operations.
Spend management is a practice that involves overseeing supplier relationships to build long-term value, as well as tracking the procurement budget to make sure each dollar spent is used for maximum value.
In the past, many companies that prioritize spend management still fail to reach their goals. Too often, companies treat spend management as an isolated practice. Spend management should be incorporated across business activities: budgeting, sourcing, contract management, order requisition, inventory management, and even product development.
Here are some ways to integrate spend control best practices and improve spend management in your company.
Spend control refers to the tools and processes used to monitor and manage purchasing across the business. Spend control is the final step in the spend management process, following spend visibility and spend analysis. Spend control is nearly impossible without a full understanding of its expenses and an analysis of ways to optimize those expenses.
Spend control is often conflated with cost control. Cost control refers more narrowly to cutting costs, particularly when the company is facing a business or economic downturn. Spend control doesn’t necessarily mean the business reduces its spending; rather, the company has optimized spending to make sure it’s getting the highest possible return.
Improving spend control doesn’t happen overnight; it requires tools and best practices to get it right. These tips can help you improve spend control at your company.
The right technology makes spend control effortless. When integrated properly, spend management tools can help businesses cut overall annual expenditures by 5% to 10%.
There are lots of ways technology can help reduce wasteful spending. Glean AI enables accounting teams to review invoices and quick financial decisions on the spot. By centralizing vendor data, teams can align quickly on budgets and seamlessly collaborate on spend decisions. Plus, Glean AI's proprietary benchmarking data empowers your company to negotiate better deals with your vendors and drive increased spend efficiency.
[Read more: Work Smarter, Faster With Glean AI]
With AP automation, Glean AI helps accounting teams process and approve invoices with no data entry. Make ACH, check, & international payments in just a few clicks, and sync bills & bill payments with all top GL systems. Increasing efficiency increases productivity, saving time and resources throughout the payment process.
In addition, workflow automation makes it easier for everyone to stay compliant with their purchases, reducing costly errors down the line. Automated reconciliation makes reporting and analysis easier and more accurate.
Technology can put the right data at your fingertips, but spend control depends on those across the organization having the right attitude and approach. More than 80% of finance leaders admit there are cost-saving opportunities falling through the cracks: in travel, expense and invoice spending, in particular.
Create a culture of spend control to reduce opportunities for waste. Make sure teams are aware of the risks of poor spend control. Make sure that all parts of the company become familiar with the spend control vendors and tools you choose, so everyone is on the same page.
Likewise, set forth clear processes that users can follow to get expenses approved — including a separate ‘special’ process for emergency procurement needs. Make it easy to get invoices reviewed, approved, and paid, to keep spend visible and workflows running smoothly.
Once you have your internal spend controls in order, it’s time to take a closer look at your vendor relationships. Examine your vendor agreements to look for opportunities to improve your terms and pricing.
Negotiation doesn't have to be a negative experience. Building long-term relationships with your vendors ultimately benefits your business financially. As a result, seek to negotiate terms that are mutually beneficial for both businesses. Be specific about the products, services, and technology features you require and make it clear that you won’t pay for anything you don't need.
[Read more: How to Better Control Your Vendor Spend]
It’s estimated that 15% of vendor invoices contain errors. Tracking down and correcting errors takes time, which is why AP staff spends 84% of the time processing invoices.
These errors cost your business time and money, and they could cost more if your business is unable to comply with security standards or reporting requirements. Spend control vendors like Glean AI can automate workflows for your finance team, including invoice matching with purchase orders and performing mini audits Smart spend management tools can also identify red flags for potential issues and save your business from costly reputational risks.
Spend control can reduce the risks of fraud, financial waste, inefficient operations, and poor vendor relationships. It starts with identifying areas in which spend can improve (spend visibility and analysis) and requires the right tools and training to bring the organization to a better place.
The first step to get started is to bring your spend data into one centralized location. Glean AI can help. Our accounts payable platform is built to help you understand what's driving your vendor spend with analysis and insights powered by machine learning. It efficiently extracts all line items automatically for a clear view into your vendor cost drivers.
Plus, it’s easy to get set up and running. Glean AI connects to your General Ledger and bank within minutes, showing you where you can save money quickly. Our platform automatically detects duplicate invoices and overcharges; sends you alerts on billing errors or anomalous spend activity; and leverages vendor benchmarking to see what competitors are charging, so you can negotiate the best possible terms.
To learn more about the spend management and Glean AI, request a demo, today.