It’s hard not to love spend control software that builds budget discipline right into the purchasing process. When automated spend controls are part of an intelligent spend management system, budget owners have clear visibility into spend activity before it happens — therefore the budget can be protected. Employees can make the purchases they need, using corporate or virtual cards, purchase orders, or simple invoices, without worrying about exceeding spend limits, and without delays while waiting for approvals. The finance team always has an accurate picture of current financials without any surprises at month-end. With the right system, this is all possible without adding additional software to the financial tech stack.
The onset of our subscription-based credit card economy added significantly to the amount of distributed spending taking place by businesses, thereby putting more stress on spend controls. Without spend controls, finance teams must wait for credit card statements to discover how much card spend happened the previous month, then make budget adjustments after the fact. The advent of virtual cards solves this problem by building in pre-approvals for card spend.
For truly effective spend control, those approvals have to reflect a company’s structure and expense policies, and they have to be able to adapt to changes. For example, as a company grows, approval chains may become more complex, or a request in a certain category may require approvers from more than one department.
When approval flows are automated and easily configured, employees don’t have to waste time figuring out who approves an expense. Expenses policies and procedures are transparent to everyone in a company, and enforced consistently.
Spend control software that gives visibility into spend activity also helps to identify wasted spend, and even possible fraud. For example, if a company already pays for a service, anyone making a request for that service will receive an alert. Similarly, the finance office will be alerted if an employee who has an ongoing charge attached to a corporate card leaves the company. The resulting savings can be significant. JD Higginbotham, Controller at Ridecell, estimates that his company has saved about 20% by reducing unnecessary spend after switching to software with spend controls. And the savings go beyond the amount that would be spent on services; without automated alerts, the finance team could invest many hours trying to resolve discrepancies. Plus, when spend controls are built into a comprehensive spend management system, there is no need to purchase a separate program just to manage subscription spending.
Real-time financials give an up-to-date picture of a company’s available funds, which allows budget adjustments to be made on the fly, instead of waiting to make those adjustments after receiving and reconciling credit card and bank statements. Both virtual and physical corporate cards should carry adjustable spending limits, and spend activity should be visible through easily accessed reporting tools. Budget owners can then track spending throughout the month, instead of waiting for reports after the month-end close, or asking the finance department to use their valuable time to create ad hoc reports.
This access to current financials is particularly important during times of economic uncertainty, when companies may have to suddenly change strategies. It also creates a full audit trail, since approvals and required documentation are automatically captured.
Gaining control over budgets doesn’t have to mean adopting five or more different software solutions. With automated spend controls, a spend management system can enforce budget compliance, with total visibility into all kinds of spend, and adjustable controls and approval routes. If you’d like to learn about how spend controls can help your company, we’d love to talk.