It’s time to get serious about cost control: 4 ways spend management helps.
The importance of being able to pivot quickly was made clear during the COVID-19 pandemic. And now, finance leaders must once again respond against a backdrop of great uncertainty. Inflationary pressures from global events continue and the possibility of a recession looms large. Revising budgets and forecasts might feel a bit like Groundhog Day for already stretched businesses, but after 2020, we know that agility and responsiveness are paramount in uncertain times. It’s no wonder that a recent Gartner report states that the ability to be agile and flexible with regard to budgeting and forecasting activities is a top priority for CFOs in 2022.
The easily implemented cost controls in a spend management platform like Airbase make it possible to be prepared for change — good or bad. The following elements enable flexible cost controls to help businesses respond to change.
1. Real-time levers of control.
Real-time visibility into all non-payroll spend makes it possible to monitor budget status and easily make adjustments. That’s increasingly important as the focus for many companies shifts from “growth at all costs” to a greater focus on efficiency.
In his talk with PYMNTS, CFOs Double Down on Model Testing, Cost Controls Amid Choppy Economy, Airbase CFO, Aneal Vallurupalli, spoke about the role of finance in helping companies stay nimble. The importance of having tools that serve as levers that can be adjusted cannot be emphasized enough.
Software-enabled corporate cards with customizable limits provide the necessary insight and flexibility. When cards are backed by powerful software, you can limit the amount that can be purchased by transaction or in total. You can also set expiration dates, or even make virtual cards vendor-specific. If it turns out an employee needs more funds, admins can make adjustments to controls on the go, either temporarily or permanently. If you suddenly have to tighten the belts, limits can be lowered easily.
When card transactions automatically sync to the general ledger, financial status is up to date without having to wait for card statements to arrive. Robust reporting capabilities mean that budget owners can easily check the status of their spending.
In a G2 review, an HR manager noted that after adopting Airbase’s spend management platform, she’s now: “keeping spend organized and streamlined, managing budget overall month to month instead of simply guessing and hoping we are under.”
2. A single source of truth for software subscription management.
Software subscriptions are an often overlooked source of wasted spend. One study found that 38% of enterprise software licenses aren’t used — which adds up to an enterprise company wasting an average of $7.4 million annually.
How can this kind of waste happen, often, ironically, in SaaS companies? Here are some examples:
- An employee signs up for a free trial and forgets to cancel their subscription.
- A subscription renews automatically, even though nobody in the company uses it anymore.
- Another employee leaves the company, but nobody cancels their software subscriptions.
Consolidating all company subscription information into one place helps prevent that kind of wasted spend. A central subscription calendar monitors subscription expiration and renewal dates, and sends reminders accordingly.
3. Insights into ways to save money and increase revenue.
It’s one thing to plow through a pile of bills to make sure they get paid on time. But when every dollar counts, it’s important to take a step back to think about ways to pay less — and even make some money — while making bill payments.
When spending is done on different platforms and by different payment methods, it’s more difficult to spot those opportunities. Smart AP teams leverage spend intelligence tools that can highlight ways to save money, including:
- Duplicate subscriptions. With the advent of decentralized spending, employees can easily sign up for a subscription without knowing if someone else in the company has one.
- Better pricing opportunities. Many vendors offer discounts for yearly plans or reduced rates based on the number of licenses.
- Opportunities to earn cash back. Consolidated bill payment and corporate card platforms make it possible to monetize bill payments. A smart bill payment platform will let you know when a vendor accepts virtual cards. With Airbase, you’re even shown how much cash back you could earn by using a virtual card.
4. Rule-based expense policies.
Tightening employee expense policies improves cost controls, but if you only have written policies, employees must adjust to and, somehow, track any changes. Finance is then put in the awkward position of having to police employee spending and make adjustments when employees spend over budget. Rule-based policies make the system the enforcer and can be easily adjusted as budget targets shift. Plus, when transactions are approved before they happen through automated, upfront approval workflows, employees can rest assured spend is compliant.
Don’t be caught off guard. Discover how Airbase’s control and visibility can help your company in the coming months and beyond.
Airbase offers a one platform solution to manage all non-payroll spend. It provides oversight and control over spending with real-time reporting and automatic syncing directly to your general ledger. Control all payments – physical cards, virtual cards, ACH, and checks – from one place. Close faster. Empower employees. Control spend.
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