What is zombie spend?
How does zombie spend happen?
It might be tempting to blame zombie spend on employees not following procedures (or evil scientists controlling their minds, but that’s another blog post). However, the reality is that these unplanned expenses are often the result of information on spend activity slipping between the cracks of different systems like purchase order requests, credit card statements, and bill payment platforms.
Decentralized spending makes it difficult to have full visibility into how money is being spent. In the past, purchases were often made through a central procurement department. Now, however, employees typically have the power to make their own purchases. This welcome plot twist removes roadblocks and empowers employees to get what they need to get their jobs done. But it does carry risks: Without the right controls, the perils of zombie spend lurk in the background.
For example, an employee signs up for a yearly SaaS subscription using a corporate card. A few months later, the employee mysteriously disappears on Halloween night, but the subscription continues unused. And, like any good horror movie, the situation only gets worse after this first mishap. Once the initial subscription term ends, it auto-renews. The card is charged again. And again. And again. Nobody notices these unwanted charges. And these oversights can go on for years! To avoid this, finance teams often have to hunt down all the card expenses from a former employee — and we can all agree that’s a lot less fun than hunting zombies.
How can you stop zombie spend in its tracks?
A good spend management system has an HRIS integration that keeps everyone informed when someone leaves. It can then send out an alert when an employee is no longer employed but still has an active card. It can also be set to lock cards when a subscription term ends so that a possible renewal can be reviewed before it is paid. Even better, virtual cards provide further ammunition against zombie spend because they can be tied to a specific employee, a specific vendor, and a specific time frame.
Whether it’s called zombie spend, orphan spend, or just wasteful spend, most businesses experience frightening charges like these at some point. By creating processes that provide oversight and control over all areas of company spend, finance teams can rest assured that they’re protecting their budgets from zombie spend with the best weapons possible.
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