How real-time spend visibility improves efficiency and enables smarter decision making for finance teams.
Companies looking for a competitive advantage in uncertain times, take note: Changing the way you approach data regarding company spend can raise your bottom line. Simply put, real-time spend visibility improves efficiency and enables smarter decision making for finance teams.
It’s obvious that smart decisions are essential for success, but efficiency is also important, even when it comes to the decision-making process. A McKinsey Global Survey found that companies who are able to make quick decisions are more than twice as likely to have successful outcomes, which suggests that lingering on the right course of action, or spending hours of time gathering data, isn’t always a smart approach.
How can a business decision be both smart and fast – especially when it comes to financial decisions, which can involve multiple departments, systems, and processes? The answer lies in the tools used to draw conclusions. In particular, to make informed decisions, finance teams need to be working with accurate and timely data.
Meaningful and effective analysis recognizes that the numbers tell a story, and, unfortunately, many decision makers aren’t getting all sides of the story because they don’t have full visibility and control when it comes to how money is spent across their organization.
What is spend visibility – and why does it matter?
When used to drive business decisions, spend visibility is more than merely keeping a close eye on expenses. Instead, by providing a comprehensive view of how money flows through all parts of a company, the tools that provide spend visibility create actionable insights into processes like supplier evaluation and compliance. Being able to drill down into financial data across all departments and activities in real time allows managers to assess the best approach to meet their objectives. When you can see common spending patterns and vendors, it’s easier to identify opportunities to save.
Another important advantage to having real-time visibility over spend is that it eliminates often-tedious processes, such as those involved in a traditional monthly close.
When automated processes and workflows keep the books updated in real time, finance teams have more freedom to think strategically about policies and procedures.
How real-time insight into company spend saves money.
To achieve true spend visibility, you need tools that provide the ability for real-time expense tracking. Below are six ways that having a comprehensive view of company spend can enable better financial decisions.
1. Cost-reduction strategies: How can you save money if you don’t know where it is going in the first place? To reduce costs, you need oversight into exactly what is being spent. The ability to create customized reports on the fly enables finance teams to examine spending patterns from different perspectives, even including historical comparisons.
For reports to be most effective, it’s important that expenses are properly categorized. An intelligent spend management system can categorize expenses as they are being made. Thanks to advances in machine learning, it’s even possible to anticipate an expense category based on past behavior. As a result, expense categorization is correct in real time, which eliminates the hours of work adjusting categories after the fact when it’s time to balance the books.
2. The ability to evaluate vendor performance: Are you getting what you’re paying for? Visibility into bill payments gives you the opportunity to assess whether a vendor is upholding the terms of an agreement.
3. Insight into duplicate costs: The decentralization of employee spend makes it harder to track situations in which more than one employee is paying for the same service. Subscription-based SaaS models are a good example. In the past, all software spending would go through a central purchasing department before being purchased. Now, however, employees can quickly purchase a subscription online. If they’re using a shared corporate credit card, each employee can enter the number without being told it’s a duplicate. (Typically, a SaaS vendor doesn’t have controls for how many times a credit card is used. They want the revenue, after all.) Management may not notice the duplication until the month-end close, which is often too late to reverse the payment. A smart pre-approval process automatically notifies an employee when they create an approval request if their organization is already paying for a service.
4. Fraud prevention: The costs of fraudulent activity go beyond any dollars lost. Those funds can often be recovered – eventually. However, the time invested in canceling compromised cards or tracking down a mysterious charge can never be regained. Spend controls, routine reports, and vendor-specific virtual cards give finance teams the visibility they need to identify and prevent fraud.
5. Purchasing leverage: Decentralized spending can lead to purchases being made in silos. As a result, a purchasing employee might not have the information they need for a better deal until it is too late. For example, a SaaS subscription might offer a lower price for a higher number of users, so a company could save money if they’re aware of everyone who is using the software.
6. Support for budget adjustments: The justification for spending cuts should be to support the organization’s long-term goals, not just because it’s unclear where all of the money is going. Up-to-date data can provide the ROI for every action, and automated expense approvals and virtual cards can make budget adjustment quick and easy. Having clear policies and procedures can also create a culture of accountability that employees appreciate when it’s time to reduce costs.
A comprehensive, up-to-date view into company spend is vital for finance teams when it’s time to think strategically, and having the right tools is an important component for successful decisions. If you’d like to learn how a one-stop spend management system can help, schedule a demo today.
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.