A spend management system will exceed your expectations. Here’s the proof.
A spend management system is much more than accounting software; it’s a wholesale realignment of how a company manages every dollar that leaves its bank account. By transforming the operational aspects of spending money, a spend management system creates a collaborative culture focused on accountability for the budget and efficient deployment of company capital.
The depth of positive changes that follow the adoption of a spend management solution suggests that spend management is much more than just the sum of its individual parts. Its results often exceed expectations. Let’s take a look at some common expectations of a spend management system and the reality experienced by finance professionals.
Expectation: Not much will change after adopting spend management software. We use lots of different software already, and spend management is just one more incremental step for my accounting team.
Reality: Spend management is a completely new approach to accounts payable. The Definitive Guide to Spend Management describes spend management as “an important innovation that represents a radical departure from the status quo. It handles the full lifecycle of every non-payroll dollar that leaves a company.”
A short explanation of how spend management transforms AP is that it consolidates three central functions — approval workflows, accounting automation, and real-time reporting — in three main areas — accounts payable, corporate card programs, and employee expense reimbursements. The ensuing visibility across all non-payroll spend ripples across a company. As a result:
- Employees feel empowered to make purchases, and they confidently know their spending will be within corporate expense policies.
- Approval policies are transparent and ensure compliance.
- Finance teams no longer have to hunt down receipts or other documentation to process expenses.
- Forecasting and budgeting are based on up-to-date information.
- The month-end close is much faster — or even moves to a continuous or rolling close — which frees up time for higher-value work, because accounting automation ensures reconciliation happens as transactions occur.
The greater accountability experienced by those using a spend management system is a common theme in our case studies. Dmitri Litin, Controller at AspireIQ, says that his company experienced a cultural change in attitude towards spend, with a much greater sense of accountability, because of this transparency. “A single source of truth that provides visibility allows us to be much more direct and makes it clear that every dollar matters. Holding each individual accountable creates a culture of transparency.”
Expectation: Introducing spend management software will cause friction with employees. Who wants to learn yet another system?
Reality: Employees are more than happy to get rid of expense reporting, complicated approval chains, and opaque spending policies.
At first glance, employee resistance might seem like a valid concern. Accounts payable processes, like employee expense reporting, are often seen as nuisances by staff, or even as something to work around if possible. Plus, employees may have struggled to finally master one expense reporting system, so it’s understandable when they resist change. Andrew Vernik, VP of Finance and Operations at HappyCo, says the elimination of expense reporting was the selling point for spend management at his company. “Saying, ‘I've got a new expense system,’ probably sounds as exciting to the business as, ‘I've got a new dentist.’”
“The watershed moment came when I switched approaches by saying ‘You’ll never have to file an expense report again,’ and only then perceptions and enthusiasm changed.”
Employees also appreciate that automated approvals take away the frustration of trying to figure out who approves what expense and ensure that all spending happens within policy. Michael Zheng, Head of Finance at Affinity, notes that these changes have shifted the conversations around employee spending.
“What used to be a post-expenditure questionnaire, ‘Why did you spend this?,’ is now a collaborative planning conversation, ‘What will you need to spend on in the short and the long-term and how will it benefit the business?’”
Expectation: Implementing a spend management system will require time that we just don’t have.
Reality: While some software requires a full implementation process, spend management is a matter of onboarding, and that process is likely faster than you think. Although some work is required up front, spend management onboarding is spread over a month to get through the first month-end close. The most time-intensive aspects are switching card details for vendors who have credit cards on file and making sure that vendor details for ACH and check payments are properly transferred over.
In addition, recent research shows that adopting new technology is often much faster than anticipated. One survey by McKinsey asked executives how long they would have predicted the adoption of new business operations technologies to take, and the average answer was 672 days. But at the onset of the COVID-19 pandemic, when they didn’t have a choice but to change, companies were able to implement new systems in an average of 26.5 days — that’s 25 times faster!
Plus, in the long run, spend management saves time, so the initial time investment pays off with shorter monthly closes and the elimination of expense reporting and reconciliations. Some finance executives report that switching to a spend management system saves about as much time as hiring a half-time employee would.
Expectation: Spend management sounds like a great idea, but investing in new systems and processes during uncertain times is too risky. It’s best to stick with what we know right now.
Reality: Now is the best time for change.
We get it. Whether you’re worried about economic uncertainty or the future of your distributed workforce arrangements, change feels risky. However, research from Accenture shows that companies who embrace technological change experience higher revenue growth than slow adopters. Technological advances allow companies to pivot quickly, which is essential in chaotic times. Budgeting and forecasting activities, for example, are much more flexible when they are based on real-time data. And if budgets have to be adjusted, a system that easily allows the levers of control to raise or lower spending limits is more effective than a cumbersome system that lags behind actual spending data. And the visibility afforded by a spend management system’s real-time accounting automation is a perfect fit for remote teams.
Expectation: Specialized systems are best-of-breed and offer better functionality, so it’s best to stick to systems that are just focused on one thing, like Bill.com for paying bills.
Reality: For most companies, the value of a consolidated system exceeds the potential cost of losing any edge-case functionality, and the features of a robust spend management system like Airbase often give parity with legacy systems like Bill.com.
When bill payments are part of a comprehensive system that incorporates all aspects of accounts payable, including payments by check, ACH, or corporate cards, finance teams have a complete picture of spend activity that is always current. Automated workflows help to make bill payments flow smoothly, right through to booking to the General Ledger.
Because a spend management system consolidates all payment types on a single platform, it’s even possible to make money while paying your bills by using virtual cards to earn cash back.
“Spend management” might not sound like something that will transform your company, but we’d like to prove otherwise and raise your expectations. Contact Airbase 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.