Top 3 reasons why the smart money is going to spend management.
Don’t fight the tape. It’s good advice in the stock market — resisting market trends rarely pays off. It’s also good advice for managing a finance tech stack. Just take a look at recent activity in the fintech sector. The smart money is clearly betting on a major shift in payment systems for company spending. Those that don’t will face an increasingly archaic world of slow manual processes and murky visibility into spend.
Recent investments include:
- In June, 2021, the news hit that Airbase had raised a $60M Series B funding round.
- Legacy bill payment system vendor Bill.com purchased Divvy for $2.5B in May, 2021.
- Brex announced that the company had completed a $425M Series D in April, 2021.
- Corporate card provider Ramp announced in April, 2021, that they had raised $115M for Series B.
The timing of the funding rounds coincides with the investment that companies are making to add new features in order to provide an intuitive, complete platform for all non-payroll company spend. (Airbase is already leading the pack in the race towards consolidation and ease of use. But don’t just take our word for it: Check out what the reviews say.)
So, what’s prompting investors and fintech companies to put so many chips on the spend management table? Let’s take a step back and consider three key elements in the build-up to this point.
1. Frustration with legacy systems and processes. For a long time, companies relied on clunky, siloed tech stacks to keep track of employee spending. Accounting seemed to be the last holdout for innovative technology, even for otherwise high-tech companies. Airbase’s Benchmark Survey of Finance Professionals found that high levels of manual work, slow monthly closes, and ineffective cost controls continue to plague AP teams, even in this age of automation. Eoin Hession, Controller at Recharge, summed it up well: “The amount of time that qualified accountants spend just trying to organize data from different systems, and get the coding correct and transferring data, is too much low-value time.”
2. The need to become more responsive in the face of change. The rise in remote workforces triggered by the pandemic further magnified those frustrations. The efficiencies created by a consolidated spend management platform offered a competitive advantage to remote teams, and access to real-time data proved to be crucial for agile decisions in the face of historic change.
3. More advanced payment rails. At the same time, advances in digital payment systems made it possible for fintech companies to build software on top of new types of payment rails. With those rails in place, software-enabled corporate cards can automatically capture a transaction as it takes place, and sync spending data to a company’s general ledger, thus eliminating many of the long-standing pain points.
A perfect storm for innovations in spend management platforms? Absolutely. An opportunity for you to rethink your approach to company spend and play a more valued role in your company? Without question. Here’s even more incentive: According to research, those who adopt new technologies early in the game fare better during turbulent times.
All evidence suggests that more companies are following investors’ line of thought. According to American Express’s Global Business Spend Indicator, 48% of businesses are mostly or fully automating AP, and 46% plan to automate, or further automate, over the next year. Another report predicts the global spend management market will grow from $492M in 2020 to $1031.9M in 2027.
Investors are experts in identifying trends. Their livelihood depends on their ability to see the future. And they’re putting money behind spend management. So what are you waiting for? Contact us for 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.
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