GUIDES AND EBOOKS

The Definitive Guide to Spend Management.

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From innovation to best practice.

In the 18 months since the first edition of this Definitive Guide, the number of companies on the G2 Grid® for the Spend Management category has skyrocketed from a handful to around 30.

The rapid adoption of spend management, along with the increasing convergence around the approach that Airbase pioneered, has been gratifying to see.

Still, there are important differences in solutions calling themselves “spend management.” To a large extent, this is because the companies offering point solutions in aspects of spend management like corporate cards, bill payments, expense management, travel software, or procure-to-pay are working to add to or modify their systems to become fully consolidated spend management solutions.

Only Airbase began as a spend management platform to address all workflows and payments associated with all non-payroll spend, which includes corporate cards, bill payments, and expense reimbursements.

As others rush to embrace Airbase’s holistic vision, we’ll continue to define and lead the category with new features, expanded capabilities, and impactful integrations.

We offer this guide to help you understand the why and how of spend management, and provide a glimpse into a better future for your company.

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What is spend management?

Spend management is an automated process to facilitate safe, compliant, accurately recorded company spending.

How does it work?

Spend management is collaborative software for the many workflows involved in spending company money. All data and related documentation flow across all touchpoints, including employees, approvers, accounting teams, other business units, and the GL.

All payments are scheduled, executed, and booked from an easy-to-use dashboard. A full audit trail is created across all non-payroll spend.

Non-payroll spend is comprised of three main areas. There are operational, accounting, compliance, and reporting requirements across all three:
  • Traditional AP/bill payments.
  • Software-enabled corporate cards.
  • Employee expense reimbursements.
Save time and improve accuracy by automating the following…
  • Approval workflows.
  • Documentation capture.
  • Accounting entries.
  • Payment scheduling and execution (ACH, card, check, international, vendor credits).
  • Direct syncing to the GL.
  • Real-time reporting.
  • Easy capture of and access to transaction data.
  • Spend policy compliance (through automated approvals and spend controls).

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The benefits of spend management.

Two words: visibility and control.

The widespread benefits of visibility and control.

  • Modern financial operations with better data and cleaner processes.
  • Connect employee workflows from initial request to final booking.
  • A process that is efficient and easy to use for accounting teams and for all employees who need to spend company money.
  • Create a single source of truth for all non-payroll spend.
  • Improve your company’s spend culture.
  • Faster time-to-close.
  • Automatic compliance based on customizable controls in line with budget and policy.

“I’m solving the problem of paying for company expenses in a remote world. Now I can track and immediately pay for things with my company’s approval and I don’t have to think twice.”
G2 review*

* We use quotes from the #1 review site G2, which does not allow full attribution. All reviews are from verified Airbase users and can be accessed by visiting their site.

value drivers

The everyday capabilities of a spend management platform.

BEFORE SPENDING
WHEN TRANSACTING
AFTER TRANSACTION
CORPORATE CARDSCorporate Cards
  • Pre-approvals.
  • Spend limits.
  • Auto-categorizations.
  • One-time or recurring cards.
  • GL categorizations applied.
  • Preset budget and policy conditions.
  • Approver and observer visibility.
  • Automatic booking, categorization, and sync to GL.
  • Virtual, physical, single-use.
  • Secure payment.
  • Multi-currency and international payments.
  • Clear audit trail of card transactions.
  • Readily available data for reporting or budgeting.
  • GL fully up to date — including allocating spend to the right subsidiary across your ledgers.
AP/BILL PAYMENTSAP/Bill Payments
  • OCR invoice processing.
  • Invoice inbox.
  • Vendor portal.
  • Slack and email integration.
  • Pre-approval workflows — automatically send bills for approval before payment is made.
  • ACH, check, card, or credits.
  • Multi-currency/international payment options.
  • Scheduled payments.
  • Single-click bulk payments.
  • Clear audit trail.
  • Readily available data for reporting or budgeting.
  • Vendor timelines and history.
  • GL fully up to date — including allocating spend to the right subsidiary across your ledgers.
REIMBURSEMENTSReimbursements
  • Pre-approved single-use.
  • Receipt upload in app (OCR).
  • Reimbursement policies can be viewed.
  • Request through app.
  • Immediate receipt upload available through mobile app.
  • Automatic payment to employee bank account.
  • Easy receipt upload.
  • Request reimbursement at the point of purchase.
  • GL fully up to date — including allocating spend to the right subsidiary across your ledgers.

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What makes spending so hard?

The rise of decentralized spending makes companies efficient, but it creates challenges for those charged with accounting and oversight. Increased remote work has compounded the risks.

Decentralized spending: Transactions undertaken by employees distributed across various locations of the company.
Centralized spending: An oversight intermediary has insight into spending — and therefore control — before it is committed to or carried out.

Employees pay vendors directly using a corporate card or their own personal funds before being reimbursed.

Purchases can be made by individual employees without scrutiny by an intermediary (e.g., an IT or procurement team) before they’re executed.

  • The good: Empowers employees to easily and quickly get access to the services and tools they need to do their jobs.
  • The bad: Without the right systems it’s difficult to have visibility into, and control, over this type of spending.

Common in enterprise-level companies with formal procurement teams. High-level managerial access and oversight occurs over spending.

Funds are not necessarily accessible by other employees.

  • The good: Visibility and control over all spending.
  • The bad: Tends to overburden employees administratively, and creates friction in getting access to the tools and resources to do their jobs.
Finding solutions to support company spending at scale.

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Three product areas of spend management.

The functionality of each area is essential. The consolidation is magic.

Corporate CardsCorporate Cards
Bill PaymentsBill Payments
ReimbursementsReimbursements

A consolidated spend management system streamlines bill payments, employee reimbursement, and corporate cards into one platform to manage all non-payroll spend.

Automated coding to the GL reduces errors, omissions, and facilitates vendor-specific and subsidiary-specific allocations to various ledgers.

Having full visibility and control 
over non-payroll spend would save 
firms between 9% and 12% of total spend.*

* Key Performance Indicators for B2B SaaS Companies. A PYMNTS & Airbase Collaboration, June 2022.

“On a weekly basis — between the automation, and everything being in one platform — I’m saving at least 15 hours a month. That time is much better spent making further improvements and serving the company.”
Shaina Beeson, Staff Accountant at OpenGov

1. Corporate cards.

Corporate cards can refer to:

  • Traditional physical cards.
  • Virtual cards.
  • Debit, credit, charge cards.
  • Spend management cards which are software-enabled.

Virtual cards can be generated for:

  • Specific vendors.
  • Specific initiatives.
  • Specific employees.
  • Specific departments..
  • One-off purchases.
  • Specific expiration dates.

Meet virtual cards, meet card control.

The ability to quickly generate single-use virtual cards is a defining benefit of using a spend management system. After receiving approval for a purchase, a quick tap generates a card number to share with the relevant vendor.

Virtual cards reduce fraud, support budget compliance, and are created instantly with ease.
  • Virtual cards are synced to the GL.
    The categorization of spend and the transaction flow directly to the ledger for automatic booking.
  • Approval workflows are connected to the card in the spend management system.
    This ensures compliance with company policies and leaves a clear audit trail of approvals.
Traditional cards to software-enabled future

Spend management takes your traditional cards into the software-enabled future.
Comprehensive spend management platforms enable you to use a choice of card options.

For example, our partnerships with American Express and Silicon Valley Bank mean that — in addition to offering Airbase cards — we give you the option to work with the card providers you’ve always relied on. This level of choice creates a fully comprehensive spend management experience.

Automatic alerts that vendors accept cards makes it easy to shift from checks or ACH to cards to optimize for cashback benefits.

2. Bill Payments.

Core AP/Bill Payments features of spend management:

  • Bill creation.
  • Purchase order automation.
  • 3-way match.
  • OCR scanning of documents (auto-fill).
  • Global subsidiary support.
  • Amortization scheduling.
  • W-9 compliance settings.
  • Auto-categorization of invoices and transactions.
  • Vendor portal.
  • Vendor credits.
  • Automated receipt compliance.
  • Scheduling/executing payments.
  • Real-time spend reporting.
  • International payments.

Over 85% of finance and accounting professionals agreed that they wish they had more visibility, control, and automated workflows regarding company spend.*

* The Spendlightenment Survey of Finance Professionals.

3. Employee expense reimbursements.

The reimbursement process requires:

  • Employees to provide documentation.
  • Accounting to book the expense.
  • A non-taxable payment made to employee.
Spend management systems eliminate cumbersome receipt chasing and reconciliations across reimbursements.

Previously, single-point expense management solutions offered limited reimbursement functionality to effectively reconcile, report, execute, and review reimbursements — multiple solutions and systems were needed, but not anymore.

What does spend management do to help?

  • Automatic receipt upload.
  • OCR auto-scan of receipts and emails for details.
  • Automated requests and approvals.
  • Review, clarification, and approval from within Slack and email.
  • Deposit reimbursed funds directly into an employee’s personal bank account.
  • Total audit trail of every detail, all synced to the ledger.
  • Consolidated reimbursement process in one system — no switching between solutions.
  • Automated approval workflows that expedite reimbursements while also enforcing compliance.

“[Airbase reimbursements] is a super smooth integration with NetSuite. I measure that success off of how few complaints we get from employees. To get nearly 300 employees onto a reimbursement process and have it go smoothly is a big deal.”
Steve Lamping, Controller at Instawork

With efficiency prioritized, it’s time for finance teams to consolidate operations.

Spend management systems provide all payment types — checks, ACH, a variety of corporate cards, vendor credits — from one unified system. This includes reimbursement payments and allows accounting teams to carry out varied functions without shifting from one system to another.

The flexibility this offers a company is substantial: one system to give visibility and control over all non-payroll spend.

Spend management gives finance teams the visibility, control, and automation they seek.

“I wish we could get greater visibility into all of our company’s spending in real time.”
“I wish we could automate more of the repetitive accounting workflows that take up a lot of time.”
“I wish we could control corporate card spending better.”

* The Spendlightenment Survey of Finance Professionals.

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Complex workflows and accounting needs.

Advanced approval and oversight workflows, vendor intake, 3-way match, amortizations, invoice and receipt processing, consolidated real-time reporting, multi-subsidiary and multi-currency support.

1. Approval workflows.

Spend management applies advanced approval workflows to all spending using sets of rules set to reflect company policies.

Pre-approval workflows mean spend will be accurately categorized, on budget, requested, supported with relevant documentation, and kept under the watch of delegated observers or approvers.
Approval workflow

Qualities of strong approval workflows:

  • As simple or complex as required, with routing dependent upon size and type of spending.
  • Easy to set up, easy to update, easy to use.
  • Transparency for employees and managers.
  • Applicable across all use cases (cards, PO requests, reimbursements).
  • Easily managed from within a single platform.
  • Reflective of company policies.
  • Flexible enough to change workflow settings as circumstances change.
  • Integrated with communication tools (e.g., Slack, email) minimizing time between requests, approvals, and follow-up communications.Avoids bottlenecks in productivity (e.g., establishing replacement approvers).
  • Creates audit trails of approval process, providing posterity, and identifying where in the workflow an item needs to be addressed.

Automated linking of approval processes to card spend

The automated linking of approval processes to card spend is a radical contribution by spend management.

Making sure only the right spend happens:

Approvers: Approvers are the delegated party to approve or deny spend or reimbursements.

Observers: Observers are users who can be assigned oversight access without the explicit power of an approver.

@Mentions: Any others who might be involved in the communication about a purchase.

2. Additional stakeholders.

Spending company money often requires the participation, review, oversight, and approval of additional business units. Take, for example, IT review of software purchases, or legal review of contractor agreements. A good system allows administrators to manage and customize the spend request workflows to automatically route these requests to these groups.

3. Accounting automation.

The benefits of automation are clear: it reduces human error, allows companies to act more quickly, and frees up time for higher value work for finance and accounting teams.

Automation has revolutionized accounting

Automation has revolutionized accounting in many ways. Here’s how it’s helping spend management:

AP processes: Basic AP features, such as bill amortization, payment scheduling, and payment execution are fully automated.

Approval workflows and receipt compliance: Automated approvals, as well as receipt and invoice processing, mean you have every detail on hand.

Auto-categorization for GLs: Using machine learning to improve its performance, auto-categorization frees up substantial time for accounting teams.

OCR: Automatically extract key information without manual input.

Compliance tracking: Additional oversight to ensure adherence to company policies.

4. Purchase orders and 3-Way Match.

Invoice management: Automatic routing of emails to an invoice inbox saves time, administrative work, and provides context. Scan emails to capture and add in any relevant additional information.

PO creation: When a customer requests a purchase order, the system should be able to generate one and match it against the invoice(s). The GL identification number of your ledger will appear on POs and bills to help organization and syncing.

NetSuite 3-way Match from Airbase: A time-tested verification and risk control procedure ensuring your company gets what it pays for. Airbase partners with NetSuite to create a fully-automated, seamless 3-way match experience, keeping PO processes aligned with an up-to-date ERP.

Alerts and reminders: Fraud, missing W-9s, approval requests, requests for subscriptions.

A Purchase Order Process Everyone Can Love ebook

Have you updated your PO process? To find out more about how automation is revolutionizing purchase orders, check out our ebook: Purchase Order Process Everyone Can Love.

5. Real-time reporting.

A spend management system tracks and captures every detail of non-payroll spend as it happens. This increases visibility and creates actionable insights in real time.

Consolidation of non-payroll spend means that budget owners can pull total spending, whether on cards, via POs, and reimbursements any day of the month.

One of the greatest benefits of spend management is that it can support a continuous, or rolling close: where the company’s books are updated and balanced as transactions occur.

This turns an activity that can take several days, or weeks, into a manageable daily task. Leadership can take a more agile approach to planning and forecasting.

Capturing data and organizing it into a complete transaction-level audit trail also means that information is where it needs to be whenever it is needed.

Find out more about the real-time reporting capabilities of Airbase.

6. Multi-subsidiary and multi-currency support.

A comprehensive system offers multi-subsidiary reports, multi-currency-enabled payments, and reporting.

When the GL supports multi-subsidiary reporting, like with NetSuite, spending can be easily booked to the subsidiary level. A unified and consistent approach to managing spend across multiple entities, and around the globe, adds efficiency to your finance operation.

See our ebook Managing Subsidiaries: Payments, Accounting, and Control to further understand the benefits of a spend management system for multi-entity businesses.

If spend isn’t visible, it’s invisible. Time is up for delayed payments and manual entry.

More than 90% of firms report not having full visibility and control over non-payroll spend.
90%
Nearly half of firms surveyed currently face data entry errors when managing non-payroll spend. This is the most important challenge, with 20% of executives citing it.
20%
47% of firms are currently facing data entry errors when managing non-payroll spend.
47%
One full-time AP employee spends 42% of their hours managing non-payroll spend by employees.
42%

* The Spendlightenment Survey of Finance Professionals.

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Conclusion.

As the #1 spend management provider as verified by G2, here’s our wrap-up of spend management today.

Modern solutions are holistic and collaborative.

Spend management solves the many problems companies face when it comes to making purchases — large and small. It’s an innovation made possible because of advances in digital payments technology, APIs, and cloud-based collaborative software.

Modern finance teams see that automation takes low-value work off their hands while accurately capturing and organizing data and documentation. They also appreciate the unprecedented visibility and control to ensure efficiency and compliance.

Spend management supports the increasingly complicated workflows of modern company spending. It takes a holistic approach to solving for the risks and inefficiencies, and redefines best practices for the safe, efficient, compliant, and properly recorded use of company capital.

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G2 awards.

G2 Badge - Leader - Mid-market Winter 2022
G2 Badge - Momentum Leader - Winter 2022
G2 Badge - Users most likely to recommend - Mid-market Winter 2022

“It’s easy to use, very intuitive. Scheduling payments is seamless. Airbase makes paying bills a painless process now.”

“I would say that Airbase is a ‘Day 1’ tool. The longer you wait, the longer you’ll have bad spend in the system. The earlier Airbase is part of all of your workflows within your company, the easier it will be for you to manage spend over the longer term.”

“One of the reasons why we like Airbase is because it just saves us a lot of time with real-time syncing. We don’t have to do a lot of reconciliations, we have to do fewer accruals now because everything’s on credit card, so it’s getting charged when it’s supposed to charge.”

“Both the physical and digital cards are easy to use. As a team lead, the best part about this platform is that the approvals process is quick and easy and I don’t feel like the bottleneck that’s holding up our spending process anymore. I also love that you can upload receipts straight to the platform — which definitely helps streamline the process.”

* We use quotes from the #1 review site G2, which does not allow full attribution. All reviews are from verified Airbase users and can be accessed by visiting their site.

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