The three functional areas of spend management, AP, corporate cards, and reimbursements are all supported by three pillars:
The idea of getting approval for spending company money before committing to a purchase is central to expense management, and spend management systems are built upon
powerful approval processes. They enable companies to set up approvers, typically managers, to review committed spend (e.g., submitted invoices and employee expense reimbursements) as well as requested spend (e.g., purchase orders). When these settings are robust, they can handle more complex company approval policies and contingencies.
The process of requesting spend by employees should be intuitive and quick, no matter how elaborate the approval logic required for a particular purchase. Spend management systems are able to build sophisticated approval workflows, specifying who should be approvers and under what conditions. This is commonly used to establish second-in-line, or even third-in-line, approvers in the event that the main approver is unavailable. And, to identify categories or amounts of spend that require additional approvers.
Spend management systems’ radical contribution to non-payroll spend is to link approval processes to card spend. Wrapping the pre-approval process around spending using virtual cards means that the request and approvals are executed before a transaction occurs. Prior to spend management, card payments created a huge blind spot for finance and accounting teams. The pre-approval process for virtual cards solves this problem. It gives visibility to budget owners, who serve as approvers, so they can control their budget. And, because the transaction syncs directly to the GL, accounting has the information it needs.
While these workflows help to protect companies’ bottom lines, they also help to protect employees from inadvertently breaking company policy.
A strong request and approval workflow is a paramount capability of a fully integrated modern spend management system.