At face value, the term spend control may sound obvious in its meaning, particularly for those in finance. But what is spend control? And what does it mean to control spend, are some of the terms used to describe methods put in place for finance professionals to have control over spending by budget holders in the business.
These methods mean they have full visibility of all transactions, meaning they can identify issues and errors before they have costly repercussions. Ergo, they are successfully controlling spend.
For some finance departments, however, spend control isn’t always high up on the agenda. This isn’t always on purpose, it’s just the natural order of how finance professionals are able to manage their workloads and efforts. Particularly for finance teams still using a manual purchase to pay process, a lot of time is spent on paper documents and chasing approvals that need to be processed straight away. In this instance, spend control doesn’t feel as important so finance professionals are quite content with letting this take a back seat.
With this in mind, it’s worth asking if finance professionals are fully aware of the benefits spend control can bring to their departments.
To ensure you’re implementing the most efficient spend control strategy, the first solution is to adopt an automated purchase to pay system. Using this type of software not only frees up a lot of time used on chasing approvals and manual processes, but it also comes ready built with a lot of the tools you need to manage good spend control.
Here are some of the important considerations for spend control:
1. Full visibility
As I touched on earlier, one of the biggest considerations for adopting a spend control strategy is the ability to have full visibility of all transactions being processed in the business. Having full visibility means finance professionals will be aware of spending activity, allowing them to have full control. This is where an automated P2P solution far outweighs a manual process.
2. Cut down errors
By having control and visibility over spending activity, finance teams are much better equipped to spot errors in the system such a duplicated invoices or missing approvals. This means they will be able to rectify any errors they spot straight away and avoid costly repercussions.
3. Identify maverick spending
Maverick spending can sometimes be disguised as errors in the process but the difference is that this is deliberate unapproved spending. Without a spend control strategy in place, it’s very difficult for finance teams to differentiate and identify maverick spending to genuine errors and this can leave the company’s finances in a vulnerable position.
4. Access real-time data
An automated P2P system not only stores data, but it can present it to finance teams in a digestible way. Having access to the real-time data on company spending activity gives finance the full visibility to control spend in real time.
5. Be equipped to make smarter spending decisions
When you combine the different functionalities of a spend control strategy you’re not only able to control spend in real time, you’re also now equipped with data to make smarter future spending decisions.
6. Unite departments
Having the entire P2P process on one automated platform invites other stakeholders with spending responsibility into the process that was once entirely used by finance. By giving budget holders and procurement full visibility in the process, this creates a unified relationship between them and the finance department.
If you’d like to learn more about spend control and why it matters, download our white paper below.