Business Spend Management: Meaning, Requirements & Best Practices

1. What is Business Spend Management and why is it important?
2. What are the benefits of expenditure management for businesses?
3. and promotes a positive working environment.
4. ⁠⁠BSM integrates cost transparency into all business processes. This allows decision makers to include cost aspects in their decisions, thus increasing the overall efficiency of the company. ⁠
5. ⁠⁠BSM optimizes the travel expense process. Through automated workflows and clear guidelines, travel expenses are controlled and approved more efficiently.
6. , from cost efficiency to better transparency and strategic orientation.
7. ⁠OMR Reviews has a category specifically for Spend Management where different tools and solutions are rated and compared. This allows businesses to make informed decisions when selecting their Spend Management software.
8. Analytical features such as expense analyses and reporting are indispensable. Companies need meaningful data to make informed decisions and better control costs.
9. Receiving feedback from employees and stakeholders is crucial. This allows identification of weaknesses and necessary adjustments to be made.
10. ⁠Companies should continually look for innovative tools and technologies to optimise their spending strategy.

In an era where businesses rely more than ever on financial agility due to increasing competitive intensity and volatile economic conditions, business spend management (BSM) is becoming an indispensable strategy. This article delves deeply into the various aspects of expenditure management, from its definition to concrete application examples and proven practices.

What is Business Spend Management and why is it important?

Expenditure management represents not merely an accounting discipline for cost control, but rather a comprehensive approach to optimising your corporate expenses. This strategy is becoming increasingly important in a business environment characterised by rapid changes and uncertainties. It not only serves financial discipline but also creates a solid foundation for strategic alignment of business expenses and resources that are crucial for long-term success.

What are the benefits of expenditure management for businesses?

Efficient use of resources is further strengthened by Business Spend Management, by helping companies steer their expenses in line with their strategic goals, thereby promoting sustainable management of resources and business expenses. This shows how closely business spend management is linked with various company departments and how it offers a holistic approach to controlling marketing, procurement, supply chain, finance and resources.

Image: Key Benefits of Business Spend Management (Author's representation)

Profitability and Sustainability

Lower costs, more sustainability with Business Spend Management

The question of profitability or sustainability no longer arises with the right expense management. The focus on sustainability even increases profitability. BSM enables the integration of environmental protection, social commitment and corporate governance (ESG) into expense processes. Companies can use data on these aspects to find suppliers who not only offer competitive prices, but also meet diversity criteria, reduce CO2 emissions and optimise procurement processes.

Centrally recorded spending data also enables AI-supported monitoring of the supply chains. This allows the company to point out potential improvements, for example if costs in a particular product group are above the industry average. This contributes to the creation of sustainable and transparent supply chains and procurement processes.

Staff Productivity

Increased staff productivity with Business Spend Management

Automated, digital processes through BSM reduce the risk of error and create space for strategic tasks. An example is automated invoice processing, where top companies can match up to 96.5 % of invoices on the first attempt and approve them in only 10.6 hours. This not only improves the efficiency of accounting, but also promotes supplier relationships

. Faster invoice processing means less bottlenecks on the procurement side and allows purchasing to focus on nurturing supplier relationships.

Risk Management

Fewer risks through Business Spend ManagementBSM is also an important tool in risk management. It contributes to compliance with environmental and tax regulations, checks third parties in the supplier master file and prevents fraudulent payments

. ESG risks in particular are crucial as consumers and governments are increasingly focusing on transparent eco-balances.With BSM tools, companies can check suppliers for possible violations and detect suspicious activities in real time

Anzeige

Die digitale und rechtskonforme Spendmanagement-Software

Mit Circula digitalisieren Sie ihr Spendmanagement. Behalten Sie die Kontrolle über alle Ausgaben und sparen Sie 80% Ihrer Zeit. Jetzt Spendmanagement automatisieren und zwischen Rückerstattung und Mitarbeiterkreditkarten wählen.

Jetzt Demo buchen

 

. Automated processes and preset control mechanisms help to avoid errors, fraud and excessive budgets. This is crucial to protect the company's reputation, especially with investors.

Financial PlanningBetter financial planning

thanks to Business Spend ManagementBSM provides real-time, comprehensive insight into all types of expenditure, approved invoices, the general liquidity and upcoming payments. This creates transparency, needed by finance and treasury departments. By adjusting the budget to the financial performance of the company, departments can make real-time decisions and avoid bottlenecks. The finance department can accurately monitor liquidity, thereby minimising the risk of payment delays and credit costs. Here you can also find an overview of financial planning tools

. Thanks to BSM, financial teams can react more quickly to market trends

and make informed business decisions. A McKinsey study found that companies with an advanced spending strategy achieve 20% more EBITDA growth than their competitors.

Compliance and Security

Stronger compliance and security through Business Spend ManagementCompliance with regulations and the security of financial transactions are crucial today. BSM helps companies comply with compliance regulations and minimise financial risks

. By automating processes, human errors are avoided and digital records facilitate verification and auditing.The implementation of BSM also contributes to keeping information secure. With encrypted data transfers, multi-level approval workflows and access rights, companies can implement their financial processes securely

. This is particularly important in the face of increasing threats from cybercrime.

Improved supplier relationships

Stronger supplier relationships thanks to Business Spend ManagementSuppliers are a central part of the value chain. The implementation of BSM enables companies to collaborate more closely with suppliers

and increase the efficiency of the entire supply chain. Transparent processes and better planning allow companies to pay on time and in return receive better conditions.Automation of ordering processes and quick invoice processing significantly improve supplier relationships. Companies can create supplier ratings and optimise their supplier base. This promotes a win-win situation

, where both companies and suppliers benefit from efficient and fair business practices.In practice, it has been shown that companies can not only save costs through BSM, but also achieve their sustainability goals

. For example, Dell Technologies achieved a CO2 reduction of 33% per dollar of revenue through the introduction of BSM. This shows that BSM is not just a tool for cost reduction, but also has a positive impact on the environment.

Transparency and Data Analysis

More transparency and data analysis through Business Spend ManagementBSM is a data-driven approach. It not only provides a transparent view of all expenses, but also allows a deep analysis of this data. Through advanced analysis tools, companies can identify patterns, spot trends and make informed forecasts. Here is an overview of business intelligence tools

, that can help you create transparency in your business.The transparency extends across the entire supply chain. Companies can trace the entire lifecycle from procurement, production to delivery. This not only allows a more efficient planning, but also helps to minimise bottlenecks and interruptions

.BSM data is also crucial for cost transparency

. Companies can understand exactly where their expenses are going and where there are opportunities for optimisation. This is not only important for cost control, but also for the strategic orientation of the company.

Agility and Adaptability

Greater agility and adaptability through Business Spend ManagementThe business world is dynamic and constantly changing. Companies need to be flexible and agile to succeed. BSM provides this flexibility. Through automation and digitisation, companies can react quickly to changes

.An example is the adaptation of budgets. With BSM, companies can flexibly adjust budgets based on current performance data. This allows a quick reaction to changes in market dynamics

or unforeseen events.In addition, BSM also enables a faster integration of new suppliers

or changes in the supply chain. This is crucial to maintain competitiveness and seize opportunities in the market.

Staff Satisfaction

Higher staff satisfaction through Business Spend ManagementBSM not only influences processes, but also people. Automation and digitisation bring efficiency gains, which contribute to making everyday work easier. Employees have to worry less about manual processes

and can concentrate on strategic tasks.Automation of routine tasks leads to fewer errors and less stress. Employees can rely on processes running smoothly and have more time for creative and strategic tasks. This contributes to employee satisfaction

and promotes a positive working environment.

How can Business Spend Management help companies cut costs?

1. Business Spend Management (BSM) is a powerful tool for effectively controlling and reducing business expenses. Here are some key ways BSM contributes to:Automation of expense processes:
2. 
   ⁠⁠BSM enables the automation of routine tasks in expenditure management. The manual processing of invoices, reimbursement of expenses and other expenses is replaced by intelligent BSM tools. This not only saves time, but also greatly reduces error sources.
   ⁠Optimisation of procurement processes:
3. 
   ⁠⁠Through BSM, companies can optimise their procurement processes. This includes searching for cost-effective suppliers, negotiating contracts and streamlining order processes. Better control over the entire procurement cycle allows for cost minimisation.
   ⁠Real-time monitoring of expenses:
4. 
   ⁠⁠BSM provides companies with the ability to monitor their expenses in real time. By centrally recording all expenses, for example via corporate cards, companies can see exactly where their funds are flowing. This transparency allows for precise budget planning and identification of potential savings.
   ⁠Better negotiating position with suppliers:
5. 
   ⁠⁠With solid expense data from BSM, companies can take a stronger negotiating position with suppliers. They can create supplier ratings that are based on facts and negotiate better terms as a result. This leads to direct cost savings.
   ⁠Prevention of fraud and abuse:
6. 
   ⁠⁠BSM prevents fraud and abuse by implementing control mechanisms and compliance rule books. Automated processes identify irregularities and ensure that expenses are in accordance with company policies.
   ⁠Analysis of expense data for strategic decisions:
   ⁠⁠Through the analysis of expense data
7. , companies are able to make informed strategic decisions. BSM enables the identification of trends, recognition of cost drivers and alignment of resources on areas with the biggest impact on the cost structure.
   ⁠Integration of cost transparency into all business processes:

⁠⁠BSM integrates cost transparency into all business processes. This allows decision makers to include cost aspects in their decisions, thus increasing the overall efficiency of the company.
⁠

1. What types of expenses can businesses better control using Business Spend Management?Procurement expenses:
   ⁠⁠
2. BSM allows for efficient control over procurement expenses, from the identification of cost-effective suppliers to the negotiation of contracts and the optimisation of order processes.
   ⁠Operating costs:
3. 
   ⁠⁠By automating invoicing and expenditure monitoring, BSM helps keep operating costs in check and identifies unnecessary expenditures.
   ⁠Personnel expenses:
4. 
   ⁠⁠BSM facilitates the management of personnel expenses, including expense reports and travel costs. The automation reduces errors and speeds up the approval process.
   ⁠IT expenses:
5. 
   ⁠⁠The management of IT expenses, including software licenses and hardware procurement, is made more transparent through BSM, so companies can better control their IT costs.
   ⁠Travel expenses:

⁠⁠BSM optimizes the travel expense process. Through automated workflows and clear guidelines, travel expenses are controlled and approved more efficiently.

How can companies integrate expense management into their business processes?

1. The integration of effective expense management into business processes requires a holistic strategy:Analysis of current processes:
2. 
   ⁠⁠Companies should analyse their existing expenditure processes in order to identify weaknesses. Where are there manual processes that could be automated? Which areas are prone to error?
   ⁠Selection of a BSM solution:
3. 
   ⁠⁠The selection of a suitable BSM software is crucial. It should meet the company's requirements and enable seamless integration into existing systems.
   ⁠Training employees:
4. 
   ⁠
   ⁠The introduction of BSM requires training for the employees. It is important that everyone involved understands the new processes and can use them effectively for expenses, for example via corporate cards.
   ⁠Establishing clear guidelines:
   
5. ⁠⁠Clear guidelines for expenses should be created and communicated. This includes budget limits, approval procedures and compliance requirements.
   ⁠Automating processes:
6. 
   ⁠⁠The automation of expense processes is a key element. This ranges from automatic invoice processing to the integration of expense data into other relevant business systems.
   ⁠Regular review and adjustment:
7. 
   ⁠⁠Business processes and BSM solutions should be regularly reviewed and adapted to changes in company structure or market conditions.
   ⁠Continuous improvement:

⁠⁠Implementing BSM is not a one-time process. Companies should continually seek for improvement opportunities and optimise their expenditure strategy accordingly.In total, integration of BSM into the business processes offers numerous benefits for businesses

, from cost efficiency to better transparency and strategic orientation.

What tools and technologies are used for Business Spend Management?

1. Effective business spend management is enabled through the use of modern tools and technologies. A standout example is Chrome River from Emburse, but other tools also play a crucial role. Here are some relevant technologies:Chrome River from Emburse:
2. 
   ⁠Chrome River is a premium business spend management solution that provides comprehensive control over expenditure processes. From travel expense accounting to invoice processing, this tool enables efficient and transparent management of corporate expenses.Pliant:
3. 
   ⁠Pliant is a business process automation (BPA) platform that can be integrated into spend management. This technology allows the automation of business processes, leading to an increase in efficiency and a reduction in manual effort.pleo:
4. 
   ⁠pleo is an intelligent expense management platform that helps companies control and track their expenses. The platform combines card functionality with modern expense management features. (book a free demo):
5. 
   ⁠Payhawk is the all-in-one spend management software that supports CFOs and financial teams in optimising company budgets and expenses. It helps teams control their business expenses, including bills, reimbursements, cards and more.Spend Management category from OMR Reviews:

⁠OMR Reviews has a category specifically for Spend Management where different tools and solutions are rated and compared. This allows businesses to make informed decisions when selecting their Spend Management software.

What requirements do companies have for a Business Spend Management software?

1. User-friendliness

The software should be user-friendly to ensure smooth integration into existing business processes. An intuitive user interface facilitates acceptance by the staff.

2. Integration with existing systems

The ability of the software to seamlessly integrate into existing company systems is crucial. This enables continuous data transmission and prevents data silos.

⁠3. Automation featurescircula

(Jetzt Demo buchen)

should provide automation features to reduce manual processes. This includes automatic invoice processing, approval workflows and more.

⁠4. Compliance and Security

The software must meet strict compliance guidelines while simultaneously offering robust security mechanisms. This is especially important in order to prevent fraud and data misuse.

⁠5. Analytical capabilities

Analytical features such as expense analyses and reporting are indispensable. Companies need meaningful data to make informed decisions and better control costs.

How can companies ensure they get the best results from their expense management?

1. Conduct a needs analysis

A thorough analysis of the company's specific needs is the first step. This helps in choosing a Business Spend Management solution that is exactly tailored to requirements.
⁠

2. Train employees

Employees should be trained on the new processes and technologies to ensure the software is used effectively. This encourages acceptance and usage throughout the company.

⁠3. Regular review and adjustment

Companies should regularly review and adjust their expense management strategy to adapt to changes in the company or in the market. This ensures continuous optimisation.

4. Obtain feedback

Receiving feedback from employees and stakeholders is crucial. This allows identification of weaknesses and necessary adjustments to be made.

1. What are best practices for Business Spend Management?Central expenditure control:
2. 
   ⁠Centralising expenditure control through the use of BSM tools allows for a holistic view of business expenses.
   ⁠Clear guidelines and compliance:
3. 
   ⁠Implementing clear expense guidelines and adhering to compliance standards are basic best practices.
   ⁠Proactive identification of savings potentials:
4. 
   ⁠Regular analysis of expense data enables proactive identification of savings potentials and budget adjustments.
   ⁠Continuous innovation:

⁠Companies should continually look for innovative tools and technologies to optimise their spending strategy.

Conclusion