Company spending is an area which is often vastly overlooked but spend visibility is crucial and offers many benefits over and above cost analysis; it can identify maverick spend, pinpoint areas of inefficiency and optimise supplier management.
A recent study by PayHawk revealed that 28% of medium sized businesses say they need help with corporate spending and 24% admit to being “incredibly concerned” about corporate spending.
Can you accurately show where your money is spent in real time? If the answer is yes then you have spend visibility. If you can’t say where your money is being spent or who is buying what, then unfortunately you don’t.
Spend visibility refers to the level of insight you have over where your business funds go, but also involves a granular look into your overall business purchasing strategy.
Fragmented and miscategorised spend across departments and suppliers can be easily missed which leads to inaccurate data, and longer term can spiral into uncontrolled spending. It goes without saying that some departments spend more than others, but having real-time visibility is vital to managing and allocating budgets accordingly. Without this visibility in place employees will continue to buy things they need, potentially eating into other departments budgets, and causing headaches for finance teams to try and pinpoint where this spend is being made. Other benefits of spend visibility include:
Once you have identified where maverick spend is occurring you can then try to reduce it and identify cost saving opportunities. A high level of visibility will also enable you to benchmark suppliers based on contract terms and costs.
When employees make their own purchases there is a risk across the business that duplicate purchases are occurring, whereas a consolidation of purchases and suppliers will ensure smarter spending decisions are made.
Giving yourself a unified view of your suppliers will help you identify which suppliers are falling short on their commitment and which are delivering the best and worst quality, services, and pricing. This knowledge will help you build on relationships and minimise risk when evaluating which suppliers to use.
When you gain full spend visibility you can begin to identify where processes can be made more efficient and highlight where bottlenecks in the purchasing process are occurring.
Spend visibility is something that businesses find challenging, and indeed, it is often easier said than done to achieve this level of real-time clarity; even the best run businesses can struggle to achieve a good level of spend visibility.
Why is it so difficult?
The common phrase “that’s how we’ve always done it” is prevalent here and many businesses are stuck in the past when it comes to processes, and updating the way things are done can seem like a daunting prospect. Shared corporate cards, petty cash and paper cheques are difficult for finance teams to reconcile and are also highly prone to fraud.
Without simple and straightforward processes that digital practices deliver, it can be tedious and slow for finance teams to reconcile purchases and can result in inaccurate books and audit penalties.
Without a centralised system, data is often stored in multiple locations and systems and can sometimes be entered incorrectly or mismatched. This siloed approach makes it impossible to accurately locate and analyse spend.
At the heart of achieving spend visibility lies the need for centralised systems, clear processes and providing clarity to messy data. It may seem daunting when first setting out to improving your spend visibility, and looking at a mass of unorganised data is like looking at a stack of crumpled receipts.
Where do you begin?
Implementing robust, centralised software is an easy way to achieve spend visibility as it automates the purchasing process and gives finance teams complete insight and control over indirect spend before it occurs. Purchases can be pre-approved before they take place so finance know exactly who is making the purchase and the value of said purchase so reconciliation can take place at the click of a button. This powerful spend analysis will then enable finance departments to allocate budgets accordingly, with a real-time view of ongoing purchasing activity. Solutions such as Online Buying help you do just that.
To learn more about our new Online Buying solution and how it can help transform the relationship between your finance teams and budget holders then contact us today to see it in action.
Posted On: March 26, 2024
