Spend management: why and how to better control your business expenses?
In an environment marked by inflation, limited resources (budgets and human), and supply chain tensions against a backdrop of geopolitical uncertainties, businesses need more than ever to manage their expenses effectively to ensure their financial stability and long-term sustainability.
Why control expenses?
Rising inflation puts pressure on costs, while economic uncertainty makes long-term planning difficult. Companies face unexpected price increases for raw materials, services, and wages, making it imperative to rigorously control expenses.
Tight budgets and limited (human) resources force companies to maximize operational efficiency. It is essential to get the most out of every euro spent and avoid unnecessary waste.
Disruptions in the supply chain can lead to delays and additional costs. Effective spend management can mitigate these risks by identifying alternatives and diversifying sourcing.
Lack of visibility into spending can lead to maverick buying. Insufficient control can lead to an increase in indirect costs, compromising the company’s profitability.
In other words, by effectively managing your expenses, you can:
- Reduce and control costs
- Plan your expenses over the long term
- Maximize operational efficiency
- Limit the risk of delays and additional costs
- Strengthen your supplier relationships
- Capture the volume of spending
- Reduce maverick buying
Ultimately, you stay competitive and proactive!
How do you ensure good expense management in this environment?
Implement a rigorous purchasing policy
The first step is to establish a clear and rigorous purchasing policy. This involves defining approval processes, spending limits, and supplier selection criteria. A well-defined purchasing policy provides direction for the entire organization, helping to avoid impulse purchases and align spending with strategic objectives.
Map your processes to better optimize them
Optimizing internal processes is essential to reduce operating costs. This may involve automating repetitive tasks, improving workflow efficiency, and reducing processing times. Optimized processes save time and money, strengthening the company’s competitiveness.
Effective supplier and contract management
Close collaboration with suppliers and proactive contract management are key elements of spend management. Negotiating favorable pricing terms, monitoring product and service quality, and implementing flexible contracts are practices that contribute to efficient supplier management.
How do you deal with an environment of tight budgets and limited resources? How do you implement all these actions and achieve the desired results with limited financial and human resources?
- Your purchasing policy is only effective if it is properly deployed and applied throughout the organization.
- Your processes, although optimized, need support to materialize them.
- Your suppliers and contracts need to be centralized and visible to be able to track the actions and activities associated with them.
In short, you need a tool to manage, digitize, and centralize all your expenses, contracts, and suppliers.
SI Purchasing, Procure-to-Pay Solution, P2P Software, Purchase-to-Pay System, or Expense Management Application: call it what you want! These solutions are great toolkits to facilitate the deployment and application of your purchasing policy, optimize your processes, and effectively manage your expenses, contracts, and suppliers. Most large companies have already deployed P2P solutions in their organizations. This is less true for others.
Corcentric offers a modular and flexible Procure-to-Pay solution adapted to the challenges of large accounts, mid-sized companies, and large SMEs that offers many benefits:
- Total visibility into spending commitments and control over 100% of spending
- Guaranteed compliance of purchases, suppliers, and contracts
- A reliable audit trail to ensure your regulatory compliance
- Facilitated Purchasing/Finance collaboration
- Optimized Purchasing-Finance processes for tenfold efficiency
- Integrated data for optimal management of activities and risk
The Corcentric spend management solution is designed to address the unique challenges faced by various departments within an organization. For the purchasing department, this solution streamlines the deployment of policies, significantly reduces instances of maverick buying, and ensures that each expense is duly approved. This not only enhances compliance but also contributes to a more efficient purchasing process.
Management benefits from improved oversight and verification of budget commitments and potential overruns, enabling more precise financial planning and control. Accounting departments experience a marked optimization in the closing process, coupled with a reduction in invoice processing times.
Operations teams, on the other hand, gain access to a user-friendly tool that simplifies procurement processes and provides greater visibility into the status of orders and invoices. The time saved through these streamlined processes allows operations to focus more on their core business activities, enhancing overall productivity and efficiency.
Effective spend management is crucial for maintaining financial health and operational efficiency in any business. By implementing robust spend management practices, organizations can gain better control over their expenses, reduce unnecessary costs, and ensure that resources are allocated efficiently. Adopting advanced spend management solutions like Corcentric’s can further streamline procurement processes, improve budget oversight, and optimize invoice processing. In today’s competitive landscape, mastering spend management is not just an option but a necessity for long-term success.