Experts seem to coincide that the pandemic has prompted long-lasting changes in the way people work, entertain, date, and exercise, among other things. During the health crisis, the adoption of digital tools seems to have taken a quantum leap and millions of people are now realizing that their life can get easier if they embrace technology.

In the same way, as individuals may have modified their patterns and behaviors, businesses are also embracing digital solutions to increase their productivity, profitability, sales, and the strength of their relationship with customers.

This digitalization trend is increasingly gaining ground when it comes to shaping financial processes that have often been so time-consuming for business owners.

Installing and using a spend management platform is one way through which companies are embracing digital solutions and, in this article, we explain how this software works, what it does for a  business, and how easy it is to implement it.

The basics of spend management

Spend management involves tracking and managing how money is disbursed within an organization. In the past, this task was carried by accounting departments and financial professionals who used whatever software was available to draft reports that helped the management team in making informed decisions.

Nowadays, spend management has evolved alongside technology and most platforms are now offering the possibility of integrating a company’s bank accounts and payment instruments into their interfaces.

The goal of these integrations is to maintain a company’s ledgers and accounts updated in real-time to show how money is being spent, by who, and when.

Spend management has many goals:

1. 1. It helps business owners in identifying and trimming unnecessary expenses.
   2. It strengthens internal controls through permissions and authorizations.
   3. It alerts entrepreneurs when certain categories are exceeding their pre-established targets.
   4. It helps increase profit margins by reducing overhead via lower operating expenses.

How does a spend management platform work?

Spend management software has been created to facilitate the process of tracking how money is being spent in an organization. These programs typically feature a user-friendly interface and support multiple operating systems.

In most cases, a web-based, desktop, and mobile version is available and users will have unique credentials with which they can log into their business’s account.

The different payment methods and accounts owned by the company will be integrated into the software so data can be updated in real-time with the information provided by the financial institutions that issue these instruments.

The master user and other authorized parties will have the ability to onboard new users, assign roles and permissions, create reports, and track the evolution of expenditures over time.

Some providers offer this software for free while others adopt a freemium model. This means that some features are available with the free version but others can only be accessed if the user subscribes to one of the paid tiers.

Key benefits of spend management software

Spend management platforms are an innovative solution to the often challenging task of keeping track of where money is going in a company. This is a summary of the top benefits of installing and using this kind of software:

• Money drains can be quickly identified: companies, especially small ones, can see their profit margins affected by items that keep deviating from their predefined budget without the owner knowing. By using spend management software, entrepreneurs can keep track of how different concepts and cost centers have been evolving to make sure that they don’t exceed their pre-established quotas.

 

• Roles and permissions can be assigned and managed: as organizations grow, it gets more difficult to control how money is spent. With spend management software, owners can establish workflows and assign permissions and roles to key personnel who will be in charge of submitting, approving, booking, and monitoring the different disbursements made by the business. These roles and permissions can be modified rapidly and an archive can be consulted to see who submitted and approved different transactions for auditing

 

• Businesses can take advantage of available rewards: financial institutions may from time to time offer certain special rewards programs that can result in savings for the business if a certain payment method is used. With spend management software, businesses can route their expenditures to these instruments to make the most out of these temporary offerings.

Bottom line

A spend management platform can be a key ally in the process of building and managing a successful and profitable business. Now that you are familiar with what this software is and how it works, are you ready to incorporate it into the suite of applications that currently power your business’s internal processes? That will surely be a wise decision.

 

Author bio: Erik Kaminski is a Dutch-born writer who lives in Asia.  Developing feature articles, global news & and opinion pieces. His work explores issues related to Tech, business psychology, and language