Spend management
Controlling all of a company's outgoing money, from employee expenses and cards to supplier bills and subscriptions, in one process.
In short
- It is broader than expense management, which covers only employee spending.
- The aim is to see and approve spend before it happens, not only to record it afterwards.
- It brings cards, bills, purchasing and budgets into one view.
Spend management is the practice of controlling every kind of business spending in a consistent way. It pulls together what used to be separate processes: employee expenses, company cards, supplier invoices, purchase requests, subscriptions and budget tracking.
Why it emerged
In many companies, spending leaves through several doors that nobody sees together. Travel goes through expense reports, software is bought on cards, suppliers send invoices to accounts payable and department heads sign contracts. Each process might be well run, but no one can answer a simple question such as "how much are we spending on software this year, and with whom?" Spend management puts those streams in one place.
What it involves
- Before the spend: budgets, purchase requests and approvals.
- At the point of spend: cards with limits and rules, or purchase orders.
- After the spend: receipts and invoices captured, matched and coded.
- Across all of it: reporting by supplier, category, department and budget.
The shift is from recording spending after it happens to shaping it before it does. That is where savings come from: a subscription not renewed, a purchase redirected to a contracted supplier, a budget overrun seen in week two rather than at quarter end.
Worked example
Software spend, found in three places
A 60-person company thinks it spends about $8,000 a month on software, based on accounts payable. Pulling cards and expense reports into the same view shows another $4,700 a month in tools bought on cards and claimed by employees, including three separate subscriptions to the same design tool.