During periods of uncertainty, executive leadership should exercise caution when considering investments and overall financial health. This is why now, more than ever, organizations have become focused on smarter spending and improving the balance sheet.
Smarter monetary management starts with good financial hygiene: evaluating your spend management ecosystem, including the process, controls, and technology that enable the function. Here are three opportunities to align spend management practices with changing strategic objectives:
Simplifying the Process
The maturity of an organization’s spend management process can vary from ad hoc and manual to advanced and automated. There is typically opportunity to determine where processes can be strengthened and simplified while still maintaining controls and visibility into spend. Organizations can do this through a review of the sourcing-to-pay and expense reimbursement processes. The goal of these reviews is to validate that cross-functional teams’ processes are complementary and effective, are leveraging technology and automation to the fullest, and the functional team member skillsets are aligned with their role.
Consolidating the Technology Environment
It is common for organizations to leverage multiple systems to support an end-to-end spend process. In order to create a dashboard view that traces capital against the budget, cost center, and strategic initiative, system integrations must be developed to collate the data into meaningful information and insights. This exercise can be burdensome and result in information disparity and a delay in the financial reporting that supports strategic decision-making. Organizations can achieve greater transparency by implementing a single spend management platform, such as Coupa, which is designed to capture and provide detailed cost data and analytics across the enterprise that can be tracked by leadership and business units. Tools such as these make spend management a strategic function that can enable better decision-making, forecasting, and planning.
Enabling Stronger Control
By implementing a spend management solution, organizations can take advantage of a rules-based system that leverages workflow. This type of system functionality utilizes pre-defined spend rules, such as the dollar threshold for approval or the percentage of variance requiring escalation. Once these rules are programmed, the system will automatically execute the pre-defined workflow to alert the appropriate leadership to take action when a threshold is breached or a variance occurs. Organizations that have spend management solutions are able to effectively regulate how capital is controlled without undue burden on any one business unit or team.
Organizations can prepare for expansion and growth even in periods of stagnated financial performance. It is important for leadership to reflect on their current practices before identifying the right plan of action to simplify and control spend practices in order to gain visibility into working capital and corresponding project and budget details.