From paying your vendors to buying lunch for the team, leading a startup means your business’s credit cards get plenty of action. But don't let those expenditures become a nightmare to manage on the back end. That's where spend management software comes in.
This solution gives you a real-time view of your spending and even lets you take control. And let's face it, with the top reason for startup failure being a lack of cash, this software is a total game-changer.
So, if you want to stay on top of your expenses and keep your business thriving, you need to get your hands on this spend management solution. Here’s everything you need to know about why it’s a game-changer.
What Exactly Is Spend Management?
Do you know how your startup spends its money and manages its employee expenses? Spend management is the process that addresses these questions. Essentially, it involves tracking and controlling a business's expenses.
For example, are employees with business credit cards able to spend an unlimited amount of money? And when they do spend, how long does it take for you to understand what’s being spent?
There are various methods to manage spending, but some of them have flaws. Traditional business credit cards, for instance, often come with shortcomings in the way you can handle and reconcile expenses.
There is also sometimes a gap in the market. While there are solutions for businesses at scale, they sometimes might be designed for national or global operations that have hundreds of thousands of employees. Startups and other new businesses with dozens of employees often fall into an under-serviced middle ground.
Still wondering if you should utilize this software? We touch on that below.
Why Might Spend Management Software Be Necessary?
Spend management software is a tool that gives you a 360-degree view of your expenses in real time while keeping things organized. By doing so, you can easily track where the company's funds are being spent and set limitations on spending. This level of transparency gives you the ability to prevent any unnecessary or excessive spending, ultimately saving you money in the future.
Without spend management software, startups can easily run into issues with their spending. For example, they can struggle to manually track and reconcile what’s being spent. This can make back-office financial management a bit of a mess.
It’s not just tracking that becomes difficult without the proper spend management tools; controlling what employees are spending can be a challenge as well. Without proper limitations, employees can run wild with their business credit cards.
Overall, utilizing spend management software is one of our favorite accounting tips because it’s the ultimate organizational tool, which gives startups unparalleled insights into their expenses while also providing financial control. These tools can also often be integrated with things such as business credit cards to create a one-stop shop for managing expenses.
8 Common Features of Spend Management Software
Spend management software can overhaul how your business handles expenses, and there are many new tools and features available today. In fact, the global spend management software market is quickly growing and is expected to reach almost $4 billion by 2027.
With that in mind, here are some of the most common (and handy) features to look for in this solution.
1. Real-time spending notifications
Never be left in the dark about how your employees are spending again. With today’s spend management software, you’ll get push notifications to your phone in real time. That way, you can see exactly what they’re buying and how much they’re spending. This also allows you to quickly stop inappropriate spending in its tracks.
2. All of the data you need in one place
Spend management software gives you a bird’s eye view of all the mission-critical information you need about transactions. It’ll include information like the name of the spender, the name of the merchant, and of course, the amount of money spent. But you’ll also have the chance to categorize expenses (by indicating which budget the expense comes from, for example).
Certain spend management software also allows integration with other financial management tools, such as your bookkeeping software.
3. Review and approve transactions at the drop of a hat
Is that expe personal dinner not a covered employee expense? With spend management software, you have the ability to review and approve transactions in real time. This means you can reduce unwanted spending and save time spent reconciling credit statements.
4. Rapidfire reconciliation
Reconciling credit card statements can take hours every single week. But with spend management software, you get fast and efficient reconciliation. When your employees spend, it takes just a few taps for expenses to be fully coded and ready to sync with your accounting system.
5. Automated expense reports
Never waste time on an expense report again. With spend management software, you get handy features like automated expense reports. This means you’ll get the reports you need at the touch of a button while also enjoying features like receipt matching and auto-categorization.
6. Top-tier fraud protection
When you have a complete view of the company’s spending, you can quickly catch things like fraud. Unfortunately, employee cards and recurring subscriptions can often open you up to that and overspending. When you have a clear picture of expenditures, you can catch and address fraudulent spending as soon as it happens.
7. They integrate with other financial tools
Spend management software can be incredibly useful on its own, but in many cases, it seamlessly integrates with other business finance tools, such as business credit cards. For example, Divvy (our trusted partner) is an all-in-one expense management solution that combines expense management software with corporate credit cards to provide a seamless experience. With Divvy, businesses get fast and flexible credit (up to $15 million), robust expense management tools, and virtual cards. On average, Divvy users save more than $10,000 and 12 hours of their valuable time every single month.
8. They save you time and money
Spend management software is designed to not only save you money: it should make your life easier. Data from Divvy shows that their customers save time when it comes to expense reports, reduce errant spending, and have more satisfied employees. They also often receive higher credit availability and report more efficient accounting departments.
How Does Spend Management Fit Into an Accounting System?
Spend management is useful on its own accord, but it’s even more handy for how it fits into your business’s entire accounting system. Here are just a few ways that spend management integrates into it:
- Better bookkeeping: A major part of business bookkeeping is keeping track of your startup’s transactions, including expenditures. If you track your business expenses with spend management software, then you can rest assured your books will be as accurate as possible with minimal effort. With spend management software, things like credit card and bank reconciliation and employee expense management are made easy.
- Financial reporting and analysis: Financial data is integral to accurate financial reporting and analysis and can help leaders make decisions backed by the best data possible. Expenditure data is useful for annual budgeting, monthly financial reporting, and financial analysis and forecasting.
- Cash management: How your business’s money is spent shouldn’t keep you up at night, even when there are different cash inflows and outflows. Cash needs to be correctly managed to maintain your business’s stability, meet payment commitments, and plan for growth. Get this—82% of small businesses that fail do so due to cash flow problems. When using spend management software, you get a 100% accurate picture of your business’s expenses in real time.
Managing Spending Is Crucial for All—Startups, Enterprises, and Everyone in Between
Sure, your startup is going to spend. But that spending doesn’t have to be a headache. Thanks to spend management software, your business can easily track, monitor, and control employee spending, all in one place. It provides you with complete control over expenses and saves you and your team precious time.
We’re pretty passionate about spend management (you might be able to tell). That’s because we’re obsessed with helping businesses take control of their finances and level up how they handle their accounting with our finance-as-a-service offerings.
Interested in partnering with us for your business accounting needs? Let’s get the ball rolling!
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