4 Spend Control Tactics for Your Business
There are multiple components within your company that contribute to how effectively you run it.
One major component is spend control. While it is frequently stated that you need to spend money so that you can make money, how your business spends money is a huge contributor to your business’s success.
As a result, spend control is crucial to keeping your business expenses in check and derive the most value.
This is the only way that you can maximize your company spending and get more out of every dollar that leaves your organization
What Is Spend Control?
You have probably come across the word before, spend control is the practice of monitoring and managing the money flowing out of the company as a result of daily operations.
To further elaborate, all expenses whether internal or external fall into the category of company spend.
Companies naturally have to spend to boost their own revenue and this is where spend control comes to play.
Accounts payable teams need to know not only how much money is going out, but also what it’s being used for and whether the purchase is ultimately beneficial for the organization.
Why is Spend Control important in your business?
Spend Control practices enable you to eradicate some business issues that include:
Poor budgeting practices: You can’t form a reliable budget plan if you don’t know where money is being spent. Your teams might need more funding than you originally thought and consequently run into setbacks during daily operations.
A good budget is based on accurate spending data from previous quarters.To understand how much your company spends you can easily track this by using an expense management software like Boya that helps you keep track of all your company spending in one place.
Uninformed business decisions: Executives and management rely on financial data to make informed business decisions. Without spend visibility, you can’t set meaningful objectives for the company to follow.
The more reasons why your company might need Expense Management software to help track the company’s spending and make informed decisions
Bulk paperwork: If there’s no standard way of recording transactions, you end up in a situation where many purchases were made without a receipt or without proper recordkeeping practices.
Finance teams would then have to chase after the right documentation during the closing process, which builds on the tedium of the entire procedure.
In an ideal world this shouldn’t be the case, platforms like Boya, enable you to reduce the need for paper-based processes, improve efficiency, and enable finance staff to get back to more important jobs.
It does so through various features, including automatic receipt scanning and paperless invoice processing.
Boya is also compatible with the most popular accounting packages, including Xero, Sage, and QuickBooks.
This means finance teams can export expense-related data to their accounting software with the click of a button no paper documentation is necessary.
Human error: Tying into the excessive paperwork, an inefficient spend control system results in a ton of manual processes that can all potentially introduce human error. If not caught in time, mistakes can cause serious problems during tax season or when looking at the budget at the end of the quarter. A large part of spend control relies on automation for this reason.
Fraud: Expense reporting fraud, whether intentional or not, is unfortunately common in the corporate sphere, as is credit card fraud.
One study concluded that 85% of employees lied on an expense report to receive extra reimbursement. By implementing spend controls, finance teams can detect and prevent fraudulent purchases on the company account.
Spend Control Tactics for your Business
After getting an understanding of why spend control is important to your business, we now share with you a few tactics that your business can use to ensure you stay on top of expense and business spending
Use Real-Time Tracking for More Visibility
Businesses need to shift to real-time data to track spending for more visibility. They need to use appropriate tools to track an expense as it is made.
Expense management software can turn out to be a key consideration and pave the way for efficient spend control.
Additionally, you will be able to track each transaction with a few clicks on your mouse.
Create a Single Source of Truth
Most businesses are stuck with spreadsheets to control spending. Those who have chosen digitization are also working in silos with fragmented data.
As a result, they cannot justify all expenses and even lose track of some.
The solution is to integrate all your tools to create one source of truth. So, you should integrate your accounting software and an expense management tool for a seamless flow of data.
However, with a platform like Boya, you don’t necessarily have to do that as the platform is already integrated with some of the main accounting platforms like Xero and Quickbooks making it easy to download and share your reports with the right departments.
This will allow you to develop quick insights and make informed decisions. You can also expect improvement in your forecasting accuracy.
Set Up a Clear Expense Policy
Most organizations lack a clear expense policy making the finance team deal with endless approvals and reimbursements that take a toll on efficiency.
Start off by creating a clear expense policy and communicate the policy to all employees who are allowed to spend money.
Another way to overcome this challenge is to use virtual credit cards. You can create custom cards for each employee with expiration dates, spending limits, and more. Seems complicated? Let us help you, Boya offers modern, simple, and free virtual cards connected to a smart app allowing you to pay for expenses without compromising on control.
Validate Every Expense
Every business expense must generate value or bring due returns. However, that isn’t the case with most organizations. They continue to pay for services on auto-mode without measuring what they get in return for their payments.
Therefore, finance teams must take a step back and take the time to validate every expense. You will find many that aren’t generating enough value or are outright unnecessary.
Involve other stakeholders in making decisions on the suppliers and services you need to achieve your business objectives.
Overall, spend controls are essential to keeping up healthy cash flow and financial practices in the long term.
You can reduce the chance of mistakes and fraud while making it easier to audit your financial activities in the future.