As a CFO, you might question the reliance on enterprise spend management software as the ultimate solution for streamlining financial processes and maximizing cost savings.
Contrary to the growing popularity of business spend management solutions, there are voices that challenge their effectiveness in tackling the complexities of spend management.
These differing views suggest that such tools may not deliver the comprehensive solutions they promise, and they may not be the magical fix for all the financial challenges faced by the finance department and procurement teams.
In this article, we’ll examine the key features of top spend management solutions, as well as their suitability for addressing the unique needs of global organizations.
What does spend management software do?
Spend management and expense management are often used interchangeably, but they refer to distinct aspects of financial management within an organization.
Expense management primarily focuses on the control and tracking of individual employee expenses, such as travel expenses or meal reimbursements. It involves processes like expense reporting, reimbursement approvals, and ensuring policy compliance.
On the other hand, spend management takes a broader view, and includes the management and optimization of an organization's overall spending across various categories.
Its objective is to help companies gain visibility into and effectively manage all types of spending to maximize cost savings, negotiate better supplier contracts, and make data-driven decisions when allocating resources.
While expense management is a component of spend management, spend management takes a more holistic approach, covering a wider range of financial processes and focusing on the organization's overall spending strategy.
Understanding this distinction is important for businesses to ensure they have the right tools and processes in place to effectively manage both expense and spend management aspects of their financial operations.
When it comes to software, although the specifics may vary between tools, most spend management providers for global enterprises focus on automating three functional areas of spend management:
Accounts payable processes
Corporate card payments, and
Employee expenses, including travel expenses
We’ve detailed the topic of spend management in the article below.
Key features of top spend management software
PwC's CFP Pulse Survey conducted in 2022 showed that nearly half of CFOs (48%) were planning to intensify their focus on digital transformation initiatives, with the objective of achieving operational efficiency and fostering long-term revenue growth.
Having the right tools is key in facilitating transformation projects, and according to the same survey, 53% of finance chiefs were looking to accelerate digital transformation using data analytics, AI, automation, and cloud solutions.
By bringing expenses, invoices, and card payments into one central platform, AI-powered spend management software such as Yokoy can support these objectives, as it helps drive standardization and automate manual processes for operational efficiency, as well as improve spend visibility and control across departments and geographies.
So let’s take a look at the key features of spend management solutions that can support these goals.
1. Process and workflow automation for improved process efficiency
One of the key features of top spend management software is the automation of workflows and processes.
With enterprise spend management solutions, manual and time-consuming tasks, such as data entry, reconciliation, and approvals are replaced with streamlined automated processes. This automation eliminates human errors, reduces processing time, and enhances overall efficiency.
With automated workflows, organizations can establish predefined rules and approval flows, ensuring consistent adherence to spending policies and minimizing maverick spending.
Automated processes also enable real-time visibility into the status of requests, invoices, and payments, allowing finance departments and procurement teams to track progress and take timely actions.
Accounts payable automation
Accounts payable automation streamlines and automates the invoice processing and payment workflows, improving efficiency, reducing manual errors, and enhancing visibility into financial transactions.
For example, Yokoy enables global enterprises to automate their invoice processing from end to end. Our software uses AI-powered automation to capture data, validate it, match it, and book it, removing the need for human intervention almost fully.
This leads to improved accuracy in financial records and eliminates the need for manual reconciliation. Additionally, automated workflows and pre-approval flows accelerate payment cycles, ensuring that suppliers are paid on time.
We've explained how Yokoy’s Invoice module works here: AP Automation: How to Accelerate the Accounts Payable Process with AI Software.
Travel and expense management automation
Another valuable feature of top spend management software is the automation of travel and expense management processes.
Manual tracking and reimbursement of employee expenses can be time-consuming and prone to errors. However, with automation, employees can easily submit digital expense reports, including receipts and relevant documentation.
Automated travel and expense management solutions streamline the entire process, from expense submission to approval and reimbursement. Moreover, they make it easy for organizations to enforce expense policies, ensure compliance with spending limits, and automate reimbursement calculations.
By automating travel and expense management, organizations can gain better control over employee spending, enforce policy compliance, and gain real-time visibility into expenses. This enables finance departments to analyze spending patterns, identify cost-saving opportunities, and make informed decisions to optimize travel and expense-related expenditures.
In the white paper below, you can learn more about Yokoy’s travel and expense management automation capabilities.
Corporate card payment automation
Top spend management providers offer corporate cards - debit cards, credit cards, and virtual cards, as part of their offering. This feature is essential for global enterprises, as it connects expenses, invoices, and payments across departments and geographies, offering full visibility and real-time control over business spend.
Yokoy’s smart cards, for example, can be configured with built-in spend limits for specific payments, employees, or entire company departments, for full control of company spending.
In addition, they fully integrate with finance software such as the Yokoy spend management solution, enabling seamless finance automation. Thanks to this integration, every transaction with a smart corporate card is fed directly into Yokoy, making it easy for you to track them.
Moreover, transactions are automatically reconciled with stored receipts. As a result, your finance team is able to maintain control over the entire card portfolio and all associated transactions, providing an unprecedented level of oversight.
To see how Yokoy’s smart corporate cards automate global business payments, read the article here: Why Smart Corporate Cards Are a Must for Businesses.
2. Spend controls
Top spend management platforms allow for a unified view of spending across departments and locations, eliminating silos and providing a comprehensive understanding of the organization's financial landscape, for enhanced spend control.
Such solutions enable organizations to establish and enforce spending policies, ensuring that expenditures align with predetermined guidelines and budgetary constraints. By defining spending limits, categories, and other policy parameters, organizations can better control spending, minimizing the risk of overspending and encouraging responsible financial behavior.
Approval workflows further enhance spend control. Organizations can implement predefined approval hierarchies and routing mechanisms to ensure that all spending requests go through the appropriate channels and receive the necessary approvals.
Moreover, spend management tools provide real-time visibility into spending activities, helping organizations to monitor their spend, track it against planned expenditures, and take corrective actions if necessary. This helps prevent unauthorized spending and promotes accountability.
3. Real-time spend analysis
Real-time spend analysis is a key feature of spend management solutions that enables organizations to monitor and analyze their expenditures in real-time. It provides up-to-date and accurate data, allowing for proactive identification of potential issues such as budget overruns or excessive spending in specific categories.
Spend management apps offer customizable reports and interactive dashboards that allow users to visualize and analyze spending data in real-time, enabling stakeholders to gain a comprehensive view of their organization's spending landscape.
Real-time expense tracking and in-depth spend reporting capabilities enable finance departments and procurement teams to identify areas of overspending, negotiate better terms with suppliers, and ensure compliance with internal policies and external regulations.
By consolidating and analyzing spend data, enterprise spend management software generates valuable business intelligence, enabling organizations to gain actionable insights into spending patterns, supplier performance, and market trends.
With this information, finance departments and procurement teams can make informed decisions, identify opportunities for cost optimization, and drive strategic initiatives.
4. Automated compliance checks
Compliance tracking is another vital aspect of risk management offered by spend management tools.
Through configurable rules and automated checks, spend management systems helps ensure that business expenses adhere to established guidelines - internal policies and external regulations alike. This reduces the risk of non-compliance, regulatory fines, and reputational damage.
For example, Yokoy’s AI technology and automation helps detect policy breaches and fraudulent spend in real time, flagging outliers and exceptions and notifying stakeholders when manual revision is needed.
This functionality ensures efficiency through automation while maintaining compliance standards.
5. Fully integrated software environment
Another essential feature of top spend management systems is the ability to integrate seamlessly within existing tech stacks, ideally through API. This removes data and system silos, ensuring true end-to-end automation as well as full transparency and visibility into processes and spend.
A fully integrated software environment improves data accuracy and consistency by eliminating manual data entry and reducing the risk of errors.
Moreover, integrations facilitate collaboration among different departments involved in spend management, as all stakeholders can access and work with the same up-to-date information. This collaborative environment promotes transparency, reduces communication gaps, and enhances overall efficiency and effectiveness.
Although each spend management provider comes with its preferred integrations, top solutions make it easy to integrate with ERP and accounting software, travel, HR, procurement and contract management, and VAT reclaim systems.
6. Budgeting and forecasting
Budgeting and forecasting are essential processes for finance departments as they provide a roadmap for financial planning and decision-making.
Accurate budgeting enables organizations to allocate resources effectively, set financial targets, and monitor performance against planned expenditures. At the same time, it allows finance departments to anticipate future financial outcomes based on current data and market trends, helping organizations make informed strategic decisions.
Top solutions for spend management recognize the significance of accurate budgeting and forecasting and offer capabilities to support these processes.
For example, Yokoy offers real-time tracking of invoice payments, card payments, and employee expenses against targets, allowing finance departments to monitor spending activities closely.
By having access to up-to-date data, finance teams can identify variances, analyze the reasons behind them, and take corrective actions promptly.
In conclusion, an effective spend management process is critical for companies who aim to streamline their operations and achieve financial excellence. By implementing spend management software, organizations can streamline their spending processes, gain better control over expenditures, and make informed financial decisions.
Spend management solutions offer a range of benefits, including improved efficiency, spend control, real-time spend analysis, accounts payable automation, improved risk management, a fully integrated software environment, and stronger business intelligence.
If you’d like to see how Yokoy compares to other top spend management providers, and what makes our AI-powered spend management suite different, you can book a demo below.