Everything you need to know about spend management for your business

What is spend management?

You may have read about the importance of keeping track of small daily expenses in your business. Of course, this is valid, but we’re here to talk about a bigger subject: spend management. Spend management covers a broader range of purchases and goes beyond everyday expenses. You might not consider recurring subscriptions or deliveries to be expenses, but they’re still outgoings that you need to keep track of.

So, spend management involves the tracking and managing of your company’s total spend. From light lunches to laptops, everything that eats into your business’ funds need to be accounted for, and in this article we’ll look into the best ways to do just that.

What’s wrong with traditional spend management?

Traditionally, the options that businesses have been presented with when it comes to spend management have been inefficient. Slow, clunky, and vulnerable systems have made it difficult to make the most of your money. Here’s why they don’t work:

Prehistoric petty cash

One way of managing smaller spending is to maintain a petty cash box and an associated logbook. This system involves employees dipping into the fund when necessary and storing the relevant receipts for later reconciliation. Finance teams then record spending in the petty cash book and the fund is topped up periodically.

This is not a system that offers effective spend management. Cash is extremely insecure and is prone to theft. Not to mention the fact that fewer and fewer vendors accept cash these days. A petty cash system also relies on a great deal of manual data entry, as well as a meticulously kept archive of receipts, both of which are vulnerable to human error. Put simply, petty cash is outdated and can’t keep up with modern business.

Restrictive reimbursements

Another way of managing spending is to have employees use their own money for purchases with the promise of being reimbursed at a later date. This system has a raft of issues, from staff morale to a similar reliance on manual data entry. Slow processing could leave your employees out of pocket, which isn’t a fair way of managing spend.

Not only this, but someone will have to sort through the relevant expense claims before anyone can be reimbursed, taking up valuable time that could be used more efficiently.

Clunky credit cards

One of the more useful solutions for spend management is the business credit card. This is, as the name suggests, a credit card that’s used exclusively for business purchases. They’re issued by traditional high street banks, and offer more security than petty cash. However, they still come with issues.

These cards are often rigid in their controls; it can be difficult to limit spending, leading to spiralling costs. Businesses can also end up sharing one card amongst a whole team, which is not only inefficient, but can lead to confusion as to who bought what. And, much like petty cash and reimbursements, the efficient use of a business credit card relies on physical receipts, which are always at risk of being lost.

While business credit cards may offer better features than other spend management solutions, they still leave a lot to be desired. So what is the best way to keep track of your spending?

How to revolutionise your spend management

Spending policy

This may seem obvious, but having a simple spending policy that’s understood by everyone on the team can make managing spend much easier. With everyone on the same page, expense claims and reporting should take less time, and there’ll be no room for disagreements as to what’s acceptable.

Any policy should cover a wide variety of spending scenarios without being a tedious read. It should also be easily accessible for all employees. However, whilst a policy like this can improve spend management, it’s not going to solve all of the issues discussed above. You’ll need something more rigorous for that.

Spend management software

A great way of tackling these issues is to implement the right software that can simplify spending for you. A good spend management software will offer complete visibility, letting you see transactions as they happen and giving insight into the spending trends across your business. This means you can nip and overspending in the bud.

Depending on the provider, this software may even let you limit spending and set budgets. For example, if you use prepaid cards (and we’ll talk more about those soon) then you can connect them to your software in order to decide your monthly outgoings before a penny has been spent.

Accounts software integrations

Another way to get a handle on your business spend is to connect your financial data with your preferred accounting software. This allows for much faster bookkeeping, saving your finance team precious time. Soldo offers this capability, connecting directly to software such as Xero, QuickBooks, and Sage.

How Soldo can help

Soldo is a prepaid system that will provide solutions to the issues mentioned above, and much more. We offer prepaid cards and associated spend management software that is designed to make every aspect of business spending easier.

First, you decide how many cards you want. These can be physical or virtual and assigned to any number of individuals or departments in your business. Before you distribute the cards, you decide how much is on each one, what it can be spent on, and how often the budget renews (if at all). This means you always know how much is going to be spent and there’ll be no surprise payments.

Employees then go out and spend, just as they would any other payment card. But the difference is, you get complete visibility. Every card is connected to the Soldo console for desktop or mobile so you can see each payment as it happens, wherever you are.

And Soldo makes reporting easier too. When employees pay for something, they take a photo of their receipt and upload it to Soldo along with any relevant notes. Soldo then compiles the data and produces reports for you. This means there’s no need to maintain a store of physical receipts, and you can cut down on manual data entry.

Having this amount of data at your fingertips means you have access to incredibly detailed spend analysis across your entire business. This is far more accessible and useful than the tracking systems associated with petty cash, reimbursements, and business credit cards.

Once you have all your spend data, Soldo integrates with accounting software. We’ve spoken about this already, but it bears repeating how much time this will save you. With automatically refreshing bank feeds and one-click data transfers, Soldo can make bookkeeping much more streamlined.

So why not get started today? Signing up to Soldo is easy, and there’s no need for a credit check. Pick a plan that’s perfect for you.