Regardless of the size or expertise of a company, spend management is often the Achilles heel of a business, mainly because of the often complicated nature of finances. Businesses that triumph in spend management stick to their process and mold to modernize. 

In this blog post, we'll explore today's best strategies, tools, and solutions to find both time and cost-saving success (and maybe even a little joy) in your company's expense processes. 

What is spend control?

“Spend control” is how you control expenditure, eliminate wasteful spending, and increase profitability in your organization. When controlling spend in your business, you first need to understand where your money is going and then identify areas of waste and overspending. Spend control helps you strategize on how to increase capital efficiency and properly deploy finite resources, as well.

Spend control vs. cost control

"Cost control" is a phrase typically used to describe cutting business expenses when a company needs to save money, whether that’s because of financial struggles or to ensure high capital efficiency and maximize ROI. 

Key elements of spend control

When it comes to controlling expenses in your business, you should consider these key elements:

• A spend policy: Your policy should be tailored to the specific needs of your business. For example, you may have a sales team that needs to travel often. Your spend policy should include specific rules, such as maximum spending amounts and allowed expenses (e.g., airfare, hotel, food, etc.).

• Business processes: From procurement and supplier relations to subscriptions and online payments, there are many areas where you might be lacking proper control. A business spend management strategy can help you take a proactive stance on how your company approaches and manages these processes.

• Payments technology: Technology can help your business simplify and automate the spend management process, making it easier to track expenses and enforce spending policies.

Why is spend control important to businesses?

Controlling expenses is one of the most important aspects of running a successful business. No business, large or small, has unlimited financial resources. And unnecessary expenses often result in lost reserves that could have gone toward fueling company growth and increasing profitability. 

What are the benefits of controlling company spending? 

There are many benefits to implementing spend control measures in your organization. 

• Budget control: When you have a handle on your company's spending, you can make more informed decisions about where to allocate your resources. Moreover, effective spend control allows you to improve the accuracy of your forecast, which helps you avoid issues with inconsistent cash flow or inadequate funds to cover unforeseen costs.

• Lower financial risk: Spend management also helps you avoid costly errors. However, what was effective yesterday may not meet your needs today. Custom software that integrates with your other tools can help you monitor and avoid serious issues like duplicate invoices, fraud, or overspending.  

• Increased profits: Spend control is vital if you want to maximize your company's profitability. It ensures that funds will be readily available to invest in activities and services that guarantee returns. Tools that track spending in real-time are the best for both spend control and cost-cutting.

Spend control best practices

Let’s take a look at some best practices for controlling company spending. 

Communicate the company spend policy

Make sure your employees understand what is and isn’t allowed under your company's policy. Additionally, equip them with adequate resources to make better purchasing decisions. By leveraging business virtual credit cards, you can set budgets and spend limits to prevent unauthorized spending and promote accountability across the board.

Modernize payment methods

In today's world of online applications and digitized spending, paper expense reports and physical credit cards are falling behind. Fortunately, your business can now turn to modern payment solutions that allow you to issue virtual credit cards across teams. This creates instant visibility into your company's finances and real-time spending, and allows teams to quickly identify and address issues like overspending and fraud.

Collect receipts easily 

If spend management isn’t the Achilles heel of your business, then perhaps collecting receipts is. Collecting receipts is a real bottleneck for finance teams, especially when dealing with “missing receipts.” Those mishandled or lost receipts can jeopardize your business and get you in big trouble with the IRS. Better receipt handling is where virtual cards and effective spend management come into play, making it easier and safer for employees to submit receipts straight from their phones.

Implement spend approval processes

Another way to control company spending is to implement spend approval processes. These processes should be designed to ensure all purchases are made under your company's spending policy. A spend management platform can help reduce the hassle of purchase requests and approvals. With this system in place, an employee can request a card with notes and an invoice attached. Their expense is automatically reconciled for immediate use without the need for expense reports and cash reimbursements. 

Control spend with virtual credit cards

Spend control is crucial for any organization aiming to gain greater visibility and optimize payment processes. If you need a better spend management approach, consider adding virtual cards to your spend control arsenal.

To learn more about virtual credit cards and how they can help, contact Extend today.