Keeping track of the who, what, when, where, and why of company spending is crucial to running a successful business. But without a clear spend management strategy, this can spiral into a mess that drains business resources and stalls growth. 

Even small mistakes — like miscategorizing an expense or sticking with outdated tools — can lead to big problems down the line. For small businesses and finance teams, the stakes are high: disruptions to cash flow, unexpected costs, and inefficiencies can throw things off balance. 

The good news? These challenges are 100% avoidable.

6 Spend management mistakes you should avoid 

Most businesses fall into the same traps. And that’s actually a good thing! It means there are plenty of opportunities for organizations to learn from each other, understand common pitfalls, and prevent them from derailing financial goals.

Let’s dive into the six most common spend management mistakes businesses make and, more importantly, how to avoid them to stay on top of spending, cut down on waste, and build a stronger financial foundation for your company. 

1. Lack of control and oversight

The first mistake to watch out for is a lack of control and oversight. Without a clear view of where company funds are going, it’s difficult to prevent overspending, budget overruns, unauthorized expenses, or even fraud. The result? These spend management issues can quietly build up over time, and you could lose money without even realizing it, all because you don’t have the proper controls in place. 

Here are a couple of things to watch out for as you address this issue:

Limited expense tracking 

Start by evaluating your expense tracking methods. If you still rely on outdated tools or manual expense reports, you’re likely sacrificing visibility and efficiency. These methods aren’t only time-consuming but also prone to human error. The truth is without real-time insight into transaction activity, it’s much harder to spot and address issues before they escalate. Using a spend management platform with automated, real-time tracking can make all the difference. It gives you a clear, up-to-the-minute view of your spending as it happens rather than after the fact.

Decentralized spending 

When you take a closer look at your expense tracking practices, you might find that spending decisions are scattered across different departments and teams without proper oversight. This decentralization often leads to inconsistencies in how expenses are tracked, approved, and reported, usually resulting in inefficiencies, duplicate work, and sometimes unauthorized spending. A spend management platform will be vital to centralizing costs, establishing consistency, and providing an organization-wide view of spending. It’ll also make it much easier to catch inefficiencies and overspending early so you can adjust before things get out of hand. 

2. Inefficient processes

Another common spend management mistake is relying on inefficient processes. This one can be tricky, especially if your company has been following the same routine for years, sticking to a “this is how we’ve always done it” mentality. However, this is a crucial issue to address because inefficiencies in spending processes can be just as damaging as overspending. They eat up time, lead to mistakes, and distort financial data, making it harder to keep expenses under control. Remember, just because something worked initially doesn’t mean it’s the best long-term solution. 

Pay attention to the following areas to turn this mistake around: 

Manual processes

It’s never been easier to automate manual tasks. If your team still uses spreadsheets or manually enters data, you’re missing out on some serious benefits. Manual processes not only slow things down but also leave room for errors — like inaccurate reports or unplanned overspending. Plus, let’s face it, spending hours on these tasks isn’t the best use of your team’s time. Automation allows you to streamline tasks like expense tracking, approvals, and reporting. You’ll cut down on mistakes, free up your team to focus on more strategic initiatives and boost efficiency and growth. It’s a win-win that simplifies expense management and gives you better control over business spending.

Overlooking small expenses

While it’s natural to focus on the big-ticket items, don’t underestimate the impact of smaller, miscellaneous expenses — they can add up fast and slip through the cracks if tracking them isn’t part of your process. In fact, according to the Boston Consulting Group (BCG), most companies can’t account for 20% of their spending until it’s already gone. Over time, these seemingly small expenses can put a noticeable dent in company budgets. That’s why it’s crucial to track and review all expenses, no matter how small. By using an expense management platform, you can centralize payments and keep better tabs on these smaller costs, ensuring they don’t snowball into bigger budget issues. 

3. Poor management of suppliers and expenses 

If you’re not actively managing your relationships with suppliers or closely tracking expenses tied to vendor payments, it’s only a matter of time before problems arise. Duplicate payments, missed discounts, and strained relationships with key partners can sneak up on you, creating unnecessary headaches. This can affect your day-to-day operations and lead to long-term financial setbacks, making it harder to control costs and capitalize on potential savings. 

To avoid this, start by addressing these key areas:

Weak vendor management 

Building strong, lasting relationships with your suppliers is imperative for keeping costs down and ensuring smooth operations. The first step is to make sure your team is actively managing these relationships. This not only helps secure better service and reliability, but also creates opportunities to negotiate favorable terms, lock in discounts, and improve efficiency across your supply chain. If you're not there yet, consistent communication and transparency will be key to improving these partnerships. Make regular check-ins part of the routine, address issues quickly, and work together to find mutually beneficial solutions. It also helps to review performance on an ongoing basis, understand each other’s strengths, and give constructive feedback. Taking a collaborative approach will go a long way in building stronger, more successful partnerships.

Faulty analysis

Next, take a look at your supplier data. Is it scattered or poorly organized? If so, you’re likely losing track of key details, like payment terms or contract deadlines. This can lead to inaccurate reporting, increasing the chances of duplicate payments, missed discounts, or overpayments. A spend management platform can simplify this process for you and your team. It will help consolidate your spending data, monitor and analyze expenses in real-time, and automate tracking payment schedules. This gives you and your team a clear view of every supplier relationship and its associated expenses, allowing you to spot spending trends, cut unnecessary costs, and ensure financial resources are used wisely.

4. Ineffective budgeting and expense policies

The next mistake businesses make is relying on ineffective budgeting practices and failing to address policy issues. When budgeting isn’t properly controlled, or spending policies are unclear, you’re opening the door to unexpected costs, mismanagement of funds, or even fraud. The last thing you want to do is leave things up for interpretation, so get clear on your policies, communicate them, and ensure everyone adheres to the budget.

Here’s what you need to focus on to correct this:

Lenient budgeting

What type of budgeter are you? If you’re too lenient, overspending is bound to happen. It’s crucial to set clear controls and expectations, so departments can use resources without jeopardizing the company’s financial goals. Think of your budget as a financial blueprint — it should align spending with business objectives. Now, while adding more control is essential, that doesn’t mean you should be rigid. It’s important to empower your team to make decisions, but always within the framework of a clear and regularly reviewed budget. A spend management platform that enables budget control can help strike that balance. You can set clear budget limits for each department and regularly review how their spending aligns with your business strategy.

Unclear or complicated spending policies

Take a fresh look at your spending policies and imagine you’re seeing them for the first time. Are they clear, or do they leave you scratching your head? If you find your policies confusing, chances are your employees do, too. Without a clear set of rules, how can your team know what’s allowed? Vague or missing expense policies create confusion, opening the door to mistakes, financial abuse, or even fraud. To avoid this, establish specific, easy-to-understand guidelines that define the boundaries — who can spend, what they can spend on, and under what conditions. This clarity ensures everyone is on the same page, reducing the chances of unauthorized or unnecessary spending. 

5. Insufficient optimization

Another spend management mistake businesses often make is failing to revisit and optimize their processes and workflows. Business processes shouldn’t be treated as a "set it and forget it" deal. Over time, methods that once worked can become outdated and inefficient, leading to missed savings and growth opportunities. It’s easy to fall into a routine and stick with what’s familiar, but if a process isn’t delivering the results you expect, you need to refine your approach to improve efficiency. 

These are two focus areas to fix this:

Gaps in workflow automation

Take a moment to review your existing workflows and find opportunities for improvement. The great thing about optimization is that it’s not just about fixing what might be broken but about refining what already works to get even better results. Small iterative adjustments can lead to greater efficiency and smoother operations. Make sure to revisit and fine-tune your workflows on an ongoing basis to guarantee things stay sharp and your business keeps running at its best. 

No regular process audits and feedback loops

To keep your workflows running smoothly, regularly audit your processes and gather feedback from your team. You’ll spot bottlenecks, inefficiencies, and areas that could use improvement. By setting up a feedback loop with your team, you will get real-time insights from the people who are working with these processes every day. Their input can highlight issues or suggest improvements that you might miss otherwise. Continuously audit and refine your workflows based on feedback, and you’ll ensure operations stay efficient and adaptive.

6. Lack of innovative payment technology

One of the biggest mistakes that can hold your business back is not embracing innovative payment technology. With so many powerful tools available today, there’s no reason not to streamline your finances and get real-time insights into where the company’s dollars are going. It’s understandable to feel hesitant about learning new tools as a small business, but sticking with outdated methods will end up costing you far more in the long run — and not just financially, I’m talking: inefficiencies, errors, and missed opportunities.

Here’s a quick and easy way to start leveraging powerful payment technology: 

Extend the functionality of your existing corporate card

Your corporate card can do a lot more than you might realize. Many major banks now offer the ability to create multiple digital versions of your existing card. These are called virtual credit cards, and they unlock transparency and control over company spending. 

What’s great about virtual cards is they’re easy to use; no need to adopt complicated software or systems.

Each virtual card comes with its own unique card number, expiration date, and custom spending limits. You can assign specific card numbers for individual transactions, employees, or vendors, rather than sharing a card across the organization, making it much simpler to track exactly where money is going. Plus, each transaction can be tied to a department or purpose, which helps reduce the risk of overspending or fraud.

Another huge benefit? Real-time tracking. Instead of waiting for monthly statements, you get instant insights into transaction activity — meaning you can catch spend management issues early and make adjustments to stay on top of your budget.

Take control of your business expenses with Extend.

Managing business expenses shouldn’t be complicated or overwhelming, but without the right tools in place, it’s easy to run into spend management issues like overspending, inefficient processes, or a lack of oversight. 

Extend makes it easy to take control of your spending with innovative payment solutions like virtual cards, real-time tracking, and automation, all designed to help you keep expenses aligned with your company's financial goals.

Ready to simplify your expense management and make smarter spending decisions? Reach out today to learn how Extend can help you optimize spending, save time, and protect your budget.