Spend management and expense management: two terms often discussed in business finance. They might seem interchangeable, but the approach behind each is distinct. And yet, they’re also not mutually exclusive.
In this blog post, I’ll explain these two financial practices and why adopting a holistic and proactive approach to payments can yield better financial outcomes for your business.
Business expense management has long been in practice. So, if you own a business or handle its finances, you might be more familiar with the term "expense management" rather than "spend management."
As the name suggests, expense management focuses on tracking and managing expenses made by employees on behalf of your business.
For example, expense reports may be required if an employee uses their corporate card to charge a business expense. Alternatively, formal reimbursement requests may be required if an employee charges an urgent business expense to their personal card.
While expense management focuses on streamlining these financial processes in a reactive way, spend management deals with the bigger picture by proactively managing overall business spend.
Business expense management is therefore a key component, but only one chapter of the spend management playbook.
Spend management focuses on managing, analyzing, and optimizing company spending. It is all about the big picture, taking a holistic approach inclusive of expense management’s narrow focus on employee-initiated spend.
Adhering to a dedicated spend management strategy is key to controlling business expenses and managing spend in a proactive way.
It can be leveraged to inform higher-level decisions around approving spend, setting budgets, and cost management. And a good strategy will maximize business value.
Spend management is often broken down into key focus areas to optimize spend, such as choice of vendor, services provided, outcomes, and impact on working capital.
Here are some examples to keep in mind:
The key steps of spend management include:
Setting targets for business spending on particular items, services, or investments based on current priorities and available capital.
Grasp the entire picture of spend by tracking actual expenses against the planned budget through a dedicated spend management platform.
Examine spend data to spot trends, identify areas of over or under-spending, and find ways to save money or reallocate resources.
Based on your spend management insights, you may make changes to optimize business value, such as switching vendors or changing approval limits.
Here's an overview of how these steps work in tandem with the standard expense management process.
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Correctly implemented, a spend management strategy can power the long-term success of your business by making the most of available capital, avoiding risk, and improving strategic decision-making.
By tracking data beyond business expenses, but also things like budget performance and supplier terms, you can better understand capital availability and find ways to make cash work even harder for your business.
In-depth spend management can highlight areas where resources are being wasted or could be deployed better. By understanding the inputs and outputs involved, you can maximize your return on investment.
Spend management highlights what your business should be making in relation to what it’s spending. By uncovering insights that drive new efficiencies, you can reduce spending and deploy resources to generate maximum profit.
The data that drives spend management provides a detailed picture of how well each business area deploys resources. By analyzing performance at a granular level, your finance team can find new ways to improve processes, go to market, or develop products that meet unique needs.
Fraud can cost your business dearly. Detailed spend management processes provide visibility and control to catch risks early, highlight suspicious spending activity, and set high thresholds for security before a payment takes place.
Expense management and spend management aren’t isolated practices; they’re interrelated components that work together to achieve better financial results.
By tackling expense management through a comprehensive spend management approach, you will create a more proactive financial management system.
You will not only gain better control over business expenses, but you’ll also empower your team to proactively plan and optimize all spending for stronger overall financial performance.
Ready to tackle expense management through a proactive spend management strategy?
Extend’s spend management platform can help! Get in touch to learn more.
Spend management and expense management: two terms often discussed in business finance. They might seem interchangeable, but the approach behind each is distinct. And yet, they’re also not mutually exclusive.
In this blog post, I’ll explain these two financial practices and why adopting a holistic and proactive approach to payments can yield better financial outcomes for your business.
Business expense management has long been in practice. So, if you own a business or handle its finances, you might be more familiar with the term "expense management" rather than "spend management."
As the name suggests, expense management focuses on tracking and managing expenses made by employees on behalf of your business.
For example, expense reports may be required if an employee uses their corporate card to charge a business expense. Alternatively, formal reimbursement requests may be required if an employee charges an urgent business expense to their personal card.
While expense management focuses on streamlining these financial processes in a reactive way, spend management deals with the bigger picture by proactively managing overall business spend.
Business expense management is therefore a key component, but only one chapter of the spend management playbook.
Spend management focuses on managing, analyzing, and optimizing company spending. It is all about the big picture, taking a holistic approach inclusive of expense management’s narrow focus on employee-initiated spend.
Adhering to a dedicated spend management strategy is key to controlling business expenses and managing spend in a proactive way.
It can be leveraged to inform higher-level decisions around approving spend, setting budgets, and cost management. And a good strategy will maximize business value.
Spend management is often broken down into key focus areas to optimize spend, such as choice of vendor, services provided, outcomes, and impact on working capital.
Here are some examples to keep in mind:
The key steps of spend management include:
Setting targets for business spending on particular items, services, or investments based on current priorities and available capital.
Grasp the entire picture of spend by tracking actual expenses against the planned budget through a dedicated spend management platform.
Examine spend data to spot trends, identify areas of over or under-spending, and find ways to save money or reallocate resources.
Based on your spend management insights, you may make changes to optimize business value, such as switching vendors or changing approval limits.
Here's an overview of how these steps work in tandem with the standard expense management process.
Correctly implemented, a spend management strategy can power the long-term success of your business by making the most of available capital, avoiding risk, and improving strategic decision-making.
By tracking data beyond business expenses, but also things like budget performance and supplier terms, you can better understand capital availability and find ways to make cash work even harder for your business.
In-depth spend management can highlight areas where resources are being wasted or could be deployed better. By understanding the inputs and outputs involved, you can maximize your return on investment.
Spend management highlights what your business should be making in relation to what it’s spending. By uncovering insights that drive new efficiencies, you can reduce spending and deploy resources to generate maximum profit.
The data that drives spend management provides a detailed picture of how well each business area deploys resources. By analyzing performance at a granular level, your finance team can find new ways to improve processes, go to market, or develop products that meet unique needs.
Fraud can cost your business dearly. Detailed spend management processes provide visibility and control to catch risks early, highlight suspicious spending activity, and set high thresholds for security before a payment takes place.
Expense management and spend management aren’t isolated practices; they’re interrelated components that work together to achieve better financial results.
By tackling expense management through a comprehensive spend management approach, you will create a more proactive financial management system.
You will not only gain better control over business expenses, but you’ll also empower your team to proactively plan and optimize all spending for stronger overall financial performance.
Ready to tackle expense management through a proactive spend management strategy?
Extend’s spend management platform can help! Get in touch to learn more.
Lisa is VP of Product at Extend. A strategic product leader with a track record of innovation, Lisa has over 10 years of experience launching and managing leading financial services products. Previously, at American Express, she launched new payment solutions, grew their largest consumer lending product, and advised C-Level executives. She developed her design thinking approach to product development at Interbrand, an Omnicom agency, where she consulted global financial services clients after starting her career in finance. Lisa holds an MBA from Columbia Business School and a BA in Economics from Cornell University.
Spend management and expense management: two terms often discussed in business finance. They might seem interchangeable, but the approach behind each is distinct. And yet, they’re also not mutually exclusive.
In this blog post, I’ll explain these two financial practices and why adopting a holistic and proactive approach to payments can yield better financial outcomes for your business.
Business expense management has long been in practice. So, if you own a business or handle its finances, you might be more familiar with the term "expense management" rather than "spend management."
As the name suggests, expense management focuses on tracking and managing expenses made by employees on behalf of your business.
For example, expense reports may be required if an employee uses their corporate card to charge a business expense. Alternatively, formal reimbursement requests may be required if an employee charges an urgent business expense to their personal card.
While expense management focuses on streamlining these financial processes in a reactive way, spend management deals with the bigger picture by proactively managing overall business spend.
Business expense management is therefore a key component, but only one chapter of the spend management playbook.
Spend management focuses on managing, analyzing, and optimizing company spending. It is all about the big picture, taking a holistic approach inclusive of expense management’s narrow focus on employee-initiated spend.
Adhering to a dedicated spend management strategy is key to controlling business expenses and managing spend in a proactive way.
It can be leveraged to inform higher-level decisions around approving spend, setting budgets, and cost management. And a good strategy will maximize business value.
Spend management is often broken down into key focus areas to optimize spend, such as choice of vendor, services provided, outcomes, and impact on working capital.
Here are some examples to keep in mind:
The key steps of spend management include:
Setting targets for business spending on particular items, services, or investments based on current priorities and available capital.
Grasp the entire picture of spend by tracking actual expenses against the planned budget through a dedicated spend management platform.
Examine spend data to spot trends, identify areas of over or under-spending, and find ways to save money or reallocate resources.
Based on your spend management insights, you may make changes to optimize business value, such as switching vendors or changing approval limits.
Here's an overview of how these steps work in tandem with the standard expense management process.
Correctly implemented, a spend management strategy can power the long-term success of your business by making the most of available capital, avoiding risk, and improving strategic decision-making.
By tracking data beyond business expenses, but also things like budget performance and supplier terms, you can better understand capital availability and find ways to make cash work even harder for your business.
In-depth spend management can highlight areas where resources are being wasted or could be deployed better. By understanding the inputs and outputs involved, you can maximize your return on investment.
Spend management highlights what your business should be making in relation to what it’s spending. By uncovering insights that drive new efficiencies, you can reduce spending and deploy resources to generate maximum profit.
The data that drives spend management provides a detailed picture of how well each business area deploys resources. By analyzing performance at a granular level, your finance team can find new ways to improve processes, go to market, or develop products that meet unique needs.
Fraud can cost your business dearly. Detailed spend management processes provide visibility and control to catch risks early, highlight suspicious spending activity, and set high thresholds for security before a payment takes place.
Expense management and spend management aren’t isolated practices; they’re interrelated components that work together to achieve better financial results.
By tackling expense management through a comprehensive spend management approach, you will create a more proactive financial management system.
You will not only gain better control over business expenses, but you’ll also empower your team to proactively plan and optimize all spending for stronger overall financial performance.
Ready to tackle expense management through a proactive spend management strategy?
Extend’s spend management platform can help! Get in touch to learn more.
Learn more about Extend and find out if it’s the right solution for your business.
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