CFOs who invest in spend tracking and management tools will benefit from significant efficiency gains and cost savings in the long run
Managing ad hoc spend requests across a company can be a daunting task for any finance team. These requests, often for small purchases or subscriptions, can add up quickly and become a significant drain on a company’s budget. However, with proper tracking and management, ad hoc spend can be controlled and even leveraged to benefit the company as a whole.
According to a survey from Kloo, the top pain points for businesses were filling in missing information on expense reports and chasing employees for receipts and other material, both being cited by 76.2% of respondents. Not far behind these was ensuring expense reports are accurate (69.6%) and manually reconciling expenses and data input (65.6%).
This all suggests that the current processes being used by firms are clunky, a drain on resources, and time-consuming, indicating numerous efficiency gains that can be made.
One way to do this is through tracking and management of Software as a Service (SaaS) subscriptions. SaaS subscriptions are becoming increasingly popular as companies move towards digital solutions for their operations. These subscriptions, such as those for email marketing tools like MailChimp, or project management tools such as Trello or Asana, are often added to a company’s budget through ad hoc spend requests.
However, without proper tracking, subscriptions can not only quickly become a significant expense for companies but also cause major strategic problems if not paid in time/renewed successfully. Implementing a system for tracking and managing SaaS subscriptions can prevent these problems from happening.
This includes centralising the approval process for new subscriptions, setting up automatic renewals, and regularly reviewing and cancelling unnecessary subscriptions. Tracking and managing SaaS subscriptions enables companies to control their ad hoc spend and ensure they are getting the most value out of their subscriptions.
And there is more to this. It is not just SaaS subscriptions that can be controlled through ad hoc spend management. Any small purchase or subscription can be tracked and managed through similar systems, including office supplies, travel expenses, and even company phone plans. By centralising the approval process and regularly reviewing these expenses, companies are able to control their ad hoc spend and also gain a better understanding of where their money is going.
However, there is a pressuring need for companies to adopt fewer spend management systems and tools. A survey of 123 responses, found that nearly half of firms (44.7%) were using one to three products or tools, with another 39% saying that they were using four to six tools. Worryingly, 16.2% said that they were using anywhere from seven tools to more than ten.
That so many (55.2%) said that they were using so many tools indicates a concrete, definite need for companies to move towards a single solution, in order to gain a company-wide view of what form their spending takes. There are multiple negative knock-on effects from having so many systems in use. It is not only complicated and time-consuming to be using so many different platforms, but there is a specialised degree of knowledge that is needed to be able to not only operate these platforms but understand how they interact—or not with each other.
While the need for spend management tools is evident, it is concerning that many companies are still relying on outdated methods. According to Kloo, the lack of awareness of available tools, the cost of new solutions, and the time and effort needed to implement them, are the three most common reasons why companies do not adopt spend management solutions.
However, investing in spend tracking and management tools is can lead to significant efficiency gains and cost savings in the long run, making it a worthwhile investment for any company looking to streamline their processes, reducing unnecessary expenses and free up budget for other important growth projects or investments.
In conclusion, while managing ad hoc spend requests across a company can be a daunting task, but it is essential for controlling expenses and ensuring a company’s bottom line.
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