Companies are adapting to the new normal of 2022 as business travel resumes and production returns to a hum. And two things in the business world have changed dramatically since the beginning of the decade. The first, of course, is the large hybrid workforce. The second is how companies handle spend.
Now, with better digital tools and more accessible adoption paths, many companies are waking up to the fact that they can—and need to—upgrade their spend management solutions.
This need is partly due to more distributed and empowered workforces, which have pressured companies to reexamine their current spend management solution. In the past, the status quo of sharing a corporate card or offering petty cash may have been a simple solution to booking a flight or buying a coffee.
But thanks to recent innovations in the consumer space around personal cards and banking, employees want a better experience. Companies also want a better experience when processing that spend, including real-time visibility.
Thankfully, the digitization of payment technology and cloud-based services for booking and managing travel have led to significant opportunities in how companies optimize spend.
Spend management is the science of balancing spend—via an employee’s purchase card, a virtual card generated for day-to-day purchases, or a p-card created for one-time software subscriptions—with visibility and reconciliation.
In the past, companies could manage spend with a table that recorded all the company's transactions. Typically, a company would close or reconcile those transactions at the end of the month by reimbursing employees for any expenses and paying any outstanding bills to vendors.
But that traditional process of procurement and spend management comes with the conventional trappings of paperwork and analog systems. If an employee books a hotel room on a personal card, the employee needs to save the receipt, file an expense report, and wait for reimbursement. Meanwhile, finance teams must process that record, balance it against the spend, and close it out at the end of the month.
Digital solutions have led to the automation of much of this process over the last two decades. However, many of the analog artifacts of traditional spend management still exist, including the paper receipts that many people worldwide still carry in their pockets.
Expense management is a subset of spend management that functionally focuses explicitly on the science of managing expenses for employees. Where spend management typically streamlines the entire arc of managing spend, from the swipe of a card to the reimbursement of an employee (or the payment of a bill), expense management only serves the process of handling employee expenses.
Different sectors apply the science of expense management uniquely. On the enterprise end of the business spectrum, larger companies employ specific tools for managing expenses. Aspects like corporate cards, ERP, and bill pay are all governed by other, distinct enterprise tools.
Smaller and medium-sized companies, by contrast, may only need single spend management tools to handle the full spectrum of purchasing, expenses, and reconciliation alongside its spend analysis.
As better tools emerge, the line between single solutions for spend management and disparate tools for handling enterprise transactions is starting to blur. TripActions Liquid™, for example, can scale: It’s ideal for both a company that only wants to manage travel, corporate cards, and spend for a few users, as well as enterprise-scale companies that wish to deploy thousands of cards and manage the expense for all of those employees.
Automation is the key to the future of streamlined spend management. Much like how the economy now automates the production of cars or the ordering of shared rides, using digital tools to manage spend functions like ingesting receipts or even reimbursing expenses can help create numerous efficiencies across a finance organization.
On the employee side of that equation, automated spend management looks like a tool that already knows where your travel is booked, has contextual policy built into the stack, and automatically recognizes and approves of transactions. If the employee uses a personal card, the tool also has context to the journey and can automatically identify and reimburse expenses based on spend data.
Beyond travel, spend management software can handle reoccurring subscriptions, expenditures, and contract management— it can even boost supply chain and supplier relationships by eliminating time-consuming processes.
The finance team on the other side of that equation also gets to offload the majority of the analog work of benchmarking, ingesting, reviewing, and reconciling expenses, which frees up time for strategic initiatives and helps close the books each month.
Similar to how the world is now migrating to an all-in-one, digital solution for managing HR, payroll, and project management, streamlined tools for sourcing and handling corporate cards, travel, and expense are now emerging as modern solutions for spend management. Modern high-growth companies are actively looking for ways to eliminate manual processes.
A significant benefit of handling cards, travel, and expense with spend management systems is the contextual insight between systems. Like forecasting, if the system knows an employee’s travel plans and policy, it’s simple to automate and reconcile expenses through machine-based decision-making.
Because spend analytics are built into management platforms, knowing an employee’s spend limits for office expenses allows the platforms to recognize and handle those transactions, too. Suppose an employee shows up with a complicated hotel receipt that needs itemization. In that case, the right technology can step up to allocate one line item to travel and another to meals.
Take for instance TripActions Liquid’s interactive dashboards, which help finance teams spot trends, identify patterns, and target anomalies at any given time, so the teams can respond quickly to changing business conditions. With the most relevant information available, company spending becomes more accurate, agile, and intuitive—and boost a company’s bottom line.
As companies look to better handle spend management in 2022, a digital solution that creates efficiencies across workflows and drives cost savings should be top of mind.