The United States Census Bureau released a 2019 report based on data collected from their Annual Capital Expenditures Survey (ACES). The survey collects information on U.S. expenditures for new and used structures and equipment by all U.S. (nonfarm) businesses. It found that between 2008 and 2017, the total spending by these businesses increased 22.5 percent, rising over $300 billion from $1.37 trillion in 2008 to $1.68 trillion in 2017.
Nearly 1.7 trillion dollars annually is significant (to put it lightly) — and that’s just on structures and equipment. But how much money did it cost those businesses to spend that money?
Spend management isn’t simple, and with a TAM (total addressable market) in the trillions, countless companies are trying to simplify the mess of spend management for business.
Finding ways to control spending is critical, but many obstacles get in the way of making budgeting, or spend initiatives, effective. Frequently, these obstacles prevent spend management from doing its job, and a company’s finances can suffer because of it. On the other hand, not implementing a budget can be just as dangerous. Here are three blind spots to keep an eye on:
The most common spend management problem is using old data and expecting better results. Identifying useful expenses is difficult without real-time data. Traditional expense management works with spending information that’s at least a month old. You never know what the company is committed to paying for until a month after the fact, making it difficult to gauge the financial health of the business.
Understanding spending habits are an important part of any spend initiative. But if you’re still stuck using old data, how can you expect to accurately track spending habits? Without help, you’ll spend a significant amount of time trying to make and track your budget, including time spent trying to:
Without the right tools, this task requires a herculean effort, but the answers provide critical insights into the third blind spot — determining which costs you can cut.
Almost every business would agree they could tighten their business-belts and trim down spend. But how do you know what’s fat and what’s fiscally responsible? Without current data or the ability to effectively track spending habits, it’s almost impossible to tell. Cutting costs across the board isn’t as helpful as it sounds. Not every expense is something you can just get rid of. Taking an ax to expenses won’t necessarily solve your spend management problems, in fact, it may increase them. That said, you likely can’t stay within your budget without cutting something.
The FinTech market is attracting attention from businesses of all sizes to tackle these cumbersome challenges. Fortunately, competition provides businesses with a number of viable options. If your business is in the market for a modern solution to the traditional manual process, what should you be looking for?
As you consider any spend management solution, keep in mind these five checkpoints:
The bottom line Your foray into spend management doesn’t have to cause road rage, it can be informed and smart. Consider what your current blind spots are and what to keep in mind as you navigate toward greater visibility into your company’s spend management. As you embark on this financial roadtrip, I promise, the grass — and your bank account — will be greener on the other side of the hill.
This is a sponsored guest blog by Brandon Peterson from Divvy, Inc. Brandon works on the Brand team at Divvy and enjoys exploring the intersection of technology and design. When not working on delighting customers with the latest Divvy releases, Brandon savors spending time with his family and watching a great film with a mandatory bowl of popcorn. Divvy is a Business Class sponsor you can meet at TRAVERSE 19 on October 2-3, 2019 in San Francisco.