5 Spend Management Best Practices
When it comes to spend management, work doesn't stop after you've implemented a spending policy and chosen a spend management platform. An effective spend management strategy requires ongoing work to capture unnecessary expenses, spending rules remain up to date with business requirements, and employees remain compliant.
Here are some spend management best practices that will help you get the most out of your spend management process:
1. Continually analyze spend data
One of the biggest benefits of implementing spend management software is the ability to quickly and easily view spend data. A good spend management tool will include the ability to create dashboards and reports that make it easy to check spending trends.
How often you should check and review spending data will depend on the size of your company and amount employees are spending. For smaller companies or those with minimal employee spending, monthly or even quarterly may be enough. For bigger companies, weekly or biweekly may make more sense.
2. Leverage spend control automation
Many modern spend management platforms include spend control automation that can be set up to align with your spending policy. This automation can be programmed to automatically decline transactions that are out of policy, such as a purchase at the wrong merchant type or in excess of policy maximums.
Leveraging this automation can prevent spend policy violations before they happen, reducing the time needed for analyzing spend data and minimizing potentially unpleasant conversations with employees about their business spending.
3. Implement virtual cards
Virtual cards are another modern tool that give businesses more control over employee spending while also giving employees the ability to make business purchases when necessary.
Offering more flexibility and security than physical cards, virtual cards can be created for single uses, specific software purchases, or limited time periods such as the duration of an event or campaign. When combined with spend control automation, virtual cards make it easy to keep track of spending for most valid purposes while eliminating the need for employees to use personal funds and submit reimbursement requests.
4. Periodically review your spending policy
Like everything else in business, spending needs change over time. Employees at a fast-growing company have different needs than those at an established one. Expansion into new markets may require higher limits for hotels and meals because costs differ from costs in existing markets (a limit that works for a more affordable city like Cleveland is unlikely to work for New York City). And, of course, there's inflation, which makes the need to increase spending limits inevitable even if your business is holding steady.
Signs that a change in spend policy may be needed include increases in reimbursement requests or manual spend limit overrides. Proactively reviewing your spending policy at least once a year will help avoid creating these hassles for your employees.
5. Proactively engage employees
Regardless of how loose or strict your spending policy is and how you decide to implement spend controls and virtual cards, it is important to proactively engage employees to ensure that your spend policy aligns with business needs and policy exceptions are kept to a minimum.
Additionally, suppose you see an employee frequently requesting exceptions, getting denied for out-of-policy purchases, or submitting unusual reimbursement requests. In that case, it is better to communicate with them early and attempt to correct their spending behavior than to wait until more dramatic action is necessary. Proactive action will also help maintain spending discipline among other employees.
Torpago Makes Spend Management Easy
Using a single platform for spend management makes it easy to stick to best practices. If your finance team has to manage multiple platforms, they may find it time consuming to keep up to date on spending data or to maintain spend controls. And if your employees have to use separate platforms for different needs - one platform for physical cards, one for virtual cards, and one for reimbursements, for example - they're less likely to stick to the spending policy.
That's why Torpago combines all business spending needs in one tool. Our rewards-enabled physical and virtual cards are managed through one platform that also includes spend control tools and a reimbursement request portal. Our platform also makes it easy to review transactions and integrates with over 1,000 HRIS, accounting, banking, and productivity applications. Download our ebook, "The Business Reimbursement Model is Dying: Making the Transition from Expensive Reimbursement," to learn more!