Spend Management: What it is and How it Can Help Your Business.

Spend management sounds like the sort of thing that seems simple but turns out to be deceptively complex.

In truth, it’s surprisingly straightforward. Spend management is merely the practice of managing supplier relationships and company purchasing. It identifies where your company’s money is spent and maximises return on investment. It automates and integrates spend-related activities from source to payment so that purchasing happens as planned and suppliers are paid in compliance with contracts. What effective utilisation of spend management achieves is the transformation of your company’s spending program from individual, piecemeal transactions to a larger, integrated system, increasing organisational value.

The process begins with the conversion of sourcing, contracting, and purchasing processes into a digital format, as well as processes regarding suppliers, invoices, and payments. These functions are consolidated into one simple, intelligent program, integrated with a digital business network. This makes it possible to gather and analyse all spend data, enabling insight into your company’s spending across the organisation.

This can be broken down by positive changes in four main areas:

  • Collaboration (between partners and teams);
  • Efficiency (automating manual processes);
  • Productivity (freeing time and resources); and
  • Value (knowing what is being bought, who from, and how much)


Spend management enables companies to collaborate more effectively with suppliers. Payments are managed to increase free cash flow, working capital, and early-payment discounts. Improved collaboration with suppliers means that it is easier to identify any supply shortages early on by keeping abreast of supply and demand mismatches. Supply chain visibility also extends to non-linear and external supply chains, combining reduced inventory levels with increased fill rates. It also allows you to share production forecasts and other information with suppliers. By centralising your spend program, all parties are accessing the same information, in the same format, updated unilaterally in real-time.


Increased automation and multitier visibility reduce supplier risk and potential threats to your company’s operations. By reducing avoidable errors and eliminating cumbersome and unnecessary accounting practices, companies have improved their accounts payable efficiency by as much as 40%. With financial information centralised, companies’ responses to queries also become easier and quicker. Efficiency improvements extend to all sections of the spend program, including accounts payable, administrative support, audits, invoice capture, and purchase order handling. By moving from a decentralised to a centralised approach, companies have seen continued improvements in their overall procurement efficiency from the bottom line to the top level.


With the automation of invoice capture, workflow, and approval, companies can eliminate exceptions and ensure compliance with contracts and purchase orders. Budget compliance can be ensured by the automatic application of limits to all departments and locations. Broadly, this means more time and resources can be allocated to the most essential parts of your business. The day-to-day operations that were previously done manually are compiled and updated automatically. These include the tracking of budgets, the compilation of spend requests, and the management of available funds. However, companies can still easily update and adjust the budget in reaction to any changes.


Spend management increases the value of your purchase and reduces waste. With a more comprehensive data platform, sourcing is performed from a stronger negotiating position, meaning that your business will receive better pricing from suppliers. The centralised control of company purchasing means employees are guided to buy from preferred suppliers at prices that have already been negotiated favourably. Your suppliers’ performance is continuously reviewed with a 360-degree view of reliable, current data so that your decision to continue using them is as informed as possible. The more efficient use of time due to automation will also increase your time-to-value ratio.

What can Spend Management do for you?
Continued improvements in these four key areas should be an objective of any business. With proper utilisation of spend management services and software, your company can revitalise those four processes with one dynamic move. Increased efficiency, lower costs, lower waste, lower risk are all easily achievable. With automation freeing up your organisation’s times and resources, you can properly set your company’s minds to innovation and growth. Spend management creates a more effective division of labour between humans and technology, allowing both to play to their strengths, and creating an organisation totally ready to meet the challenges of today and tomorrow.


Would you like to hear more about how B2BE can assist you? Contact us today to learn more.


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