Top 5 Spend Management Strategies You Should Try

There are more than 120,000 Chief Financial Officers in the United States. The work of a CFO is to manage a company’s cash flow and analyze the company’s financial position.

If you’re in the role of a CFO, you know how challenging the job is. You have to make sure the company has the resources it needs to function while balancing fiscal obligations.

Part of your role implementing spend management strategies. Spend management is the process of identifying and managing every single expense in the organization.

If you can create a 1% improvement in spending, you can add thousands to your company’s profits. What are some spend management tips you can use in your organization?

Keep reading to find out.

1. Create a Corporate Spend Policy

A company that doesn’t have a corporate spend policy has no chance to control spending. A spend management policy gives clear directions to employees about what they can spend company dollars.

It can set spending limits, reimbursement procedures, and more.

A corporate spend policy can also create a procedure for procurement. It gives everyone clear and simple guidelines to use when hiring vendors.

2. Centralize Data

One of the challenges of spend management is that data is all over the place. You have some things on paper and other things spread out in different software systems.

The more centralized you can make data, the easier it is to see the big picture and make decisions. You want to have a way to see everything in one dashboard.

Digitize all of your expense documents and keep them in one location. Invest in software that gives you the data you need to make smart decisions.

3. Identify Spend Reduction Opportunities

Once you have your information centralized, look through it to identify opportunities to improve. There are usually three places to look in spend management.

The first is in the procurement process. Find out if there are ways to renegotiate vendor contracts to lower your costs.

You may be able to take advantage of prepayment discounts depending on your cash flow.

The area to improve is employee expenses. You can limit corporate spending with virtual cards today. These tell you who is spending what and why.

Virtual cards make it easier to centralize the data you depend on.

4. Create Open Communications With Stakeholders

It’s important to maintain open communications with all stakeholders. That includes employees, managers, and vendors.

It’s best to maintain these open communication channels so people don’t think there are cash flow problems.

5. Spend Management Forecasting

Forecasting cash flow lets you anticipate and respond to issues in advance. Most businesses are in reaction mode, and they end up making one bad decision after another.

Make monthly and quarterly spend management forecasts to get ahead of issues.

The Best Spend Management Strategies for Your Business

Business spending isn’t always easy to get under control. With these spend management strategies, you have proven methods to cut costs.

If you enjoyed learning about spend management, you’ll enjoy the other business articles on the blog. Head over to the home page today.