How to improve spend management in your organization? [5 tips]

Spend management is crucial for every company. In practice, however, many struggle to properly organize it. This is often due to small, unexpected purchases. Whether you operate in construction, healthcare, or the education sector, you’ve probably had to deal with invoices that are difficult to match. And you are likely familiar with purchases made outside the standard procedures.

How can you get a grip on all your expenses and ensure a much smoother process? Use the five practical tips we share in this blog post!

Spend management: properly organized, but inefficiency is lurking around the corner

Does your organization buy quite a lot of things? And do employees regularly make smaller, unplanned purchases? Then there’s probably work to be done when it comes to spend management — even if you’ve set up an excellent formal purchasing process.

This phenomenon is reflected in construction, for example, where many companies use CRM and ERP systems to stay in control and on top of things. But when it comes to purchasing small items, such as tarpaulins or screws for the construction site, many construction companies lose track. For these purchases are often made without purchase orders, which makes it difficult to match incoming invoices. Many companies refer to these types of purchases as ‘indirect procurement,’ which requires the finance department to check who placed the order when, where, and in what way. That’s a time-consuming and labor-intensive process!

Healthcare and educational organizations are dealing with similar problems. When it comes to large, planned purchases that are directly related to core tasks, most have a well-organized process in place. But if employees suddenly need a laptop, it’s often difficult to handle a purchase like that in accordance with standard procedures. This type of decentralized purchasing may lead to inefficiencies and therefore require an unnecessary amount of time and effort from the finance department.

Briefly put, there’s quite a bit of unstructured purchasing around well-organized systems in various sectors. We’ve observed this in the market, which we follow closely, as well as among our customers, with whom we regularly have conversations. Many organizations have told us that they spend about 80 percent of the time processing a stream of purchase invoices that only represent 1 to 2 percent of the expenses!

The process should be easier, faster, and more efficient. But how to go about it? Start by following our five tips for better organizing invoice and order confirmation management. You’ll lay a strong foundation for improving your spend management!

Build awareness: small expenses, major impact

If you want to improve spend management, you first need to build awareness. Many organizations mainly focus on optimizing large, planned purchasing processes — which is understandable, as these expenses are often immediately visible and significantly impact budgets. But it’s often the smaller, unplanned purchases that take a lot of time and effort to process. As a result, they can considerably affect the efficiency of your spend management.

It is important to be aware of this. By recognizing that these small expenses can have a major impact, you can take the next ‘optimization step.’

Map out preferences: purchasing isn’t tied up in red tape!

Find out how people prefer to work. Don’t try to tie up unstructured purchasing in the ‘red tape’ of structured purchasing! For example, construction site workers might prefer to place orders by phone rather than via a system. And perhaps a teacher likes to be able to order a new laptop themselves if their current device breaks down.

Map out people’s preferences and provide tools that match them. That way, you’ll set up a system that allows them to make purchases easily and efficiently.

Pick the right tools: IT should support you (not the other way around)

Once you’ve mapped out people’s preferences, it’s important to find the right tools. These days, there are many automation options that can facilitate the ordering process. An example includes a system that automatically creates a purchase order ‘under the hood’ when an employee places an order over the phone.

Look for solutions that suit your employees’ way of working. This ensures the ordering process goes smoothly and the finance department is unburdened. It makes the purchasing process a lot more efficient!

Adapt the solution to the type of purchasing: avoid the one-size-fits-all mindset

All purchases fall under ‘purchasing,’ right? Well, it’s an assumption that many people make. But not all purchases are the same, so you shouldn’t look for a one-size-fits-all solution. Here’s an example: many companies have employees submit expense accounts for work-related expenses. Technically speaking, these fall under purchasing. But they require a completely different approach than purchases of large project materials.

Make sure you recognize different types of purchasing and provide appropriate solutions. For instance, implement a specific system for submitting and processing expense accounts in addition to your system for larger, structured purchasing.

Integrate all purchasing activities: many actions, one streamlined administrative process

Ultimately, you will want to bring all purchasing activities together in one well-organized system. This means you can implement one administrative process to seamlessly handle all forms of purchasing — from large project materials to small expense accounts. That way, you’ll prevent the administrative flow from being disregarded. You can process all purchases quickly and easily. And employees don’t have to worry about the details.

So, use one central solution to coordinate all your purchasing documents. This allows you to create a well-organized, efficient purchasing process!

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