As businesses grow, the need to gain full visibility into company spending becomes essential. Adding new employees and departments makes it harder to fully monitor organizational spending, opening your business up to the risk of overspending or outright fraud.
Fortunately, automated spend controls can help you maintain visibility and control over your company expenses, so you can strictly follow budgets and monitor spend. Here are some simple strategies to get spending under control!
What are spend controls?
Spend control is the process which allows finance teams to monitor spending throughout the entire organization. This process helps provide visibility into purchases and cash flow, follow budgets, and even prevent unauthorized spending that can happen through both internal and external fraud.
Spend controls should span throughout your entire organization and include both internal and external expenses. These include safeguards both within your accounts payable process and your employee expense and reimbursement process.
Spend control vs cost control
Before we get into strategies that can help enforce spend control within your business, let’s quickly define the difference between spend control and cost control. When finance teams talk about cost controls, they’re typically referring to static, overhead expenses like payroll, rent, and utilities.
While these are important to manage, cost control typically happens at a high operational level and requires executive input on hiring and location decisions. On the other hand, spend control is dedicated to managing the more variable costs that occur on company cards, including travel expenses, materials, and even recurring charges like software subscriptions.
Why does spend control matter?
Spend control is an essential part of your cash flow management, and it ensures that your business has the cash flow it needs to grow and expand. If you don’t have visibility into where your money is going, it leads to lower revenue and the risk of shortfalls in the future. Effective spend control also prevents major issues like fraud and duplicate payments, helping finance teams to prevent financial headaches down the line.
When should you look to improve spend control?
The earlier that you implement proper spend control policies, the more money that your business will save overall. So the true answer to this question is always “as soon as possible!”
However, there are some warning signs finance teams look for that indicate it’s time to implement a thorough spend control plan. These warning signs include:
- Having to work with very limited budgets for your projects
- Consistently finding errors when it’s time for the month-end close
- Employees feeling confused over your budgets and expense policies
- Constantly chasing down lost receipts or needing more details on purchases
- Having little oversight into approvals and payments
- Difficulty finding the spend data you need to make big decisions like hiring or expansion
- Spending too much time on the month-end close and expense reports
How to implement spend control best practices
Once your business is ready to implement spend control best practices, the first step is to put together a plan that covers these three main components:
- Education
- Technology
- Oversight
Step 1: Education
The first component of your spend control process is to educate your employees on the expectations and policies around spending. Your finance team should draft up a spend control document that outlines the rules and responsibilities for each employee, and these rules should encompass both spending on company cards and employee reimbursements. The document should include spend management policies like:
- When should an employee use a company card versus a personal one?
- How and when should employees turn in receipts?
- What are the spending limits? At what dollar amount does a manager need to provide approval?
- What is your reimbursement process and how long does it take?
Having clear answers for all of these questions helps finance teams to control employee spending and provide additional oversight throughout the process.
It also helps employees feel more secure and confident, as they know exactly what to expect. And, perhaps most importantly, it prevents employees from unexpectedly hitting spending limits, which can cause complicated situations for your human resources and finance teams.
Step 2: Technology
While education can help provide the groundwork, technology is the true secret to control spending. In a manual process, there are opportunities for employees or managers to cut corners when it’s convenient. Technology ensures that employees can’t take shortcuts.
For example, let’s look at the virtual card program through BILL Spend & Expense. This technology includes built-in spend control measures, including:
- Strict budget limits to prevent uncontrolled spending
- Customizable budgets and categories so managers can monitor spending
- Automatic receipt capture, so employees don’t have to save receipts
- Automated expense reports that save time for your finance team
- Virtual cards that can be turned off instantly in case of fraud or employee termination
Technology helps ensure that your spend control policies are followed throughout the entire process, protecting your business against uncontrolled spending, misuse of funds, and even outright fraud.
Step 3: Oversight
Once you’ve implemented education and technology within your organization, it becomes much simpler for your finance team to oversee spending. Spend data—which is easily automated through the BILL Spend & Expense console—allows your team to monitor company spend and flag unusual transactions.
This high-level oversight also allows you to spot places where you might be overspending. For example, it’s very common for two separate employees to sign up for typical software subscriptions like Adobe or other photoshop services.
By looking at your total spending, you can look for opportunities for sharing logins or combining plans, cutting costs every month. Looking at your spend data also helps to spot issues early on. If one of your vendors typically charges you $600 per month and that expense suddenly jumps to $1,200, you can quickly investigate whether you’re being double charged.
Here are some best practices to gain oversight into your spend management:
- Utilize a system like BILL that automatically logs and categorizes your transactions
- Centralize all the information within BILL to get a bird’s eye view of your company spend
- Find duplicate transactions so you can spend money wisely
- Compare your spending month-over-month to spot anomalies
When combined, education, technology, and oversight all help control spending.
Ready to take control of company spending?
As your business grows, it becomes more difficult to monitor your spending using manual processes. That’s where BILL’s dependable business expense software comes in. Businesses can spend less time chasing down receipts or manually generating expense reports, and instead pivot to a smooth, automated process that saves time and increases control over spending.
BILL Spend & Expense submits expense reports as your company spends, so you can gain real-time visibility into your budgets. Employees can request budget increases through their smartphone, so managers have the chance to review and approve purchases beforehand.
After purchase, BILL provides employees with IRS compliant receipts, with no need to save the paper receipts. All of these steps help cut out the manual processes that can introduce opportunities for mistakes or fraud attempts.
Take a demo with BILL to see how you can automate your expense management!