The 4 Questions to Ask Before Choosing a Spend Optimization Platform

To avoid purchasing a tool that isn’t adopted and delivers little to no ROI, here is a brief overview of what to consider before choosing your spend optimization platform.

AP processes have multiple points of failure and vulnerability, from fraudulent spend to human error. These risks are only worsened by manual, paper-based processes and inefficient workflows.

To identify and resolve these risks, you should ask yourself how your organization handles the following:

• Separation of duties: Who has the authority to approve or deny all transactions—a dedicated team or a single employee? If it’s the latter, are you implementing any oversight over the employee’s payments review and approval processes, or are they left flying solo?
• Transaction approvals: Is an employee or team responsible for reviewing all payments before they are processed? What degree of visibility do you have into all transactions?
• Audits and control testing: Does your organization hold internal, randomly conducted audit procedures? Does a trusted third party conduct all internal audits?
• Payment safety and security: Do all company-issued devices have the proper protection, like regularly updated firewalls? Are employees relying on risky physical cards or secure virtual cards?

These questions are imperative as they apply to each of your finance teams, from AP and departmental spend to individual spend and T&E. After all, identifying risk requires analyzing each point of vulnerability in your organization. You have to look at each system individually, from procurement card programs to travel and expense reports, electronic payments, and paper invoices. Then you must compare the data from each of those individual systems with data across every other system to truly understand the complete picture of risk at your organization.

If you’re considering aggregating your organizational spend into a single, all-in-one view, you need systems that leverage integrations to provide visibility and analytics for the complete picture.

While it may seem obvious, CFOs and finance leaders often find themselves unaware of how inefficient their finance processes are without these insights. This often results in a severe disconnect between management and individual teams.

For instance, if your organization uses one system for T&E or AP management and another for payroll, you’ll want a spend optimization tool that “talks” to both systems and provides actionable insights.

You can take stock of how well your organization’s current spend management approach is working by asking these kinds of questions:

• Spend system ease of use: How easy and intuitive are our current payments and spend management process? For instance, can AP and different departments, teams, and individuals access your spend solution as needed?
• Remote employees: Can remote or hybrid employees submit receipts online or via mobile without hassle? And can you review and reimburse employees for their expenses just as quickly?
• Online safety and security: Are your employees adequately educated and trained on best practices for online safety? What checks and balances are in place if any systems become compromised? Who will be alerted?

Before attempting to optimize your spend, you’ll need to identify a “bigger picture” of spend. What is your long-term goal (the ideal result) for your organization’s spend?

The answer may be as simple as gaining more control and visibility over spend. If this is your goal, you’re in luck: spend optimization platforms that track trends lead to a 70% reduction in non-compliant spending within the first year of implementation.

But no matter what your short-term goals are, your long-term vision and mission should be to:

• Gather more accurate spend data as automatically as possible
• Integrate your spend data with business decisions (e.g., garner actionable spend data insights for informed, confident decisions)
• Track resulting business outcomes (what worked and what didn’t? Were your data insights dependable?)

Optimizing spend management is a constant, iterative process that requires frequent reassessment, too:

• How do you measure culture? Take cultural snapshots before, during, and after your implementation, and measure the effects on your teams. The results might surprise you.
• What do cleaner processes and better vendor master lists do for employee satisfaction?
• What are the secondary effects of more effective processes and less waste worth?

Humanizing work—ensuring that employees are engaged and satisfied—is much more critical to organizational well-being and financial stability than many realize. Perhaps more surprising is the substantial impact of your payments processes on employee satisfaction.

You can assess how your organization’s spend processes are helping to humanize work by asking questions about the following:

As talk of a global recession swirl, the organizations that manage to stay ahead of the curve will be those who invest and spend wisely. But managing spend isn’t enough. You must optimize spend to truly understand where your organization sees ROI so you can double down and pull back from activities that show a low return.