What is spend management? Process and benefits

Most businesses don’t realize how much money they’re wasting until they start managing their spend. From recurring software subscriptions to international supplier invoices, expenses add up fast. Without a straightforward process to track, control, and optimize that spending, it’s easy to lose visibility and profitability.

In this guide, we’ll break down what spend management‌ means, why it matters, and how a more strategic approach can help businesses at any stage operate more efficiently and grow with confidence.

Key takeaways about spend management

• Spend management is the process of planning, controlling, and analyzing operational expenses to optimize costs and reduce risk.

• Common challenges businesses face with spend management include tedious manual processes, disparate spend management systems, disconnected data, a lack of transparency and visibility over company spend, and exposure to unnecessary foreign transaction fees. 

• Adopting a unified spend management platform streamlines the spend management process, allowing businesses better to manage processes and workflows in one centralized location. This leads to greater visibility, more accurate data, and the ability to make strategic spending decisions.  

What is spend management?

Spend management is the process of planning, controlling, and analyzing a company’s expenses – everything from supplier payments and employee reimbursements to monitoring cash flow and reconciling accounts. It covers a wide range of financial activities and plays a critical role in ensuring accuracy, compliance, and cost savings.

Effective spend management helps a business stay on track to meet its financial goals. By reducing costs, improving cash flow, and increasing efficiency, companies can become more competitive and better positioned for growth, especially as they scale operations across borders.

Overview of the spend management process

Spend management processes encompass a range of business finance activities. Here are some of the key responsibilities and processes it covers:

• Setting financial goals and building budgets aligned with forecasts

• Implementing company-wide spend policies and procedures

• Creating purchase orders (POs) and managing approvals

• Tracking and categorizing expenses

• Submitting and approving expense reports

• Matching invoices with POs and delivery receipts

• Reconciling expenses against budgets and flagging discrepancies

• Managing payment workflows – bank transfers, cards, or payment platforms

• Reducing foreign exchange (FX) costs and optimizing currency conversions

• Analyzing spending trends to find cost-saving opportunities

• Ensuring compliance with financial regulations and internal policies

• Verifying financial records by reconciling them with bank statements

Beyond these core tasks, strategic spend management also involves adopting the right technology, managing supplier relationships, negotiating contracts, and creating a company culture that prioritizes responsible spending.

Challenges in spend management

Businesses of all sizes face many challenges in effectively controlling and managing company spend. It can be tempting for businesses to onboard SaaS solutions to solve individual spend challenges, rather than adopting a comprehensive, holistic solution. However, using multiple disconnected tools often ends up creating more problems than they solve. It makes reconciliation of expenses problematic, leads to error-prone manual processes for connecting data, and prevents visibility and spend control, resulting in poor financial decision-making. This is compounded further when operations involve international transactions or high volumes of payments. 

Common spend management software tools are often separated from core banking systems because they don't include financial infrastructure. This means making payments (especially international payments) requires multiple manual steps across disparate systems, increasing the risk of errors, and exposing businesses to unnecessary transaction and foreign exchange fees. 

Manual processes lead to inaccurate data

Manual spend management workflows, such as reconciling credit card statements or scanning receipts, are time-consuming and prone to human error. Without reliable, clean data, finance teams can’t make informed decisions or trust what the numbers are telling them.

Disconnected tools prevent spend visibility

Using disconnected single-purpose spend management tools removes the ability to have full and accurate visibility over spend data. This then leads to a loss of control over your cash flow, which can cause a range of issues, including late supplier payments, negative impacts on vendor relationships, and problems with budget management.

Non-integrated spend management software can also significantly slow down reimbursement for employee expenses. The data will need to be manually transferred across platforms, increasing the risk of errors and delays. This fragmentation leads to longer processing times, as each step requires additional oversight from multiple finance staff. 

Unnecessary fees and compliance difficulties

When using disconnected spend management tools, funds can be subject to high international transaction fees, leaving less money in your bank account at the end of each month. Ensuring global staff follow company policies and procedures can also seem like a monumental task without the right software and processes. 

Business benefits of effective spend management

Implementing a strategic, tech-enabled spend management approach helps a business operate more efficiently and scale with less friction. When spend is centralized and visible, teams can collaborate better, reduce waste, and make smarter financial decisions.

Financial benefits of streamlined spend management

• Save money by reducing unnecessary spending, negotiating better prices with suppliers, and improving procurement and contract management processes

• Minimize errors by adopting technology that automates spend management processes, leading to direct cost savings and improving the company's bottom line

• Gain new real-time insights into expenses and business spending patterns, helping you stay on top of your budgets, identify cost-saving opportunities, and avoid costly mistakes

• Avoid expensive and unnecessary FX and international transfer fees by utilizing spend management software that lets you store and spend funds in multiple currencies 

• Prevent spending that isn’t in line with company policies and procedures, with improved spend control and visibility with features like card controls and approval workflows

Operational benefits of streamlined spend management

• Save time, reduce manual human errors, and lessen the chance of compliance risks with time-saving automations, such as AI-powered receipt and bill extraction and auto-categorized expenses

• Improve cross-border management of company spending, making it easier to scale global processes as spending and policies are highly visible across entities

• Free up human and technical resources for more strategic activities, such as business intelligence and data analysis

• Improve vendor relationships through faster payouts and more payment visibility, leading to better contract term negotiations that improve your bottom line

How can unified spend management software help?

Unified spend management software is designed to allow businesses to manage their employee and company expenses quickly and easily. 

Adopting an all-in-one spend management solution, as opposed to individual software tools for each process, makes it easy to gain visibility into your business’s global spend in one central location. With a unified tool, you’ll be able to efficiently control, track, approve, and reconcile all types of company spend, whether domestic or international. 

The spend management software you choose should offer real-time tracking of both employee and company expenditures, as well as quick and easy reporting views, customizable payment capabilities, easy document capture, and automation capabilities that save hours for the finance team. 

Best practices for implementing spend management software

Cultivating best practices as part of your spend management software adoption can help streamline your procurement workflows, ensure timely vendor payments, and improve your relationships with suppliers and contractors through strategic planning. 

Using spend management best practices generates a positive ripple effect within your business’s general operations, facilitating more efficient, productive, and profitable outcomes across many organizational functions. 

Taking advantage of automation and centralization opportunities

Adopting an automated spend management platform can help companies ‌reduce errors caused by human error and tedious manual processes. Not only will your data be more reliable, but you’ll be more efficient, and finance teams will have exponentially more transparency and visibility across global company spending. 

In addition to automating processes, centralizing spend management data in one location can help you gain a better understanding of your global spending patterns. Where's money being spent in the business, how much is being spent, and how often? Ensuring data is accessible and easily manageable makes it simpler to identify potential areas for cost reduction and implement measures to improve contract management. 

To automate and centralize data and processes, companies should consider adopting a cloud-based spend management solution that offers seamless integration with their existing accounting software and procurement systems. Choosing a solution that has financial infrastructure embedded within it eliminates complex bill-paying procedures, as you can pay quickly and easily directly through the platform. 

Boosting scalability with centralized data management

Accurate and timely data analysis is the foundation of effective spend management for businesses, making it more straightforward to identify areas for cost reductions and improve how contracts are managed with suppliers and vendors.

Implementing a spend analysis tool can help your business to easily categorize your spend data, identify spending trends, and provide insights into spending patterns. By having access to quality data about where the business is spending money, you can make data-driven decisions that safeguard the future of your business’s financial viability, as well as increase your market competitiveness. 

By adopting platforms specifically designed for the needs of modern global finance teams, it can be easier than ever to scale internationally, turn weaknesses into strengths, and lay the foundation for sustained growth. 

Understanding different stakeholder needs 

As each department has unique needs for a spend management system, clearly communicating changes to these stakeholders and helping them understand how the new software will benefit them will help secure their buy-in. 

Common challenges faced when businesses adopt new spend management software solutions include difficulties finding resources to support the rollout, staff resistance to change, and integration issues. However, engaging stakeholders early and showing how the platform benefits their daily workflows is key to winning them over.

Optimizing spend management with Airwallex 

As a unified spend management platform, Airwallex supports businesses with their global spend processes, helping to solve the headache of spend management. With Airwallex Spend, you can manage your business’s entire spend and expense process in one location. With products including Bill Pay, Expense Management, international business debit cards for multi-currency transactions, and accounting integrations, you’ll gain real-time visibility and control over your spend, domestically and internationally.

The benefit of Airwallex is that our spend management system combines both software and a powerful financial infrastructure. This means there’s no need to shift between different payment workflows across systems, such as approving bills in one platform and then paying them through your banking system; instead, it’s all in one place.  

Using Airwallex’s spend solutions can drastically reduce friction in your business, improving the accuracy of your global spend data and saving your finance team hours on reconciliation. This frees them up to focus on more strategic tasks, like growing your business. 

Explore what Airwallex spend management software could do for your business to improve your profitability and keep your global spend in view – all from one intuitive and unified platform. 

Get real-time visibility over your spend, domestically and internationally 

Centrally manage spend across all entities located domestically or internationally, with real-time visibility over spending, including card spend and out-of-pocket reimbursements.

Track your business’s spending and pay your bills on one platform

An all-in-one solution across cards, employee expenses, and accounts payable. Optimize your tech stack with the ability to manage funds, currencies, and payments on one platform.

Save time with AI-powered automations that reduce manual tasks

Save your team time and money with AI-powered automations and insights at every step, from expense submission and approvals, through to fraud detection and transaction risk management.

Control spend with card controls and custom workflows

Implement card controls and spend approval flows in minutes, and set up customized workflows to centrally manage spend across multiple domestic and global entities, future-proofing your global growth.

Streamlining spend management for a better business future

Successful spend management is crucial to your business’s success and longevity. Effective spend management enables companies to reduce costs, improve cash flow management, and forecast, all while increasing market competitiveness.

For companies looking to improve their daily spend management processes, spend management software that provides easy integrations, AI-powered automation to reduce manual tasks, and simple methods for analyzing spend data can revolutionize the way you do business.