spend control solution

Business leaders spend a lot of time talking about revenue-related metrics; figuring out how much more revenue needs to be secured to reach growth goals or highlighting which products have the highest profit margins are common discussions amongst leadership teams. However, there’s another consideration that doesn’t get nearly as much airtime: controlling spend.  

Sure, managing expenses and mastering spending isn’t nearly as flashy or exciting as talking about revenue goals, but it’s equally important. If a company fails to establish a spend control strategy, spending can spin out of control quickly, leading to bankruptcy and business failure in many cases. In fact, a study by U.S. Bank found that 82% of small businesses fail because of cash flow issues. 

Once a company loses its ability to spend less than it brings in in revenue, it’s only a matter of time before that company is a thing of the past.

Controlling spend is one of the most effective ways to maintain a healthy cash flow and keep your organisation afloat, but it’s not always an intuitive task. Spend management tactics vary from industry to industry, changing as business models and operational needs change.

Taking the time to understand how to control spend will not only ensure the financial status of a business is strong, but it’ll also solidify that funding sources stay invested. If lenders or investors trust that the leadership team of a company can hit revenue targets and implement a spend control solution with ease, they have no reason to back out. The second that spending goes off the rails, the story will change.  

If you’re ready to adopt a new approach to controlling spend – whether the current approach isn’t working, or you want to try something new – this is the place to start.  

Why is Spend Control Important?

Small leaks can sink a ship, and the same can be said for companies that don’t keep control of how much they’re spending. Unchecked expenses, even the ones that seem so small they couldn’t possibly make a dent, can quickly add up and eat into your bottom line.

Controlling spend is one of the most effective ways to maintain a healthy cash flow and keep your organisation afloat, but it’s not always an intuitive task.

Spend control is as important as having a watchful crew on deck who can identify and stop leaks before they become a major issue, so your company doesn’t sink into the bottom of the ocean. Because when that happens, the consequences can extend beyond losing your business.  

Funding loss

No matter the size of an organisation, there are two options for funding: loans and investments. Lenders, like banks and other financial institutions, give funds to entrepreneurs and businesses in the form of loans. Eventually, businesses must pay those loans back. If a payment is missed or the business runs into cash flow issues due to a poor spend control solution, the bank can demand the money be paid back immediately, sending operations to a screeching halt.  

Although investors don’t require repayment with interest, they do expect a return on their investment. As soon as their investment appears to be in trouble, they’ll revoke the funds, break the agreement with your organisation, and liquidate the business to get their money back.  

Brand distrust

Once an organisation has a reputation for poor spend control, it’s hard for that brand’s image to recover. Scorned lenders or investors can share their experience with their competitors, basically blacklisting your business from future funding opportunities. Even further, your customers may catch wind of these struggles and decide to spend their money on a business they can trust.

But let’s say your business goes under – the impact of brand distrust won’t end with it. Your reputation as an entrepreneur and business leader will also be called into question. The consequences of expense management mishaps have a much broader reach than you expect; they can impact the rest of your career. 

Company failure 

One month of bad spend control won’t end a business, but a long-standing pattern of poor spend control? That’ll do it. Company failure is always closer than you think, especially without robust expense management policies, clear spending guidelines, and proper safeguards. Once a company loses its ability to spend less than it brings in in revenue, it’s only a matter of time before that company is a thing of the past.   

We can discuss the consequences of not controlling spend but, at the end of the day, your business is either operating or not. If a company doesn’t have enough money on hand to cover current and future liabilities, it will fail.  

Who is Responsible for Spend Control?

Expense policy best practices should include a clear breakdown of who is responsible for spend control. At a foundational level, everyone within a business is responsible for spend control. Opting for affordable business lunch spots, getting scrappy when planning holiday parties, and sharing tools and technologies with other teams are great ways to keep expenses at a healthy level.  

Although spend management is a collaborative task, two key roles need to answer for any spending issues: department heads and the finance team. If the marketing team is spending way more than they planned, the head of the marketing department should be able to explain why that is. So, where does the finance team come in?

By clearly describing the best spending practices, everyone will be on the same page when it comes to spend control.

Finance professionals might not know the ins and outs of marketing expenses, but they are responsible for reviewing and finalising budgets, notifying departments that continue to overspend, and challenging payments that appear to be out of line with budget expectations.   

While the specific department heads are focused on getting the funds to move their functions forward, the finance team is closely monitoring the big picture and pulling the levers at their disposal to maintain a healthy financial standing overall. If things go wrong from a spend perspective, both the finance team and department heads will have to answer to the board. 

How to maintain spend under control

Spend control is not always easy to perfect, but with the right tips and tricks in your toolbox, it’ll become second nature in no time. If you find yourself asking how to control spending, consider the following items. Which ones are already happening within your organisation? Where are the gaps? Answering these questions will illuminate the go-forward plan. 

Budgeting & Tracking 

At the start of every year, department heads submit their annual budget requests to finance. Finance then needs to comb through the details, adjust as needed, and approve the yearly budgets for each department.  

As the year progresses, detailed budget analysis and spend monitoring happen regularly. Each month, during the financial close, finance works closely with each business function to compare the actual spend to what was budgeted for the month. This monthly process gives businesses the chance to improve spend control quickly instead of waiting until things get to a point of no return. 

Develop and distribute clear spending policies 

Spending policies create the foundation needed to control spend. By clearly describing the best spending practices and detailing things like spending limits, approval processes, and allowed expenses, everyone will be on the same page when it comes to spend control. A policy can be something as simple as asking department heads to make sure other departments don’t already have a license for a tool or software, which will avoid paying for two separate subscriptions. 

By using an expense management solution, you’ll keep spending under control whilst enhancing productivity.

Build a live spend analysis dashboard  

If the monthly budget reviews aren’t providing insight fast enough to change course, consider building a real-time expense dashboard. By giving department heads access to a dashboard that constantly reflects their spending decisions, they’ll be able to make better spending decisions quickly. No more waiting for the finance team to provide a summary; a dashboard acts as a self-service summary that can be accessed around the clock. 

Implement an advanced spend control solution 

When your business is truly ready to take spend control to the next level, integrating a SaaS solution designed to do just that is one of the first steps. Rydoo’s software can streamline and automate all your business spend-related initiatives. It not only brings all financial data into one place, but its cutting-edge features will make managing expenses easier for everyone on the team. 

Finance leaders can easily implement budgets for specific categories like teams, projects, or even a single user within the software. With category-specific spend breakdowns, finance leaders and department heads alike can see where costs need to be cut. Even further, this feature makes it possible to clearly label expenses on a detailed transaction level, making expense control easier than ever.   

By accessing all expense insights, business leaders can have higher visibility over spending trends, cost-saving opportunities, and key spending drivers, but benefits go beyond back-end support. Automated expense approvals allow teams to get rid of manual, time-consuming tasks, and scanning features make it easy to upload expense receipts directly into the platform in seconds.  

By using an expense management solution, you’ll be able to keep spending under control while also enhancing your team’s productivity by reducing bottleneck tasks that can often derail them. 

Keep Your Spend Control Under Control

In the fast-paced world of business, revenue targets and growth strategies often take centre stage, sometimes overshadowing the importance of spend control. However, maintaining a firm grip on expenses is just as important for organisational success and sustainable growth. Without a clear spend policy in place and the right safeguards to enforce that policy, companies risk everything they’ve worked for. 

It’s not just about balancing the books; it’s about fostering trust with investors, preserving brand integrity, and securing the future of your enterprise. By implementing the right spend management techniques, businesses will benefit from better financial outcomes, sustained growth, and operational efficiency. No one likes a strict budget, but it’s spend control that separates good businesses from great businesses.