Why spend management is crucial for business survival
The COVID-19 pandemic represents a major challenge for businesses that were already under
pressure even before the crisis. According to research from ILO, the pandemic forced 81% of businesses in Asia Pacific to adapt their business operations or service delivery to the pandemic and protect the enterprise—almost half dismissed or had plans to dismiss workers.
The study also found that insufficient cash flow was the biggest problem resulting from COVID-19, affecting 60% of businesses globally. The crisis spells trouble for micro and small businesses, in particular, whose employee salaries and business operations hinge on predictable cash flow.
While COVID-19 is a once in a generation disruptor that’s impossible to completely prepare for, it nonetheless underscores the importance of building business resilience and planning for worst-case scenarios.
Kicking digital transformation into overdrive
To jumpstart recovery, CEOs in Southeast Asia are investing heavily in digital transformation, rethinking their portfolios, and speeding up decision making and execution through data analytics. This comes on the heels of 40 million new Internet users and a 36% increase in new digital services consumers of digital services (e.g., eCommerce and streaming) in the region, according to a Bain & Company report.
Another way that businesses in Southeast Asia could survive—and even thrive—in these uncertain times is through spend management.
What is spend management?
Spend management refers to a broad range of practices and processes that enable businesses to make informed procurement and sourcing decisions based on their bottom line, operational efficiency, and goals.
In other words, spend management helps you spend wisely. It allows you to minimise costs, maximise the value of your business expenditures, improve relationships with your suppliers, and mitigate financial risks.
How spend management helps businesses survive and thrive
While spend management is a broad topic that encompasses strategic sourcing, spend analysis, and supplier relationship management, its core benefits (at least those closely related to business resilience) revolve around two things: cash flow and business intelligence.
1. Improves cash flow
Getting a better handle on what goes in and out of your company’s accounts is vital to protecting your bottom line.
However, keeping tabs on your cash flow health can be tricky because of poor cash flow visibility—a problem that has hounded businesses even before the pandemic. According to PwC’s 2019 Global Treasury Benchmarking Survey, “More than a quarter of global cash is not visible to corporate treasury on a daily basis.”
In fact, a company with an unhealthy cash flow can still look like it’s doing well and making money, only for funding to suddenly run out—this is also the top cause of startup failure.
Without full visibility of your payables and receivables, it’s difficult to see if your company is liquid enough to survive possible disruptions. It also makes it impossible to figure out where you can reduce your spending and save money.
Spend management gives you better visibility of all your payables and receivables. For example, visibility of your software expenses or subscriptions helps you identify products that overlap with each other or have become irrelevant.
2. Provides better insight into the business
In the increasingly competitive post-pandemic business landscape, companies that can quickly plug leaks and reduce inefficiencies in their spending will be the ones that thrive.
In many businesses, spending tends to be siloed in different departments like marketing, HR, sales, and operations. This means that spend data is also likely to be scattered across different payment types and methods. In organisations that have yet to digitalise their expense management systems, data will also likely be fragmented and stored in the form of hundreds, if not thousands, of receipts.
But by collecting, standardising, and analysing your spend data through digital receipt capture and automated invoicing/payments, you can create detailed digital trails for comprehensive reporting. This, in turn, enables you to make strategic spending decisions.
And with more spending insights, you can reduce spending in areas without affecting your performance and generate savings that can be used to grow other parts of your enterprise.
Why you should digitalise spend management
The concept of spend management is by no means new. Your organisation may even have some kind of spend management system in place right now.
What is new is the advent of new spend management technologies, which provide not only full visibility of your spending but also do it in real-time. Efficiency is the name of the game with digital spend management solutions. Digitalising all your receipts, invoices, and quotations brings all your expenses into a single dashboard, giving you a clearer, more unified view of your company spending.
And with most spend management software now based in the cloud, your business will always have instant access to your data anytime and on any device (authorised by your organisation, of course) connected to the Internet.
Here’s a closer look at the core benefits of switching to new spend management software.
Supporting operational efficiency and growth
Digital spend management solutions typically come with a host of automation features that let you automate repetitive labour-intensive tasks, such as recording receipts and processing invoices.
Spend management automation not only saves a substantial amount of time managing your expenses but also reduces human error and the risk of employees deviating from your expense policy.
For instance, employees at Mitsubishi Estate Asia (MEA) were able to spend 50$ less time preparing expense reports and managing spreadsheets when the company automated their expense-claim management system using SAP Concur. This freed up time for staff members to focus on delivering their targets.
MEA’s spend management platform also gave them valuable insights to create more data-driven expense policies to further improve efficiency.
Enabling businesses to focus on their purpose
Globe Telecom, a telco provider in the Philippines, worked with SAP Concur to solve their biggest challenges on travel and spend management. The company migrated to a new easy-to-use system spend management system that gave them complete visibility of their entire expense management workflow. By solving their travel and expense challenges, Globe was able to focus on running their sustainability program throughout the Philippines.
The use of SAP Concur’s spend management solutions also increased Globe’s employee satisfaction. Just four months after deployment, the entire company had shifted to the new system. And Since SAP Concur offers built-in integrations with other platforms, the shift allowed Globe to form partnerships that further helped improve customer experiences
Spend wisely and plan for resilience
When done correctly, spend management can do wonders for your company’s bottom line and business resilience, protecting you from unexpected cash flow disruptions. Although reducing costs is one of its primary goals, spend management isn’t just about penny-pinching. It’s also about optimising your spending so you get more value from your expenditures.
And by digitalising your spend management, you can introduce automation and real-time data analytics to your expense management processes.
SAP Concur can help businesses survive today’s challenges and thrive in tomorrow’s uncertain business landscape. Get in touch with SAP Concur today to start spending wisely, plan for cash flow challenges, and achieve long-term business resilience.
For more on our #BusinessSpendManagement series, click here.