A Problem, and an Opportunity
Each day, companies spend their finances on various products and services that they believe are crucial to business operations. This is known as variable spending. It comes in different forms, some of them being:
- Office supplies
- Software subscriptions
All of these purchases have two main things they share in common – the expense is tactical, and it is made at the individual's discretion. The spending is not a problem in itself because some, or even most of these products or services that are in use will be needed to keep the company's operations running smoothly.
The issue lies in the monitoring. As companies continue to grow, it becomes more and more difficult to track variable spending. When the main focus is that of growth, companies usually end up ignoring their spending policies. It also becomes more difficult for finance teams to enforce rules on the spending because there are too many individuals in companies who have the authority to make purchases. The old school, tried and tested send management tools can act as a hindrance instead of helping companies regulate their expenses.
Loss in profit is not the only problem in this case. The more companies try to track their variable spending, the more administrative work it leads to, and admin work has no end.
Introducing Variable Spend Management (VSM)
Variable Spend Management is the best and sometimes considered to be the only way companies can gain complete as well as real-time control over all their variable spending within the company.
Variable Spend Management lets companies do four things:
- It empowers employees and other departments to spend on behalf of the company
- It gives finance teams total control over company spend - before and after payment
- Companies can now gain complete and instant visibility over their funds and spend that are taking place at multiple levels - individual, department and company-wide
- It optimizes the reconciliation and accounting processes, and at the same time it maximizes the existing software's efficiency
- Tracking individual spends in any company is a long and never ending process
- Companies can use traditional tracking management tools to monitor their spends but it usually becomes a hindrance
- Variable spend management allows companies to efficiently track their spends and optimizes accounting processes