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How does a spend management platform help in achieving business objectives?

Understand how a spend management strategy and platform can result in better avenues and objective achievement for firms.

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Why is spend management a core business function?

Spend management is an essential function and element that allows businesses to pave the way for objective achievement. For businesses to achieve objectives, the main barriers are expenditure and cash outflows that stand in the way of achieving financial and growth objectives.

The main features that a spend management system encompasses are:

Expense tracking

The system allows the tracking of all expenditures incurred by the company, categorising them through departments, projects, expense types, economic factors, and market conditions.

Budgeting and forecasting

The system is heavily data-reliant which enables the establishment of budgets and provides tools to forecast future finances based on historical data and financial trends.

Approval workflows

The software is open and visible throughout the organisational hierarchy; this facilitates transparency and visibility which ensures discipline within the organisation.

Vendor management

This feature manages communication and relationships with vendors, tracks performance, and negotiates contracts with suppliers aimed towards spend optimisation.

Purchase orders

This is the creation, tracking of, and management of purchase orders, which ensures all enterprise resources follow the requisition algorithm with minimum wastage and error.

Reporting and analytics

The provision and compilation of detailed reports and analytics based on the firm’s financial trends; curates insights towards saving and financial optimisation.

Why is spend optimisation important to achieve objectives?

Businesses establish objectives to create a sense of direction, derive a point of focus, set a tone for internal stakeholders, prioritise resource allocation, increase efficiency, and measure progress and scope.

Businesses have 4 main types of business objectives and they are

Strategic objectives

These are long-term focus objectives based on the long-term vision and direction of the organisation. The objectives placed tend to be broad goals that define what the organisation aims to achieve in the long run. Most often strategic objectives revolve around expansion, innovation, market positioning, and growth tactics.

Financial objectives

Financial objectives are monetary targets and performance metrics placed by organisations; these are the most common types of objectives. Typically they include sales revenue maximisation, profit maximisation, effective cost management, shareholder value satisfaction, financial stability, solvency, and sustainability.

Operational objectives

These are narrowed-down and very specific goals relevant to departments and organisational processes, which tend to be short-to-medium-term goals. Operational objectives focus on enhancing efficiency, optimising processes, improving quality standards, streamlining workflows, and improving productivity and customer satisfaction.

Tactical objectives

These are medium-term goals that transform high-level strategies into implementable steps. Tactical objectives fast-track the achievement of strategic goals, Tactical objectives include launching a new product line, market segmentation, or restructuring operations to fit in line with strategic objective initiatives.

How does spend management align with business objectives?

Financial objectives are set first and foremost to achieve other objectives. The most common approach taken to achieve financial objectives is reducing expenses and increasing income avenues.

By effectively managing spending, businesses can optimise costs, reduce unnecessary expenses and wastage, and improve profitability. Leveraging spend management systems, businesses can make use of data and analytics to make informed decisions in achieving objectives.

Spend management assists with strategic planning through the provision of insights based on financial allocations. Spend management is likely to discipline firms and allocate funds to areas that align with strategic goals.

Making use of spend management tactics allows firms to identify and mitigate risks associated with overspending, supplier or stakeholder issues, or unexpected cost volatility. This allows a firm to ensure its prime focus is devoted towards stability and resilience.

Effectively equipped spend management motives involve the evaluation and management of supplier relationships. This builds a strong bond with suppliers which can lead to better pricing mechanisms, quality, and service provision. In the long run, businesses can benefit from supplier-based insights.

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Get assistance from Kronos Group for the development of a spend management system to align with objectives

Kronos Group’s expertise lies in providing financial consulting services which has been recognised in Europe and across the world. Our experience lies in assisting and guiding businesses to take new avenues for achieving objectives through optimised strategies, processes, and technologies.

Let us assist you in diving into spend optimisation which leads to streamlining operations, achieving objectives, and disciplining and taming finances through the implementation of effective strategies and processes.

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FAQ

What do you need to know?

What is a spend management platform?

A spend management platform is a software system that aims to monitor, analyse, optimise, evaluate, and manage business financial performance.

 What are the spend management activities?

Spend management activities revolve around expense identification, expense data centralisation, data verification, spend categorisation, data analysis, strategy definition, and forecasting of plans towards the achievement of objectives.

What do you mean by spend management?

Spend management is a set of practices that ensure organisations make procurement and sourcing decisions in the interests of business objectives. Spend management is about value maximisation catered towards decreasing costs, mitigating financial risk, and improving supplier and stakeholder relationships.