Managing all the payments and transactions in your business can be a complex task—especially when there are different processes of managing your money and various software to aid in this.
A common query for many businesses is to know the difference between spend management and expense management.
These two processes also commonly have software to accommodate them, which you can usually find being offered by expert platforms – such as Mesh Payments, for instance.
In light of this, we’ll take you through what expense management and spend management is, as well as what you should look for when purchasing software for each one.
What Is Expense Management?
Expense management is a well-known term that’s been part of the business structure for many years. It’s the process of tracking and recording all business expenses within your company.
This term focuses more on any payments made by employees or members of the company, which then need to be reimbursed as a business expense.
Often, employees may be required to make a payment out of their pocket, and these transactions will be for the betterment of the company as a whole. Therefore, the company usually reimburses this payment, as it was on the company’s behalf.
Examples can range from software as a Service (SaaS) subscriptions for certain business teams to employee travel expenses.
What You Need In Expense Management Software?
One of the best ways to manage these expenses more effectively is to incorporate expense management software into your business. Here’s what you should look for in your chosen software:
- Complete visibility – You must be able to have a complete birdseye view of all the transactions happening in your company. Pair this with real-time data, and you’ll have knowledge of every business expense and all the data surrounding it.
- Payment versatility – With the right software, you can also choose the best payment methods for all your expenses. For instance, you can use virtual credit cards, which will automatically track and upload expense data with every payment.
- Easy organization – Organization is key, so you want a platform to help you structure your data as it suits you. For example, you can categorize things like travel expenses in their own section.
What Is Spend Management?
Spend management is a much more recent term than expense management. It’s the process of managing every single payment and transaction occurring in the business.
This includes managing business expenses, but also every other form of spend that takes place. Companies are continually making payments of all forms each day, so it’s important to have a process that can effectively handle spend in its entirety.
Essentially, it’s a more ‘bigger picture’ form of managing corporate spend, as opposed to just focusing on managing business expenses.
This can include things such as bill payments, business expenses, credit card transactions, company resources, and much more.
What You Need In Spend Management Software?
As with expense management, spend management can be significantly improved in your business by incorporating expert spend management software into your process. Here’s what you need in your software for peak optimization:
- Spend controls – You need to ensure your platform has effective spend controls, to manage every payment better. For instance, you could set spend limits on company cards to help keep certain areas of your business within a set budget.
- Streamlined processes – Your software should also have the necessary tools to speed up payment processes and improve efficiency. For example, you are using automated approvals for any transactions that fall within specified criteria.
- Detailed insights – Optimized spend means being as cost-efficient as possible throughout the business. Your software should therefore offer detailed spend insights to show you where you can improve corporate spend, such as showing cheaper alternatives to services.
Both spend management and expense management can be crucial components of an effectively run business. Therefore, use this information to determine which process is right for your company, and incorporate expert software to boost how you conduct it.