As more teams today go hybrid or fully remote and digital transformation efforts continue to take hold, many tedious manual tasks can be automated with the right tool.
Specifically, gone are the days of employees creating paper expense reports and attaching physical receipts. Tools like cloud-based management platforms enable automated expense tracking, approvals workflows, and reporting for dispersed teams.
In this guide, we take a closer look at cloud-based spend management, the benefits of using these platforms, and tips for successful implementation.
Understanding cloud-based spend management
Cloud-based spend management is the use of online tools where businesses can track and monitor their spending, manage budgets, and streamline procurement processes to improve financial controls.
As we’ll cover in further detail below, the specific features of a cloud-based spend management platform can vary depending on the vendor.
However, the general goal of these tools is to help finance teams get better visibility into the company’s spending habits and automate repetitive, standardized processes like purchase approvals and anomaly detection.
Key features of cloud-based spend management
Leading spend management solutions tend to share a few key features. Individual vendors may offer specialized or premium add-ons, though common features of these platforms include:
Real-time expense tracking and visibility
The core feature of these tools is a centralized dashboard that lets finance teams monitor spending data across departments, tools, and projects.
With real-time data syncs from the business’s bank account and other financial management tools, these platforms aggregate spending data across the entire organization, eliminating the need for leaders to navigate to each tool individually and manually compile data.
Budgeting and forecasting
Another main feature of cloud-based spend management platforms is budgeting and forecasting.
Budgeting tools ensure teams’ high-level financial goals are upheld, even when certain management processes are automated.
For example, teams can set spending limits for certain departments or employees or determine merchant and category restrictions to prevent unauthorized spend.
On the other hand, forecasting capabilities help teams get better visibility into future payments to support cash flow management.
Automated approvals workflows
A good spend management platform supports the creation of automated approval workflows to streamline employee spend requests and reimbursements.
Teams can configure the system so expenses are routed to the appropriate approver based on the characteristics of the request, including the purchase amount, department, and spend category.
This feature allows teams to automate the enforcement of internal spending policies, helping to uphold budget restrictions and satisfy internal controls.
Receipt capture technology
A common add-on feature in spend management solutions is a receipt-scanning tool. This way, employees can capture paper receipts on the go and submit digital copies for review.
This type of tool eliminates the need for employees to hold onto physical receipts when they’re in the field and submit them to the accounting department when they’re back in the office. Instead, they can submit receipts as soon as they make the transaction.
The platform can then compare these digital receipts against submitted expense data during the approval process to validate for accuracy.
Reporting and analytics tools
Finance and accounting teams often get incredible value from the reporting and analytics features that these tools provide.
This is where they can drill into spending data beyond top-level dashboards and metrics, uncovering valuable insights to power decision makers.
Vendors will often include standard out-of-the-box reports for all users to monitor spending patterns and budget variance. A customizable reporting or dashboards feature may also be available, though this may be a premium add-on.
Benefits of cloud-based spend management solutions
Implementing a cloud-based spend management platform can provide a wide range of benefits for teams, including:
Reduced costs
Teams often implement cloud-based spend management tools to help control spending and uncover wasteful or unnecessary costs.
For example, the tool might help teams identify subscriptions with unused seats, which they can remove to save on subscription costs. Or, simply automating certain spend management tasks can improve budget enforcement, helping to prevent overspending.
Though cloud-based spend management solutions are not implemented for free, businesses expect to generate a positive ROI from adopting these tools, in part because of the cost savings they can help produce.
Improved productivity
These tools can also boost team productivity by automating tedious, time-consuming tasks and allowing them to focus on more strategic work.
For instance, manually tracking all spending data and chasing down employee receipts can take up the finance team’s valuable time. Tasks like these become even more of a time-waste as the business grows and the volume of approvals grows significantly.
A cloud-based spend management platform improves employee productivity by automatically syncing transaction data from other business tools, enabling automatic approval routing, and supporting faster purchasing decisions to avoid bottlenecks.
Better cash flow management
Finance teams that get real-time insights into spending data can improve cash flow management.
There’s clearer visibility into normal spending patterns and upcoming vendor payments, which they can time to better align with customer payments.
Improved cash flow forecasting and management has further ripple effects throughout the organization, including greater resilience against unexpected expenses, more available capital for investment, and stronger vendor relationships through on-time payments.
Data-driven decision making
A cloud-based spend management platform offers incredible value by providing real-time spend data to power intelligent business decisions.
Business leaders can use the reporting and analytics tools from these platforms to make informed resource allocation decisions. These details are quickly available from any web-based platform, reducing friction to key data when it’s requested.
Depending on the specific tool, this might include high-level spending levels by department, granular transaction details per employee, and overall spending patterns for the entire organization.
Enhanced accountability
Finally, these tools help satisfy compliance requirements for financial record-keeping, improve audit readiness, and enhance fraud detection.
With digital audit trails around who is initiating transactions, what they’re spending on, and when, teams have the complete data needed for internal controls and an external audit.
Additionally, there’s less of a risk that maverick spending or unauthorized transactions will slip through the cracks. These platforms often have built-in fraud detection features to flag duplicate expenses or unusual spending patterns that require a closer look.
Best practices for implementing cloud-based spend management
Each team will have its own timeline for tool selection and implementation. However, the following are general guidelines for successful adoption and onboarding of a cloud-based spend management tool:
Evaluate key integrations
A cloud-based spend management tool will be most effective if it integrates with the financial and business management tools the company already uses.
These integrations help streamline data-sharing between the two platforms, preventing the need for manual data entry from one tool to another. Not only is this prone to human error, but it also detracts from the efficiency benefits that the tool is meant to provide.
When evaluating these tools, take inventory of the software the team currently uses to manage business finances, including any accounting software, receipt-scanning tools, ERPs, and more. Look for spend management platforms that integrate with them to maximize efficiency gains.
Provide adequate staff training
Employees will be more compelled to learn and use a new tool in their typical workflows if they feel like they have the proper support and resources.
Introducing any new tool or procedure can be met with pushback by employees. To help curb this, emphasize the benefits this tool will provide them, including streamlined receipt tracking and faster reimbursement.
Keep employees informed throughout the selection and onboarding process, and provide adequate training and guidance to encourage adoption.
Identify and track KPIs
Transformation leaders must set and track key performance indicators (KPIs) for the tool’s implementation to ensure it’s executed successfully and delivers the intended value.
Without qualitative data, teams might not have a good grasp on how effective the tool is and the impact that it’s having on team productivity, speed, and accuracy.
For a spend management tool, here are some metrics to consider tracking:
- Expense report processing times
- Expense policy compliance rate
- Receipt attachment rate
- Cost per expense report
- Budget variance
Future trends in cloud-based spend management
Current cloud-based spend management tools already leverage rule-based automations to streamline approvals workflows, expense tracking, and policy adherence.
However, software vendors are increasingly incorporating artificial intelligence (AI) and machine learning (ML) into their offerings to deliver more personalized, flexible, and proactive automation.
These emerging technologies allow vendors to move beyond simple rule-based systems and become tools that predict spending and forecast budget needs based on historical data. They’ll continue to help organizations flag unauthorized spending outside of company policies, but they’ll also be able to suggest additional opportunities for saving.
Plus, platforms built with natural language processing (NLP) are easier for end users to interact with, as they can use plain language and conversational chatbots to accomplish tasks like submitting receipts or checking the status of an approval.
Manage organizational spend with BILL
BILL Spend & Expense automates expense reporting so accountants can close the books faster and gain real-time insights into employee spending.
When employees spend, transaction details are captured automatically, and managers can review, approve, and sync the data in just a few clicks.
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Frequently asked questions
What is a cloud-based spend management system?
A cloud-based spend management system is a web-based application that helps accounting and finance teams manage company spend. Features may vary between vendors, but common functions include real-time expense tracking, approval workflows, third-party integrations, budgeting, receipt capture, and reporting and analytics.
What is cloud cost management?
Cloud cost management differs from cloud-based spend management, and it’s important to distinguish between the two terms. Cloud cost management refers to the practice of monitoring and controlling costs related to cloud technology. On the other hand, cloud-based spend management refers to using web-based applications to track organizational spending at an aggregate level, not just the cloud.
