7 Spend analytics best practices for easy spend tracking
Seven spend analysis best practices
Every organization is unique, so it makes sense that there isn’t a one-size-fits-all solution to spend analysis. While the guidelines for obtaining and analyzing your expenditures across industries will be similar, each process will vary based on your specific spending habits. To begin a proper spend analysis, you’ll need to follow seven simple steps:
1. Find where your expenditures are coming from
2. Centralize your data
3. Verify your data and keep it clean
4. Simplify your data by categorizing spending
5. Analyze your spending habits
6. Deploy strategies to reduce spending
7. Forecast
Before you begin tracking and analyzing your spending, you’ll need to create a clear goal. This will help you focus your efforts better, standardize your process, and look for patterns in your spending. For every organization, the goals will be different. For example, your goals might be to:
- Identify cost-saving opportunities in specific departments or categories
- Reduce invoicing errors, fraud, and rogue spending
- Create a more efficient procurement process
- Mitigate supply chain risks and create a more diverse portfolio
- Forecast future spending more accurately
Regardless of your organization’s goals, you need to be clear, honest, and direct with your expectations. Your team needs to be aligned in order to create an efficient and insightful spend analysis process.
Why spend analysis matters
Money is the cog that keeps every organization running. Without consistent and reliable cash flow, growth halts, and businesses struggle. One critical aspect of having a strong cash flow is understanding where you are spending your money and the kinds of habits you’re creating. Understanding your spending habits will help you better budget for future expenses. Below are three key benefits from tracking and analyzing organizational spending.
Saving more money
Any time you can cut costs and save money, your finance team will be happy. Spend analysis helps you identify the sources of expenses in your organization and allows you to determine whether this spending is necessary or can be cut. When you cut unnecessary or excessive spending, you can have a significant impact on your bottom line. And these added savings can help you create a more resilient, better-prepared organization in the face of potential future disruption. Just think — the money you save can be used as investments for new software and technologies, marketing campaigns, recruitment and hiring efforts, or other expenses to elevate and grow your business.
Creating more transparency.
Data is one thing you should always be able to rely on when it comes to making decisions. But how do you know if it’s accurate or not? In order to make the right decisions, you need to be able to rely on your data. In times of crisis or change, leaders need to know that the data they’re analyzing is current and verified. This allows them to make real-time decisions on the fly so that they can adapt their teams and processes to fit the needs of the market. With spend analysis, your organization can rest assured that the transaction data and cash flow analysis is accurate, updated, and reliable. You can effectively gain a transparent view of your organization’s spending and better manage your team and budgets.
Minimizing the risk of fees and fines.
With the emergence of remote work and digital marketplaces, global trade is now a commonality for many companies. When your company starts conducting business on a global scale, ensuring your spending habits and business functions are up to compliance standards can be difficult. Without proper spending tracking, your organization opens the door to undue risks in the form of audits. That’s why it’s crucial for companies to create a standardized process for tracking and archiving transaction and expenditure records. Having proper documentation helps all parties reduce risk, eliminate penalties and fees, and keep their team and suppliers happy.
Methods of spend analysis
As more advanced technologies and software solutions emerge, digital platforms are becoming more and more popular for spend analysis. However, some organizations continue to use more traditional methods.
Paper — Organizations use paper trails and forms to track the spending habits in their organizations. Team members fill out forms for approval, which are reviewed by managers. Receipts are kept to help track spending. This method is problematic because it requires a high level of human input and manual labor which not only sucks up time but also increases the likelihood of errors.
Microsoft Excel — A step above the pen and paper method, Microsoft Excel has been a go-to tool for companies when it comes to compiling data for decades. With built-in features to help with formatting, organizing, calculating, and visualizing data, you can easily collect, store, and analyze organizational spending. But there are downsides to Excel: Inputting data into spreadsheets can be time-consuming and running and analyzing large amounts of data can be difficult.
Digital platforms — Organizations truly looking for an upper hand in the spend analysis realm should really be investing in a digital platform. A digital platform tracks, organizes, verifies, and analyses spend in a cost-effective, efficient, way. With added functions like artificial intelligence and automation, you can delegate time-consuming tasks to AI leaving you with more time.
Tradeshift: a digital platform that can help with spend analysis
Tradeshift can help you take charge of spend analysis in your organization with a suite of advanced technologies that support your company’s specific needs. With Tradeshift Go, you’ll be embracing a digital-first approach with all that entails. You can transform how you approach purchasing and approving spend in your enterprise by using pre-approved, encrypted virtual cards through a simple web app. This consolidates all your approved spend in one location and gives you a clear overview of employee expenditures.
Tradeshift is a digital marketplace used by thousands of organizations around the globe. For years, we’ve been helping leaders to create more insightful, resilient, and efficient business practices. Our customers see value in areas like:
- Heightened efficiency — our advanced technology and automation functions help reduce the likelihood of errors as well as time spent on manual processes.
- Lower costs — with insights into exactly where your money is being spent, you can make sure to eliminate mystery costs and unnecessary spend.
- Better collaboration — our software is built to adapt and works for teams of any size or industry.
- Increased productivity — with Tradeshift, you can leave the worry of collecting, consolidating, and analyzing data to the platform. Without the added tasks on your plate, you can spend more time acting strategically.
At Tradeshift, we make spend analysis a simple, cost-effective, and enjoyable experience for enterprises of all sizes. Our platform helps you provide quick approvals so you and your team can get back to the work you’re passionate about. And, with a digital-first approach, you can quickly source, store, and analyze your data on a secure network.
In today’s connected and digitized world, enterprises need to embrace digital tools to support their business functions more than ever before. With the right tools in place, you can find ways to cut costs, create better data, and better track the flow of cash in your organization..
If you’re looking to embrace a digital-first approach to spend analysis, reach out to our team of experts today. We’re standing by, ready to help answer any questions you might have.
