What is Spend Visibility and How to Optimize It

Are you a business leader? A procurement professional?

Then odds are you know how important it is always to keep an eye on your finances.

How much are you spending? Where are you spending the most? 

Knowing the answers to these questions can give you a precise understanding of where and how your money is being spent. 

But what's the best approach? Is there any strategy to make sure you're gaining full visibility into your spending habits?

The answer is yes and it's known as spend visibility.

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What’s Spend Visibility?

Let's start with the definitions.

Spend visibility can be understood as the ability businesses gain to see and analyze all their expenditures in real-time. 

It's limited only to just knowing how much you're spending but it also provides you with insights into categories of spending, vendor relationships, and cost allocation. 

The result?

You can make better decisions aligned with your financial status and goals.

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Spend Visibility in Financial Management

And speaking about finances, it's no wonder that to have strong financial management of your operations, you have to know what exactly is happening with the company's spending behavior. 

Spend visibility allows you to: 

• Track expenses in real-time: This is how you can follow the money exactly the moment it is being spent. 
• Identify areas where costs can be reduced: Especially in procurement where costs can make a huge difference, discovering cost-saving opportunities can increase your company's finances.
• Improve budgeting and forecasting: When you have to make a decision related to your company's next move, whether it's a new project or a new market, nothing is better than knowing what's happening with your budget now and in the future.
• Enhance compliance and reduce fraud risks: Risks are part of any business reality and some of them can be prevented by having a deeper knowledge of your finances and spending patterns. 

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Why Accurate Spend Visibility is Important.

Here's the truth 

Without accurate spending visibility, it's difficult to make strategic financial decisions. 

Think about it, if you don't know where the money is going, you could be overspending in certain areas or missing opportunities to negotiate better deals with your suppliers.

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More precisely, accurate spend visibility helps with:

Cost control 

Knowing what's happening with your company's money is critical if you want to detect any unnecessary or redundant expenses.  For example, maybe you're spending too much money on a process that could be easily automated, saving you time and optimizing your finances.

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Better supplier management 

Visibility into your supplier's spending patterns allows you to really check if everything is aligned with your requirements or if it's needed to negotiate better terms. Maybe you haven't realised and some of your suppliers are costing more of what they're bringing to your business. 

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Compliance 

Transparent spending reduces the risk of fraud, regulatory issues, and financial management so you don't have to worry about missing key regulations or imminent risks.

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6 Key Strategies to Increase Your Spend Visibility 

Implement spend analytics tools

How can you know something for sure without a proper analysis?

Current options of financial or procurement software provide real-time dashboards and reporting features. 

Investing in the right analytics tools can help you monitor transactions, flag potential issues, and generate insights relevant to your business. 

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Standardize expense tracking processes

Another key aspect of any good strategy is to standardize your processes.

Establish clear guidelines for how expenditures are reported and categorized. This includes defining expense categories, ensuring consistent reporting, and setting approval workflows to maintain control over spending.

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Integrate financial data sources

Few things are more bothersome than searching for information only to find it scattered across multiple places. 

Be sure that all your company's financial data is consolidated in a single platform to eliminate silos. Integration with accounting, procurement, and expense management systems helps provide a holistic view of spending across different areas of the business.

Promote transparency

Build a culture where financial accountability is a priority. Providing your staff with access to spending data relevant to their roles can improve your approach to important decisions and encourage responsible spending.

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Artificial intelligence and automation

Artificial intelligence is here to say, so why not use it to your benefit?

AI tools can analyze historical spending data to predict trends, let you know about suspicious activity, and suggest cost-saving measures. Automation can also streamline processes like invoice processing and approval workflows.

Review spend data

Conduct periodic audits to ensure data accuracy, detect discrepancies, and identify new opportunities for cost optimization. Establishing a continuous review cycle ensures that financial management practices remain effective.

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The Benefits of Spend Visibility 

• More accurate budgeting: With better insights, you can allocate resources more effectively.
• Increased cost savings: Identifying wasteful spending leads to significant financial improvements.
• Stronger decision-making: Real-time data helps you make informed financial choices quickly.

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Issues Impacting Spend Visibility

Data fragmentation

Remember what we said about disorganized data? 

Financial information may be spread across different departments, systems, or software platforms, making it difficult to build a clear picture of what's going on with your spending. 

The more integrated your data is, the simpler is going to be to have access to necessary information 

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Lack of standardized processes

And speaking about messy things. 

Inconsistent reporting and tracking methods make it harder to gain that precious full visibility into where your money is going. Establish processes that are easy to understand and share them with your team so they know what steps and guidelines are important to follow. 

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Resistance to change

It happens sometimes 

Hesitance to adopt new things is part of our human nature so when it comes to working with new financial management processes or tools, your team can feel doubtful. 

The solution?

Keep your communication flowing and open and provide training if needed. 

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