In the early stages of your startup, you’re probably wearing a lot of hats. Spend management often takes a back seat as you juggle your countless responsibilities. After all, it’s barely exciting, and you probably have more demanding tasks at hand.
But spend management is crucial to your startup’s survival. In fact, 82% of small businesses fail due to cash flow problems. Managing cash flow properly can be the difference between a startup that’s barely hanging in there and one that’s prospering.
To safeguard your cash flow, you’ll need to implement a spend management platform, especially as your startup evolves from an army of one to 10, 20, or 30 team players.
In this guide, we’ll look at some of the benefits of such a platform. Let’s get started.
1. Saves Time
Spreadsheets and manual reconciliations often inspire a unique blend of boredom and exhaustion for even the most seasoned finance professionals.
The reason why? Traditional expense management processes can be time-consuming. For instance, it can take over 13 hours for all team members to process travel expenses for each business trip.
A spend management platform allows for automation, making such tedious processes much more straightforward. Want to plan a business trip? You can get everything in order in just a few hours.
Another benefit is that employees no longer have to wait for manual approval for every purchase before they make it. An effective platform digitalizes the entire procurement process from sourcing, contracting, to managing invoices, payments, and receipts.
The right system enables your employees to make their purchases faster while sticking to the company budget. At times, they can even make their purchase requests on the go using the platform’s cloud-based software.
2. Reduces the Potential for Fraud
Expense fraud is a problem that plagues most startups as they scale up. A study by the French firm KDS revealed that almost 15% of businesses fall victim to expense fraud, which can set them back $830 per employee annually.
Expense management software arms you with the tools to avoid expense fraud. It lets you regulate what employees purchase using their corporate credit cards. This helps you to make sure that employees are not abusing their corporate credit cards by charging their personal purchases on them.
3. Promotes Centralization
Various departments in your startup can be slowly chipping away at your budget. From marketing, human resources to IT, money is being spent all around. And without proper control of how the money or how much of it is being spent, it is easy for your startup to run out of money.
Spend management takes all the procurement processes and consolidates them into one intelligent process that is carried out by a single cloud-based platform that is also integrated with a digital business network.
A user can collect and effectively analyze all spend data and gain insight into the company spending across the entire organization through a centralized platform. Thus, the spend software acts as the single source of truth of the company’s data.
With expense management software, you also avoid the hassle of using too many tools to manage spending. In a recent IDC study, a whopping 61% of participants revealed that they use different tools and processes to control business spending.
The truth is, keeping track of your expenses using different systems can be a nightmare. Taking advantage of an all-in-one platform offers more security, saves on time, and helps you be more efficient.
Most efficient spend management platforms enable you to compensate your workers and settle your invoices from within the software.
Penny Inc, for instance, offers you free virtual corporate cards that can help you eliminate excess spending, reduce fraud cases, and keep track of all your startup’s purchases.
Using traditional cards can present several challenges to your finance team, as your employees are more likely to lose them.
4. Encourages Transparent Spending
More than just a budget allocation tool, it allows you to keep track of all your expense data, keeping it organized in a structured way and allowing you to recognize patterns and trends in your spending. In return, you will be able to allocate your budget accordingly so that you can get the most value out of your money.
Real-time visibility into your company’s spend helps you make wiser and smarter spending decisions. To top it off, it enables you to discover small irregularities and mistakes before they evolve into bigger problems that are much harder to deal with.
Through the software, you can also analyze how the current expenditure compares to your previously approved budgets. So, you can always remain on track and avoid blowing your budget before the year ends.
Other ways real-time visibility can help you include:
- Allows you to offer better deals to your customers — Now that you know the price of your materials, you can know where to cut costs. In return, you’ll get to offer your products at lower prices, getting a leg up on your competitors.
- You’ll be in a better position to manage a crisis — If you don’t have an idea of where your startup’s money is going, you’ll have a hard time dealing with an emergency whenever it arises. Spending visibility allows you to gain control over your expenses and identify saving opportunities. When things go sour, at least you’ll have a nest egg to rely on.
Make The Penny Inc Your Spend Management Platform
As your business scales up, you’ll need spend management software that allows you to easily automate, monitor, and control your business expenses. Penny Inc offers you all the benefits we’ve mentioned above at no cost, meaning you won’t incur any subscription, transaction, or transfer fees.
Fuel your startup’s growth by signing up for a Penny Inc account today.
