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Spend Management For Medium-Sized Businesses

April 13, 2012 | Comments: 0 | Views: 121

Although it can involve many complicated factors, the basic principle of spend management is very simple - it refers to the methods that a company uses to control and optimise the money that they spend. It encompasses several different processes, including spend analysis, commodity management and strategic sourcing, which work together to paint a clear picture of business efficiency. Although it is often associated with large, multinational enterprises, spend management can also be an invaluable tool for medium-sized businesses.

At a time when economic conditions and aggressive competition are putting pressure on businesses, it's natural that business managers will be looking to cut costs and improve cash flow. Putting an effective spend management system in place is the only way to achieve completely transparent, industry-wide visibility, which could give you business the advantage over your competition that it needs to save money and grow.

This is not always easy, however. In some cases, a lack of suitable technology or expertise means that initiating an effective programme of spend management may appear to be all but impossible. At the same time, few medium-sized businesses clearly understand how much they squander on suppliers and services, and this lack of visibility can have huge effects on their bottom line.

Many mid-sized businesses do use professional spend management techniques when it comes to handling direct expenditures. However, when it comes to indirect spend, data responsibility is often put in the hands of separate business divisions. The people making purchases are generally not experts in procurement and may fail to use strategic sourcing to discover savings when sourcing things like repair, maintenance and operating supplies. Because of this, many departments are unable to track and report on these spends and, it follows, many medium-sized companies have little control over indirect expenditure.

With this in mind, we may ask ourselves, are there any spend management solutions available that are quick to implement, require no special technology and are easy to monitor? Are there any, in other words, that would suit the typical medium-sized company?

Cloud-based spend management services can open up this useful tool to medium-sized businesses. They require no complicated installation, no additional technology, and reduce the cost of managing expenditure by a significant factor. These systems may be able to extract, clean and classify data without the need for expensive or complicated methods, and will generally reduce the time taken to complete these processes drastically. What's more, if the spend management system is collaborative, it opens up a new approach to data ownership - each department is encouraged to use standardised data practice, reducing the risk of mistakes and misunderstanding.

Traditional cost-cutting involves making budget cuts across the board, but cloud-based spend management allows businesses to specifically and strategically target the purchase of goods and services to reduce expenditure.

But successful deployment of spend management also requires a shift in the way a company conducts its business. It can be difficult for departments to relinquish control of certain data marts. But by getting everyone involved in managing expenditure, a shift in corporate culture can be achieved, resulting in improved operational efficiencies, better share prices for stockholders and increased cost savings across the board.

Cloud-based spend management solutions helps medium-sized businesses to discover cost savings. Several leading spend analytics companies offer these 'software-as-a-service' solutions.

Source: EzineArticles
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