The Buyer's Guide to Spend Management Software
If you're shopping for spend management software, this article is for you.
Spend management is important to the financial health and growth of your company. It’s the only way you can control spending and make sure that every dollar spent makes the most impact.
Modern spend management is all about giving employees the tools they need to make business expenses (typically cards tied to a budget) and tracking their spending in real-time to ensure they’re compliant with expense policies. This helps your company be more agile, eliminates the need for expense reports and reimbursements, and provides greater visibility into your expenses.
Even more important is the software factor that makes modern spend management work.
What is spend management software?
Spend management software is any tool that is designed to organize the entire expensing process into one easy-to-manage system.
It helps finance teams maintain control over the entire spend process by empowering them to issue expense cards to employees, control their usage, oversee transactions, automate admin tasks, control cashflow efficiently, and eliminate fraud.
Spend management software frees up employees to make business expenses without the difficulties a manual system would entail, such as delayed employee reimbursement or errors in reporting.
To choose the right spend management software, you'll first need to understand what you should expect from it.
What makes a good spend management software?
The aim of spend management is to manage cash-flow out of your organization, give your finance team maximum visibility into spend data, and control over the expensing process.
As a result, an ideal spend management software would be one designed to:
- give employees flexible access to funds,
- provide your finance team with better expense tracking and controls over transactions and processes, and
- ensure security & eliminate fraud.
A spend management software that leverages physical and virtual cards tied to budget ticks off all the boxes. With such a solution, you can leverage:
Cards with custom budgets
By default, the options available to spend management teams have been to either restrict spending and require manual approval for every transaction, or to adopt a laissez-faire policy where employees (using credit cards) are free to make business expenses without control.
The admin work required to manually verify spend data for each transaction will drag your operations to a halt. On the other hand, an unrestricted spending policy quickly runs down available funds and creates ample opportunity for fraud.
For a change, a spend management system that issues cards with dynamic budgets to cardholders empowers your finance team to put flexible limits on employee spend.
Real-time visibility and spend controls
Expense cards tied to an intelligent spend management system helps your finance team to keep track of transactions the moment they’re made. Using rules-based access, cards can be programmed to flag out-of-policy transactions such as cash advances or personal expenses, or highlight business expenses beyond certain amounts for further approvals.
A universal card rollout
Many organizations run a zero card model where employees have to spend their personal funds and then file for reimbursements at the month’s end. This creates a pileup of admin work for finance teams to manually reconcile every month.
Likewise, using shared cards creates work for finance teams manually tracking down who made which transactions and why—at the month’s end when it’d be too late to do anything about out-of-policy spending.
In contrast, spend management software that issues expense cards to individual users makes it easy to track and hold employees responsible for their business expenses.
Enhanced security & fraud protection
The spend control dashboard is an easy way to manage cards and limits spending to approved business expenses. Any cards that are unknowingly compromised or lost, can be detected as soon as an attempt is made to use such for out-of-policy expenses.
Access to cards can be revoked from the spend management dashboard in just a few clicks without having to call your bank.
Automation of manual tasks
Manual admin wastes the time and ability of your core finance team. Whereas spend management software automates spend data processing and effectively eliminates human error.
Automating manual tasks saves the need to hire dedicated finance staff to manually manage spend data and as a result, adds to your bottom line.
Zooming out, it’s easy to see that a spend management software that leverages physical and virtual cards tied to budgets is the answer.
It empowers employees with the flexibility they need to do their work and gives your finance team real-time visibility and control over the expense management process.
Choose the best spend management tool in 5 easy steps
We’ve established that a spend management solution leveraging physical and virtual cards would be the ideal spend management solution for a growth-focused company.
While that brings us closer to our goal (adopting a spent management software that works for your company), it remains to learn how exactly you can go about making the best decision given the countless spend management tools on the market.
Here’s our 5-step process for choosing a spend management software that empowers you to manage company funds smarter.
- Identify your stakeholders & the functionality they need from spend management software
- Outline your spend management needs. What benefits are you looking to gain?
- Build consensus with stakeholders
- Define your current spend management process. Where are things inefficient, or where will they not scale?
- Define your scope. How many users and how many transactions do you process periodically?
At the end of the day, the aim of software is to help people do their work better, quicker, and more efficiently. Software is built to assist the human factor.
Choosing the ideal spend management software requires that you identify exactly who within your organization will be using it.
Again, based on our experience, a universal rollout that issues cards tied to a central system equips everyone across your organization to do their best work with minimal hitches.
But, in order for this system to work, you’d need to identify what functionality each member of your organization would need from a prospective spend management system.
For instance, a marketing specialist would need to be able to make several micro-purchases (SaaS signups) without undergoing manual verifications; your PPC specialist would need a substantial budget to launch long-term ad campaigns; the CFO and your core spend management team would require a central control system where they can monitor transactions as they’re made, track down irregularities, and control spending.
Identifying all stakeholders involved in the spend management process will help you shortlist which functionalities they need to and which product ticks off all those boxes.
Your spend management needs go beyond the functionality you’re looking to realize from adopting software. They’re the pain points you’re looking to solve, the benefits you’re looking to gain, and the processes you’re looking to streamline.
Some of these might include:
- finding cost savings opportunities and controlling runaway expenses (i.e. grow your bottom line)
- giving employees more flexibility in the spend management process
- reducing or completely eliminating expense reports and reimbursements
- streamlining the spend management process
- eliminating fraud and out-of-policy spending with better approval processes
- creating a better user experience, and
- adopting a universal employee expensing model
Understanding the pain points you’re looking to solve within your company will help you weigh your options better, judging based on the value they provide.
Once you’ve got a clear vision of exactly what to look out for in a potential spend management solution, the best next step would be to build consensus with all stakeholders in the spend management process.
No one on your team works in a silo, and as such, you must ensure you build agreement on your current workflows, and how they could change by adopting a new spend management tool.
This might require that you hold a few all-hands meetings to map out how your existing approval process requires input from different members of your organization and how a spend management software would affect their work going forward. Building consensus ensures you’re choosing a spent management solution that works for your entire organization without leaving anyone behind.
Your spend management process is the sequence funds take flowing out of your organization. It’s the collection of rules, verifications, and interactions made throughout the cash outflow process.
In order to adopt spend management software that carries every member of your company along, you must clearly define your spend management process and determine if the options you’re considering can accommodate your needs.
More importantly, defining your spend management process helps you identify cost savings opportunities or where your spend management operations could be streamlined.
Outlining your current process will likewise help you understand what parts of your spend management processes won’t be able to scale so you can work around them and choose a software solution that can carry your needs along.
Most average-sized companies need a solution that enables staff to make expenses freely and offers control and visibility to the core finance team.
But as your organization’s size grows or shrinks below the average, your needs may change accordingly.
For example, while a one-person business wouldn’t need multiple expense cards, spend management quickly grinds to a halt in a large company where employees are expected to share cards or make expenses from their personal funds. Likewise, larger organizations would better appreciate employees being able to capture receipts from a variety of channels such as via OCR capture, email, web, etc., or a solution that’s built on Slack where most of their work already lives.
Choosing the perfect spend management software demands that you define your organization’s scope. How many users will be directly involved in the spend management process, and how many transactions will you be processing periodically? What volume of expense tracking will you need a spend management software to provide?
Defining the scope & project volume of your spend management needs makes it clear how much power you’d need a spend management tool to deliver so you can guarantee a seamless user experience to your end-users.
Top spend management options for SMBs
On your own, it might be a bit demanding deciding which spend management software to adopt, judging by the numerous players in the field.
Pro tip: trust the crowd. Analyzing the spend management options other SMBs are using would give you easy, to-the-point insight into the functionality and value they can offer for a business similar to yours. That way, you can make an informed choice without having to try every option out there.
Here's a shortlist of the best spend management tools for SMBs with our take on their unique product offering and why they may/may not be your best bet.
SAP Ariba (don't do it)
Along your search for the ideal spend management tool for your company, you’ve probably heard SAP Ariba one too many times.
And for good reason.
SAP Ariba is the most significant legacy player in the spend management field and has been around since 1996, before getting acquired by SAP in 2016. A billion-dollar company with lots of history might be a good bet just checking from the surface.
But before you start considering SAP Ariba, ensure you do a little due diligence. SAP Ariba is a legacy software built to meet the needs of established businesses where monotonous processes are needed to survive without much innovation. Ariba is known for slowly adopting changes that may be critical to your spend management success once you’ve stepped into their ecosystem.
As such, it might be a headache integrating SAP Ariba into your existing processes and workflows since it’s not primarily built for innovation—especially if you’re a smaller business looking to move quickly.
And it gets worse.
A little research reveals the consensus among Ariba’s customers is they are notorious for their aggressive pricing and have been known to send small businesses invoices running in the thousands of dollars for exceeding plans by a few transactions, taking a significant cut of every transaction, ignoring customer requests for redress, and generally doing everything in their power to skim dollars off their users.
Quoting Tradeshift’s Michael Lanng, “Ariba doesn’t have customers. It has prisoners.” Prisoners who’re locked into Ariba’s ecosystem because a part of their operations is tied in and there’s no easy way out.
So, should you choose SAP Ariba?
If you have a very big budget (like, really big) lots of time to tinker about with features, infinite patience to wait for features that may be old news on other spend management platforms, and if you’re able to make your way through the minefield of predatory pricing and poor customer service, then go for it!
Otherwise, you’ll have to look elsewhere.
Expensify tags itself as the receipt and expense management platform and does a spectacular job at spend controls and receipts management alike.
Expensify is a full-stack spend management tool designed around the needs of bigger companies with features such as OCR image capture, approval workflows, and a decent number of integrations with the tools you already work with—think Slack, Gmail, and Microsoft Teams.
Price-wise, Expensify’s $5 per month, per active user is a bargain for smaller companies, but the cost savings quickly disappear for larger organizations.
On the other hand, the software has a steep learning curve that might take a while to negotiate, especially for smaller organizations where there’s the need to hit the ground running.
So, choose Expensify if you’re looking for expense tracking and receipt management that’s built primarily to support larger organizations with several employees making lots of offline expenses and generating a huge trail of paper invoices. But if you’re primarily an SMB with the need to be more agile, Expensify might not be your best choice.
Emburse offers corporate credit cards, equipped with reporting and analytics for tracking down employee spending. But it still doesn’t get rid of the manual work. Emburse takes employee spending data and compiles it into expense reports that must then be reviewed before being approved manually. Without a free trial, and a hefty $15 per month, per active cardholder, Emburse’s pricing quickly gets out of hand once you have a growing organization.
Also, it uses an outdated interface that feels kind of clunky alongside competitors and lacks much-needed integrations with the tools you already work with. This ends up creating a lot of manual work moving data between apps—the very thing software is supposed to fix.
With countless competitors on the market, doing a lot of good (and some bad) things, we built Lola to be the one spend management tool that does it all perfectly.
Lola offers a simple spend management solution where you issue cards to every member of your team, tie their usage to a dynamic budget, and control everyone’s usage from a central dashboard.
Instead of prepaid cards that need to be manually reloaded periodically, or credit cards that let employees overspend, Lola issues debit cards tied to a fixed budget that can be adjusted. Your employees get the money they need, without you having to give away too much control.
Spend data is logged in your central dashboard where your finance team can control spending and discover savings opportunities.
Lola offers an unlimited free pricing plan with zero fees, unlimited users, and cards for all your users.
Lola provides a solution built for SMBs and bigger organizations alike, so you can have employees spending flexibly, without losing control over the entire process.
Choosing a spend management solution that works for your entire organization is fundamental to your success since it’ll determine:
- how flexible and productive your employees can be,
- how much control your core finance team can exercise over the spend management process, and above all,
- how efficiently the spend management process can run.
Lola is designed to equip companies of all sizes to be more agile in their operations, access more visibility into the spend management process, and eliminate fraud. With a spend management system built on physical and virtual cards tied to a budget, employees can enjoy the freedom they need to be more productive—all without sacrificing finance team oversight.