Companies and investors have long been under the illusion that they can either hire a visionary leader that focuses on an innovative company culture or a financially-oriented leader who is focused on cutting costs and reaching the bottom-line.
Contrary to popular belief, it is possible to be a company at the cutting edge of innovation and be fiscally disciplined at the same time. Spend visibility is the key.
Spend Visibility Defined
Spend visibility includes the analysis in the process of collecting, cleansing, classifying and analyzing expenditure data with the purpose of decreasing procurement costs, improving efficiency, and monitoring compliance. Spend visibility goes beyond tracking spending and gives both a detailed and holistic picture of how money is moving through your company.
Oftentimes, companies do not have a real-time count of how much of their budget has already been spent. This is a huge mistake. Without spend visibility and a clear understanding of what has already been spent, companies overspend and exceed their budget without realizing it until after the fact.
It’s All in the Details
Spend visibility is so effective because it requires detailed and organized tracking of every order, from the moment the transaction begins to when it ends. In order to achieve effective spend visibility, you must have visibility into the entire spend. For example, if you hire a contractor, you track specifically which employee hired the contractor and who agreed on the contractor’s rate, quotes, contract, etc.
Such detailed tracking empowers business leaders to know exactly where their money is going and when, which allows them to justify spend related to research supplies, strategic partnerships, events, and more.
Analyze Spend to Find Savings
Having such an intimate knowledge of your company’s spending allows you to identify areas that you could be saving money. For example, you may notice that your accounting department uses software that your human resources department also uses. You can then consolidate purchases and save money. Alternatively, you may also notice that you are losing money by purchasing lab supplied and equipment as you need it, a box at a time. When you have the proper spend visibility, you can analyze your spend and you may realize that if you purchase equipment in bulk at the start of the year, you end up saving money.
Having insight into your company’s spending from a holistic and granular level, empowers you to draw insights to become more cost-efficient.
Keeping a Paper Trail
If being able to justify all your business decisions and save money isn’t enough to justify maintaining spend visibility, tax preparation might be. Keeping tracking of each transaction history, from the Purchase Order to the vendor invoice, is vitally important for your company when filing taxes.
Your financial controller or third-party auditor needs to be able to trace the audit trail behind each transaction immediately, if need be. Spend visibility enables them to do this without wasting time and resources (AKA money) along the way.
No More Wasted Spend
We get it. All of this sounds horribly laborious. Believe it or not, though, you will end up saving time and money by taking the proper steps to track spend before you are already in over your head.