Even in the digital age, estimating where the cost drivers are in a company in just a few clicks is not standard. Company-wide spend management can help keep track of all expenses and ensure efficient processes.

Creating and maintaining a standardised cost overview is a real challenge. This is evident in the annual tax return for private individuals. Most documents are compiled quickly, but then the infamous “shoe box method” is used. A jumble of receipts, invoices and notes hinting that some invoices are still floating around somewhere digitally. This situation can also be transferred to companies where various departments generate costs that have to be shown into a standardised expense overview.

This is precisely the overview that spend management provides for companies. It is a proven method of managing all supplier relationships and operational costs, from services rendered to the procurement of raw materials. This ensures that all invoices and receipts for preparing annual financial statements are booked correctly. A well-organised spend management system records all incoming invoices and ensures all suppliers are paid in accordance with the contract. This simplifies the work not only of the accounting department but also of the purchasing department.

Spend management is not yet on the agenda

Especially in purchasing, it is becoming increasingly apparent in everyday life just how difficult it is to keep an eye on all of the expenses. A recent study Study of the Bundesverbandes Materialwirtschaft, Einkauf und Logistik e.V. (BME) has shed some light this topic and clearly shows how important electronic solutions are in this context. More than half of the purchasers surveyed are still struggling with mountains of paper and admit to being far away from what is technically possible. “The importance of using electronic solutions to optimise procurement activities has not yet been recognised in every company. This particularly applies to small and medium-sized companies,” emphasises BME Managing Director Dr. Silvius Grobosch. “The purchaser is in particular demand here. Because he is the driver of this process. After all, it’s about nothing less than the digital transformation of entire value creation and supply chains.”

According to the study, companies are increasingly relying on a fully automated exchange of data and documents to optimise their value creation chains in purchasing. The most important prerequisite: the exchange must work in both directions. This means that both the supplier and the purchasing company must create the necessary technical prerequisites – then the data exchange can ideally even take place without any additional verification. However, efficient spend management often fails precisely because suppliers are unable to map standardised electronic processes. According to the respondents, smaller suppliers, in particular, are not technically in a position to connect to different customer systems.

A glimpse into real-life practice clearly shows that well-organised spend management needs a digital, company-wide and, above all, intercompany basis, which is not created with electronic procurement alone. In order to find out which foundations must be laid within the company, all of the departments involved must first of all become aware of the goals of spend management. The trade magazine ‘Einkaufsmanager’ has compiled the „10 Key Objectives“ achieved using spend management. This includes, among other things, that apart from introducing standardised processes throughout the entire purchasing and procurement system, orders may only be placed with approved suppliers. The overarching goal can be seen as relieving the burden on purchasing by reducing operational activities, leaving more time for strategic issues.

E-procurement systems can help reduce operating expenses and make procurement processes digital and standardised. With their solutions, system providers such as OpusCapita enable the analysis and control of all processes for procurement as well as the administration and optimisation of all expenses. Cost saving plays a secondary role; the focus lies on process optimisation and increased efficiency. This can be achieved, for instance, by using online procurement platforms and networks. As numerous suppliers are available in one place on platforms, purchasers can handle procurement processes in a central, standardised and digital manner.

Digital solutions support spend management

Purchasers can, for example, connect directly to the „B2B Network Unite“ via an API interface and do not have to leave their familiar purchasing environment in order to buy online from preconfigured suppliers. In addition, their own suppliers can be added to the Unite network and conditions that have already been negotiated can be individually implemented. This not only fulfils the requirements of spend management for closed processes, but also ensures transparency and the control of expenses. Purchasing can access a large number of suppliers via a central access point without increasing the number of creditors in accounting. That „Single Creditor Model“ makes it possible to order from different suppliers via Unite and receive a collective invoice, meaning that only one creditor has to be created and maintained in the accounting department. This significantly minimises the control-related workload involved in spend management. Platforms are therefore a good complement; however, the basis for efficient spend management must be created within the company. It is the same as with tax returns: Once you get started, implementation is quicker than expected and it’s certainly worth it in the end.