With the start of 2024, companies become busy with planning and budgeting their expenses for the year. As a part of that, it is important to reflect on their historical expense data. Only when you evaluate your financial data of the previous year, can you properly estimate your spending through near-accurate forecasts. To avoid unexpected expenses that upset cash flow, companies must be as efficient as possible in analyzing their past transactions,
In traditional expense setup, expense management processes are handled manually. It involves paper-based receipts, excel-based calculations, and folder-based documentation. The tedious and repetitive process doesn’t just consume unnecessary resources but also accounts for multiple errors. However, the major issue with pen-and-paper processes is the lack of visibility into expense data. For this, companies will have to digitalize their expense management system using a spend analytics platform.
Let’s see how spend analytics tools help you optimize your expense management system.
Spend Visibility – How does it work?
An expense management system gives you an accurate picture of your finances across departments and expense categories. The process of getting your expense information involves AI/ML algorithms to gather, process, analyze, and report. These tasks can be classified under three components-
1. Data Harmonization: This involves capturing data from multiple channels and platforms to create a centralized hub for all the expense management data.
2. Spend Analysis: In this section, the collated data is processed to generate insights so that finance teams can make sense of their spending data.
3. Report Generation: All the data analytics and insights produced are now represented in easy-to-understand graphs and visuals. It helps stakeholders make data-driven decisions.
The expense management system helps you view the entire purchase cycle in a single flow. With visibility into the financial outlook, businesses can identify irregularities and make better budgeting decisions.
Better Visibility with Expense Management System
Finance leaders can better control their expenses when they have a good view of their business transactions. It helps them plan proper budgets and set up guidelines for managing corporate expenses. However, companies with clear visibility into their expenses have two key advantages.
Identifies cost-saving opportunities and inefficiencies
With better visibility into your business expenses, you can identify categories or departments where you can reduce spending and relocate funds for more critical areas. It ensures that strategic deployment of money drives your long-term business growth. Using the data, you can single out vendors that are costing you more, say flight tickets, and replace them with more favorable ones.
You can also negotiate better deals or get exclusive discounts for an expense that appears too frequently on your expense list.
Controls and optimizes resource allocation
At the beginning of the year, stakeholders allocate conservative budgets to each department or expense category. However, it is rarely accurate, that is, for some departments, the funds fall short of requirements, and for others, it is the other way around. You can replace the guesswork by looking at the historical data and making data-driven fund disbursement. For example, instead of fixing a budget for a business trip, you can look at the data for earlier trips for effective budgeting.
Get Real-Time Visibility with Zaggle EMS
In the current competitive world, an expense management system is non-negotiable for businesses. It empowers companies to make informed decisions through accurate forecasts and efficient strategies. To maximize access to expense data, companies must use an expense management system like Zaggle EMS.
Zaggle EMS is the most feature-rich expense management software that offers advanced analytics and insights from your financial data. It empowers you to automate expense reporting and reimbursement processes. You can eliminate risk and fraud from your expense management system with greater visibility into spending with Zaggle EMS.
To learn more about Zaggle EMS, click here.
