Managed expenses are those that are authorized and have the top management involved from start to end. This means sourcing, finalizing, collecting, arranging, and signing, all these steps have the company representative involved.

Managed expenses are controlled and contracted spends that have a clearly laid down procurement cycle. 

Unmanaged spending is non-contractual and does not have a procurement cycle. This means these are spends generally made in emergencies or unplanned scenarios. There is no negotiating or signing for these spends.

For example, your employees make an unexpected expense on their business travel at their own discretion; that is something the finance team didn’t plan and accrued on the go.



Operating spends are the ones related to the core of the business. These expenses are daily or day-to-day operational expenditures that are necessary for the business's functioning.

For example, the cost of raw material procurement, marketing campaign execution expenses, sales initiative costs, etc. 

Contrary to operating expenses, these are not directly or indirectly related to the core business operations. Non-operating expenses are recorded separately so that the decision-makers can have a clear view of how much it actually costs to keep the business operations running.

Examples of this category are debt interest payments, inventory write-offs, lawsuit settlement expenses, etc. 

Fixed spends are those that do not depend on the change in volume of production or goods or sold services. If production increases or decreases, these expenses are still fixed and have to be paid no matter what.

For example, business insurance, office rent, warehouse maintenance costs, employees’ salaries, etc. 

Opposite to fixed spends, these spends vary with the fluctuations in production and services provided. This means variable spending will rise with the increase in the volume of production and vice versa.

For example, raw materials costs, packaging expenses, delivery charges, sales commission, etc.

Without a proper understanding of how the business expenses are incurred, you will not be able to devise proper strategies to deal with the relative issues.

Hence, an advanced spend analysis structure is required, wherein you evaluate the expense type, people making these expenses, the frequency and importance, total expenses made each month, and the loopholes that need to be fixed. 

After spending analysis comes budgeting and planning. Once you have the numbers and data before you, it is time to start dividing the company funds. This means you will have a lot of specific budget amounts for each department or project.

To implement the budget and budget usage policies, you will also need to plan. The analysis data will give you the base on which you will create plans for future moves of the business.

Related read: What is financial planning and analysis?



Next in line is procurement and sourcing. With a budget and implementation plan in place, you can begin the process of procurement and sourcing.

This means you start getting the necessary raw material or supplies for further manufacturing or sales. You have to research and choose the best providers for sourcing the business requirements.



Moving on to purchase approval and control. After you have decided on your vendors, the requirements, and the pricing negotiations, you have to get approvals for the purchases. This part requires the managers or department heads to approve the expenses, and also, they have to have control over the spending.

For example, the marketing team has to purchase a software tool for tracking website traffic, and the manager will have to approve or reject the selected vendor according to the expense rules, plus have visibility and control over how much is being spent. 

The spend management process also includes taking care of the vendor invoice payments. This means there should be a comprehensive process of management that will receive the invoice to match the details, get approvals, integrate with accounting software, and finally make the payment. These stages of making vendor payments and reconciliation can be termed as the invoice-to-pay process.

Only when the invoice is processed according to the workflow will the company have the relevant data in the expense reports.

Suggested read: What is the vendor payment process and how to automate it?

Next is an extremely important element called expense tracking and reporting. All expenses made have to be tracked and recorded for further data analysis.

This is efficiently possible using an automation system, wherein the expenses are automatically tracked in real-time, and the required data is entered into an expense report that can be accessed anytime. 

You might also be interested to read: Paperless expense reporting to streamline expense management



What spending, plans, and strategies are used for business growth will possibly have risks and dangers associated with it.

Spending more than allotted on a particular project might lead to scarcity of funds for other activities, or investing in an asset might not bring out the desired returns.

All these kinds of risks have to be anticipated and managed properly. This is where compliance and risk management practices come into play. 

Along with client relationships, vendor relationship management is also essential to take your business forward. Keeping your vendors happy will reap benefits for your company. Pay your vendors on time, keep an open communication channel, and be flexible with payment solutions.

This helps in negotiating the terms of the contract further down the line and also getting discounts for cheaper purchases. Everything ultimately helps in maintaining favorable supplier relationships. 

Effective spend management will not only help your business cut down costs but will also aid in recognizing revenue generation opportunities. Along with this, you’ll be able to mitigate risks, make better growth decisions, allot resources better for efficiency utilization, and overall achieve better financial stability. 

As mentioned above, there are various steps and processes involved in the spend management procedure.

Completing all the tasks within a fixed period of time to complete the further steps and get the required results on time is difficult. You will require a huge team of employees working constantly to keep updated data for budgeting and planning purposes. 

It is natural for humans to overlook tiny mistakes or details when dealing with huge volumes of data regularly. Repetitive tasks can be tedious, and the chances of human errors increase.

For example, your finance team employees are supposed to collect all expense receipts and reports from all departments, combine everything together, and make a single expense report from those. This will include an endless amount of numbers and details, and overlooking some miscalculations is normal when done manually. 

As the whole data gathering and processing takes a lot of time, there is no real-time expense tracking possibility. The managers will only get to know of the expenses when it comes to their desk or approval, and the business heads will only know everything at the end of the month.

Correction of any glitch or even a new plan implementation can only happen after the end of a record period (month, quarter, year). There is no clear visibility into the spending data. 

As mentioned above, plans and strategies can only be implemented once you have all the sorted and organized data before you. This takes away the possibility of instantly reacting to market changes and turning situations in favor of the company.

Scalability becomes limited because all the documents and information required to expand to a new market will take months to compline, and plan implementation will take another few months. 



Manual spend management does not allow centralization of the company information. All departments will process their expenses differently and privately. It then goes to the finance team for approval and checks.

Maintaining a centralized database with all updated information manually is nearly impossible. There will always be some document or some data that will be missing. 



Manual spend management opens up your books and expense reports to fraud. Amendments in reimbursement numbers or department expense data can be easily made.

This way, you do not get accurate information, plus fraud amendments can drain the company funds like water. Compliance and audit management will take ages to complete.



Now, there is only so much that your finance employees will be able to calculate and infer from the collected material. To run a successful business in today’s world, you need quick and advanced analytical insights to make the correct decisions.

Even if you consider that your employees can learn how to calculate and analyze all the new important matrices, it will still consume a lot more time, and accuracy is not guaranteed.

Without proper tracking, recording, and management of expenses, your employees are prone to spend more than required.

Overspending is a common problem with manual spend management because issues like budget implementation, expense tracking, and spending control become extremely difficult to execute. This gives your employees the space to make unilateral expense decisions sometimes.

Poor spend management also leads to inefficient resource allocation. Resource allocation depends on a clear understanding of all department expenses and requirements, plus the future revenue generation expectations.

This is the only way through which you can divide resources in such a way that all the areas of the business can produce optimal results. 



How can you possibly exert control over the company expenses when you don’t know what the actual essential ones are and which are the ones that can be let go?

Where do you need to set restrictions, and how to help employees make expenses easily?

Good spend management is the answer here. Without that, you will be shooting in the dark. Lack of financial visibility is not a favorable state for any company. 

Every company expense has to be checked and approved against the business spending policies. This is because these policies are meant to help the business keep all its transactions under control.

However, poor spend management leads to breaches in the reports and database, missing receipts and details, and wrongly processed expense data. This raises compliance and regulatory issues. 

Quick and accurate spend management is the need of the hour because market conditions are volatile.

Responding at the right time with the right strategies is essential to growing a business along with saving costs. Lack of precise spend data and delated insights keep your business away from many cost-saving opportunities. 

When your spending records are manually managed, there is a very good chance that your employees or any third person can make changes in the expense data to get that extra money.

This creates anomalies in the final results and then leads to ineffective strategy planning. Or maybe your expense documents could be misplaced, which will further create compliance issues. 

Poor spend management basically refers to inaccuracy in spending data management. Not following the right procedures or not using the right tools can lead to mistakes in calculations, document checking, and financial reporting.

Financial reports are meant to support business growth decisions, and mistakes in this report will lead to lax business development planning. 

Also read, How to ensure expense report compliance for your business?

Ensuring that all your vendors are paid on time, and all invoices are processed correctly is the right practice to maintain good vendor relationships.

Again, this comes with good spend management, as you need to be aware of the due dates and payment amounts to plan your cash flow properly.

Vendor relationship issues should be solved on a priority basis, and that can only be done when you have accurate expense data and vendor information before you. 

All spend management best practices will definitely help your business save a lot of money. Leveraging technology, setting spending policies, continuous monitoring, and using analytics will show you the real financial health picture of the business, according to which you can easily identify areas for cost-saving. 

Effective spend management will also give your business the power of better budget control. The right strategies keep the expenses under control, and all department activities are conducted at optimal capacity with the given budget limit.

This is because spending on data analytics, budget enforcement, and employee training goes a long way. 

Another natural benefit of effective spend management is improved cash flow. When you have a good look over the expenses, how spends are being incurred, and if these are maintained in compliance with the spending policy, you get a better understanding of the business cash flow.

The subsequent plans and strategies implemented will help in improving cash flow. 

Check out our article on cash flow management to get a complete idea on how different spends affects cash flow and the strategies to improve your business cash flow.



If you adopt a spend management automation system, you will take off the significant workload of your employees. The system will take over the repetitive tasks and complete them with 100% accuracy.

Plus, your employees get the time to utilize their skills for more human-centric tasks like planning and forecasting. 

Good spend management gives you the ability to plan your business cash flow and time the vendor payments according to inflow and due dates.

This means that you can always make on-time or before-time payments to your vendors. Your vendors will be happy, and this will build a trustable image for your company.

Subsequently, you automatically create better vendor relationships. 



How can you manage your business revenue and expenses without knowing the specifics of revenue generated and types of expenses?

You can get this with smart spend management. Using the above-mentioned spend management practices, you can easily gain insights on business spending, like how much is spent on daily purchases, which department is making what kind of expenses, how your employees are spending the company funds, etc.  

Spend management practices allow businesses to map out all supply chain costs. These costs can then be used to determine which vendor is giving the best value and which is not.

Your supply chain management and costs are automatically optimized. With this clear picture, you can grab better sourcing opportunities. 

If you adopt an end-to-end spend management system, you can easily detect any future risks and also identify any weak links in the purchasing or procurement process.

Eventually, you can create and develop plans to manage these risks even before they hit the company.

Plus, you will not have to worry about any expense being out of order, as the system will only allow those spends that will be in line with the set rules and budget limits. 

The ability to make more profitable decisions comes from having an accurate spend database and all minute information.

Smart spend management provides you with a database and advanced analytics features that further help you to understand all the data to make the best possible decisions. 

One of the most sought-after benefits of effective spend management is visibility and increased accountability. You will know who is responsible for which expenses and what are the particulars of each spend.

A spend management system also allows you to stop any spending if it is not authorized or seems to be a fraud. 

These are systems that are meant to automate the invoice capturing to the reimbursement process. This means that right from capturing the receipts from email or other sources and recognizing the essential characters to processing those with other related documents, entering the information in expense reports, and finally making payments, the system can automate everything.

Plus, it also helps in real-time expense tracking and streamlining approvals. 



Another spend management software for small businesses is procurement software. This system is designed to help businesses automate the source-to-pay cycle. This means the first step of sourcing supplies from a vendor to managing spending and contracts and making invoice payments; the system can do it all.

Using this software, you can exert full control over the procurement process and use it to maintain good vendor relationships.

An invoice management software caters to the billing function of business operations. The system generates bills for the product and services.

The process of getting paid becomes seamless, along with having the business's financial health status before you. You can make accurate financial forecasts and have flexible cash flow using this spend management platform. 



A spend analytics software holds expertise in gathering company-wide spend data. This data collection is done from multiple sources, different departments, and in all kinds of forms.

It then processes this data and gives out the results in the form of expense reports, charts, graphs, and a general database that will help you understand the numbers of your company and make prudential decisions.

Another spend management software for small businesses is a travel and expense management system. This can be viewed as an all-in-one management system to track and manage all your business and travel expenses under one platform.

From travel booking to travel expense reimbursements, controlling international spending, and overall managing, other related expenses come under the expertise of the system. 



A mobile expense management solution is a system that gives your business the ability to manage and control your business expenses from anywhere and everywhere using your mobile device.

You get complete control and visibility over the amount your employees and departments spend. Plus, you can also see all international expense activity as well. 

Data analytics and business intelligence tools carry out the process of data collection, analysis, and reporting. This information is gathered from both internal and external sources.

Functions such as performance management, predictive analysis, data visualization, and more are conducted by this software.

An expense management software is designed to take over all the tedious and repetitive tasks of the spend management process and automate them. This means that the system carries out all processes like data gathering, analysis, organization, etc. Completes these tasks within minutes and in real time. 

Expense management software also helps businesses maintain policy compliance. Any expense that is not in accordance with the company rules and budget limits put into the system will not be processed.

Plus, a system with a corporate card also allows you to assign cards to employees or departments and set spend limits on those. Any expense under the limit will automatically be approved. Anything over it will need approval from the managers and other designated approvers. 



Another amazing benefit of an expense management system is real-time visibility. All expenses made through the system or devices connected to the system will automatically be tracked and recorded.

All this happens in real-time so that you can know the current status of any payment or money transfer instantly. 

The approval workflow has now been streamlined with expense management software. These systems allow you to set 3-4 levels of approvers.

Every expense request or reimbursement request has to be approved by each level of approvers. This ensures expense policy compliance and also gives the approvers control over the expenses to keep everything under the budget. 

As all expense amounts and related information are tracked and stored in the expense database in real-time, there is no chance of any errors or mistakes in the data.

All the information is accurate, as no one can mess with the database manually.

So, the mistakes that would normally be accompanied by manual processing are effectively eliminated here. 

Also, you might be interested to know - Best business expense tracker app of 2023

The process of manual reimbursements is cumbersome and difficult. Gathering all receipts and expense reports, matching with expense policy, checking with receipts for legitimacy, entering data into expense reports, and finally transferring the amount. All this, when done manually, can be a nightmare.

However, with expense management, the approvers just have to accept the reimbursement claim; all other tasks are automated. 

As all expense reports are built with real-time accurate data, the company records are automatically audit-ready. You can access this database anytime for updated expense numbers and to see how each department or project is performing financially.

As no manual alteration is possible without messing up all the connected numbers, there is no chance of false totals. 

Almost all expense management systems come with a mobile application. This mobile application helps you keep track of expenses through your phone, approve or reject requests on the go, and much more. It is a feature meant to give you anywhere accessibility. 



One more business function that is automated and optimized by using expense management software is data analytics and reporting. These systems create expense reports, analytical graphs, and charts to help you understand the business’s expense patterns and cash flow behavior. 

All these different types of expense management tools help your business streamline spend management processes, bring out better financial insights, improve data accuracy, and to-the-point policy compliance.

Ultimately, expense management tools can help you save a lot of time and labor, which can then be invested for beneficial outcomes. 

An all-in-one spend management platform that solves all your business finance management needs is Volopay.

The Volopay suite of features includes everything from simple expense tracking to advanced analytics and invoice and vendor management. This is a revolutionary spend management platform that allows you to efficiently manage all your expenses, make low-cost international transactions, and maintain control from your mobile devices with the Volopay mobile application. 

Zoho Expense is another online Spend management software for small businesses that take care of processing receipts, creating expense reports, providing an approval workflow, streamlining business costs, and giving complete visibility over business expenses. 

SAP Concur is yet another travel and expense management software that specializes in invoice management, daily business expense handling, and automating your business travel expenditure.

It is an American SaaS company that easily integrates travel and expense management with your current system. 

A global expense management software that supports financial processing for all business sizes and industries is Fyle. It provides features like automated policy compliance, spend controls, easy expense approval, budget tracking, real-time spend analytics, and much more.