5 Ways Poor Spend Visibility Impacts Your Business – And How to Fix It

Ways Poor Spend Visibility Impacts Business

Enterprise companies often operate in silos when it comes to spend management. Teams have an array of processes to manage their budgets, while vendor and procurement portals operate on separate platforms — and these fragmentations lead to inefficiencies and errors. 

This absence of centralized spending visibility isn’t merely an inconvenience; it poses a significant risk to your company’s financial health. 

Here are some tangible ways that this lack of visibility directly affects your organization’s bottom line.

1. Costly employee expense reports

Employee expenses can cause mayhem if not tightly monitored. Traditional expense reports open the door for error and create loads of unnecessary work. The finance team ends up chasing employees for receipts and the employee is only reimbursed after paying with their own money upfront.

When employees make purchases with their own money, there is no way to ensure that they are staying within company policy. Even when using a traditional corporate credit card, it’s difficult to get real-time insights into spending until the end of each month — meaning there is lots of opportunity to overspend before it is caught by the finance team.

Plus, filling out expense reports costs the company money. According to the Global Business Travel Association, a single expense report costs a company 20 minutes and $58 in operational resources — in this case, primarily employee time. On top of that, nearly 20% of expense reports have errors, requiring revisions and additional review — a.k.a. more employee time. And time is money! 

Virtual cards fix these issues by automating embedding expense policies right into the card, so employees are always in-policy (and on-budget). That way all expenses are pre-approved, eliminating expense reports and giving finance teams real-time visibility into every transaction.

2. Three-way matching (i.e. purchase order – invoice – transaction reconciliation)

Without visibility and data syncing from a centralized system, it can be extremely time-consuming to get a three-way match on purchase order payments. POs represent what is ordered — not what is delivered. Backorders and multiple shipments are common, but create a real headache for accounting and accounts payable teams. 

Plus, with payments and POs in discrete systems, it’s easy to see how a transaction may be approved without ensuring it aligns to an approved PO. Connecting the legacy systems that manage payments, expenses and POs can be time-consuming — and sometimes even impossible. 

Integrated solutions, like Mesh Payments, allow teams to sync PO numbers and any other pertinent data directly to a dedicated corporate card for that PO, ensuring that match-back is easy and fast. 

3. Zombie subscriptions

SaaS subscriptions are a normal expense for enterprise companies, but there isn’t always visibility into exactly how much is being spent on each service — or if it’s being used at all!

Companies often pay for multiple products that serve the same function, or for inactive per-seat subscriptions for employees who no longer work at the company or simply don’t need or use the products. These “zombie subscriptions” can add up quickly — especially automatic renewals.

When finance teams aren’t aware of all the active subscriptions, how they’re used or how many licenses they have, it leads to wasteful spending. 

Modern teams are solving this problem by using SaaS management software, sometimes stand-alone and sometimes through their payment solutions (like Mesh’s SaaS Management). With full visibility on cost and contract terms, finance managers can actively manage costs based on need. This way they can eliminate unnecessary costs.

4. Out-of-policy spending

Enforcing spend policy compliance is one of the toughest challenges facing finance teams today. Visibility is critical to limiting out-of-policy purchases. Whether it’s business class plane tickets or unapproved vendor services, if you don’t know about it, you can’t stop it. 

Most corporate cards have fraud alerts, but they don’t know your company doesn’t allow more than $75 per day on food while traveling for work. What’s more, finance and accounting teams won’t see transaction details for (at best) 48 hours,  and sometimes not until they receive their statement at the end of the month. 

The effective impact is that finance teams have no visibility on actual charges until it’s too late, leaving a big opening for out-of-policy spending and hours of paperwork and employee-chasing. 

Furthermore, specific limits on amounts, vendors or dates aren’t enforced, meaning employees can make out-of-policy payments with company funds.

Whether it’s a legitimate purchase that was accidentally miscategorized, or a malicious shopping spree on the company’s dime, the limited visibility into traditional corporate card transactions can create extremely costly problems.

5. Administrative & opportunity costs

While errors, overspending and zombie SaaS subscriptions have a direct impact on the budget as a hard cost, lack of spend visibility also creates soft costs that come in the form of resources like time, effort, and opportunity cost. 

When finance teams have to switch back and forth between multiple tools, re-key data from one platform to another, or handle the manual submission of employee expenses, it costs time. Reconciling multiple systems costs time. When errors or issues arise, the time spent to resolve them also ties up the finance department. As a result, the finance team can’t focus on higher-value tasks because it’s burdened with administrative work. 

Reduce business risks with increased spend visibility

Implementing an integrated spend management solution gives you visibility into finances across your entire organization. Virtual cards allow budget owners to control how much is spent and on what, while transaction information is instantly and seamlessly synced with your accounting software.

Get in touch to learn more about how Mesh can increase your spend visibility and save on unnecessary costs.

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