Essential Spend Data Points for Financial Managers

data points for finance managers

Every organization wants to keep their costs down and improve their cash flow. To achieve that, you need more than just a general idea of business expenditure, even if your revenue is strong and profits are high. You need to know exactly where your money is going at all times, so that you can maximize your bottom line and avoid any unpleasant surprises. 

Spend analysis means understanding how your company’s money is being spent. It results in a spend analysis report, which shows exactly where your business is leaking money, helps you cut costs, and guides you to setting accurate budgets for different departments.

Financial Data Points That Inform Business Strategy

Spend analysis benefits include enabling better business strategy. Once you have a clear understanding of expenditure, you’ll know how much money is available to spend on business growth, and can adjust your business strategy accordingly. 

Here are some of the key financial data points that you need to track in order to be able to make informed strategic decisions.


Profit is essentially revenue (money in) minus expenses (money out). It’s a key metric for business strategy, because the higher your profits, the more you can invest in scaling your business. Poor profits, especially if revenue is healthy, could be a sign that you’re spending too much. 

Revenue Growth

Revenue growth shows whether your income is rising or falling. Tracking it helps reveal whether your business is on an upward or downward trajectory. Revenue growth data gives you a solid foundation to predict future income and make plans to grow even further. 

As part of tracking revenue growth, you should also measure growth in your customer base, average purchase value, and sales volumes, to give you a better idea of what is driving your growth. 

Capital Efficiency and Solvency

Capital efficiency shows how efficiently your business is using its capital. It’s the ratio between how much you spend, and how much revenue you generate. The lower your ratio, the more efficient your business operations. 

Solvency goes hand in hand with capital efficiency, because it measures how much capital you have in reserve. Solvency is tracked using calculations like debt to equity ratio. 


Your business might be worth a lot, but that doesn’t mean you have cash at hand to pay your bills. Companies with a lot of capital tied up in fixed assets, like equipment, real estate, or unsold products, have low liquidity. 

Liquidity is an important factor when getting business loans, which many organizations need from time to time to fund their business strategies. Most lenders use liquidity as a key metric when assessing your risk as a borrower, so if your liquidity is poor, you might struggle to get extra funding.

Operational Efficiency

Operational efficiency measures how effectively you use the resources you have to hand, like your employees, your equipment and SaaS tools, your inventory, and even your time, to generate revenue. Lower operating costs usually mean higher operating efficiency.

If operational efficiency is poor, it’s likely to affect revenue growth, profits, and eventually solvency too, making it hard for you to meet your strategic goals.

Data Gathering and Processing for Spend Analytics

Spend analysis is a process that can take a long time. The first spend analysis steps involve gathering and preparing your data so that it’s all ready for analyzing. Here’s a how-to guide to getting your spend data in order. 

Identify all procurement and sourcing-related data sources

Financial data is rarely centralized and is often scattered across the organization. You don’t want to overlook anything, because then your spend analysis won’t be reliable, so list all the places where spend data might be hiding. 

Key departments to check include procurement itself, finance, marketing, and IT/IS, all of which make significant purchases. Some of the top places where you’ll find relevant spend data include: 

  • Credit card statements
  • ERP tools
  • Purchase orders
  • Risk reviews
  • Supplier data
  • General financial ledgers

But you also need to check other internal and external data stores. 

This might seem time-consuming, and the first time you do it, it probably will be. But once you know where all your financial data resides, it’ll be faster next time. To really save time locating spend data, companies use spend analysis tools like a centralized spending data platform 

Aggregate data into a single source of truth

Once you know where to locate all your spend data, you need to bring it together into a single location so that it can be easily accessed by your spend analysis software. This involves transferring it all into a single database, ideally in the cloud so that it’s available to finance employees wherever they may be working.

Clean your spend data

Once you’ve united all your data in a single repository, you’ll notice that there are a lot of inaccuracies. Data cleansing means removing incorrect data, deleting duplicates and redundancies, and eliminating errors. It includes mundane, yet important, tasks like fixing typos and excising out of date data points. 

Standardize your data

Once your data is accurate and up to date, it still might not be uniform. Different tools and platforms store data in different formats, which makes it difficult for analytics tools to work effectively. For example, if your organization crosses time zones, the month will begin and end at different times, which could lead to a transaction being logged under the wrong month. 

You need to set standard rules for the way your spend data is stored, like which time zone you’re using, which currency expenses are tracked in, whether you use the 12-hour or 24-hour clock, and whether names are recorded with the first name first or the last name first. 

Enrich the data 

Enriching takes data cleaning a step further to fill in the blanks. During this step, you’ll complete missing fields, like adding someone’s first name instead of just an initial and expanding abbreviations. Data enriching also involves combining multiple data sources to produce a more complete and clear final version. 

Categorize items into hierarchies

Once your data is clean, standardized, enriched, and reliable, it’s time for category spend analysis to categorize data and organize it into a hierarchy called a spend taxonomy. 

Spend data should be categorized according to the type of purchase, like food and drink, compensation, IT, etc. Different organizations will break these categories down in different ways; for example, a tech company might need separate categories for IT hardware, SaaS tools, and IT software, or a company with a huge sales team might have categories for training and employee engagement activities.

The spend taxonomy looks a bit like a tree. It places all these categories in relation to each other. So IT might be the top of the spend taxonomy, with subcategories for hardware and software, and then sub-sub-categories for SaaS and enterprise software. Spend taxonomies tend to have between 3 and 6 levels. 

The Power of Spend Analysis

Spend analysis benefits include: 

  • Full visibility into corporate spending. By bringing together data from across the organization, spend analysis can bring transparency into how much you’re spending on materials and services. 
  • Savings opportunities. Once you have visibility into spend patterns, you can spot places where you can cut costs and reduce expenditure, like by consolidating suppliers, switching to alternative products, identifying suppliers that offer better value, and negotiating contracts from a position of strength.
  • More efficient procurement. Improved visibility and accurate data make all your financial processes more efficient, which in turn brings stronger relationships with key suppliers and more productive employees. 
  • A more resilient supply chain. Trustworthy spend data helps reveal weak links in your supply chain, like non-contracted vendors, non-contracted spend, or non-performing suppliers. Tightening up contracts and switching to more reliable suppliers lowers the risk of supply chain disruptions. 
  • Internal benchmarks. Spend analysis reports allow you to benchmark your performance across business units within the organization, so you can compare expenditure and RoI and improve strategic decision-making. 
  • Leverage spend data for business goals. Procurement might lead in spend analysis, but other departments like finance or marketing can also benefit from the resulting insights. Managers across the company can leverage spend analysis to better understand their purchasing patterns and make better strategic decisions. 
  • External collaboration. Group purchasing can help all the companies in the group to cut costs by negotiating better pricing and/or contract terms. Once you’ve run spend analysis in procurement, you can more easily identify shared suppliers and commonly ordered items, and propose a joint purchasing agreement. 

Spend Analysis Tools

When you use the right tools for various business tasks, it’ll be easier for you to find and aggregate spend data ready for analysis, and the data itself will be more reliable. 

In choosing spend analysis tools, look for ones that automate workflows as much as possible, to save time and reduce risk of manual errors. Also, cloud-based can be accessed by your employees no matter where they are located, which is vital in our hybrid-work culture. .

Accounting Tools

Accounting tools help reconciling bank statements and automatically pulling finance data to the right spreadsheets. They save effort when producing financial reports and balancing your books. Many have customizable dashboards that give you real time, constantly updated views of your financial situation, so you won’t have to wait for the end of the month or the quarter to find out what’s been going on. 

ZohoBooks is a powerful and popular accounting platform that offers a full range of accounting capabilities as well as automated workflows. 

Xero is cloud-based, supports unlimited users, and its many integrations make it popular for small businesses using SaaS to punch above their weight. 

Payroll Management and HR Platforms

HR management, including all the complexities of payroll, can be a difficult challenge. The platform you choose should automate calculation and payment for compensation and benefits, manage employee onboarding, training, and promotions, and handle your tax obligations and compliance with employee regulations. Because payroll doesn’t operate in a vacuum, you also want a tool that integrates with and automatically exports to your accounting tools. 

Paychex offers an all-in-one payroll and HR platform. It helps with employee training, tracks work hours, and handles benefits and compensation. 

Papaya Global automates workforce management for global teams. It manages compensation, time tracking, and compliance, as well as integrating with outsourcing companies. 

Enterprise Resource Planning (ERP) systems 

ERPs are the backbone of large enterprises. They manage, store, and analyze data for almost every department, including HR, finance, and operations. ERPs help to unite and standardize data from across the organization, so they often serve as a key data resource, plus they produce reports and business forecasts based on historical data, to help with business decision-making. 

Oracle ERP Cloud is cloud-based, easily scalable, and intuitive, with a broad feature set, making it both easy to use and powerful. 

SAP ERP is a modular ERP that is suitable both for small businesses looking and large corporations. It’s cloud based, scalable, and integrates with most other business tools. 

Payment Processing Tools

A typical company has to process and track payments through multiple media, including credit and debit payments, recurring bank transfers, cash, check, and digital payments from online payment platforms or digital wallets. Payment processing tools help you keep on top of all your income, no matter what the source, and unite revenue streams to provide better visibility into cash flow. 

Due is a cloud-based, SaaS payment processor that can handle credit card payments, recurring payments, digital wallets, and more. It can support small businesses and enterprise sales.

Weave offers secure, safe payment processing for either in person or online payments. 

Spend Management Tools

Spend management tools help CFOs to track expenses with features like automated approval processes, automated documentation association which links receipts or invoices with the right transaction, and robust reporting on a granular or birds’ eye level. 

Mesh Payments assists finance teams to monitor spending across the organization, with automated controls and rich reports to increase visibility and understanding. 

Procurify offers a user-friendly interface for approvals and expense tracking, together with useful reporting and analytics features. 

Common Spend Blindspots Finance Managers Face

Spend analysis is all about opening up visibility into business expenditure, but even the best CFOs can end up with blindspots. 

One of the most common finance blindspots is redundant subscriptions, or dark IT. This occurs when your employees sign up for SaaS tools without anyone knowing about them. You end up with a myriad of individual subscriptions, often for tools which perform overlapping tasks, and no way to track which deliver the best RoI or get a discount for bulk users. 

License renewals can be another dark area, both for SaaS and enterprise tools. When licenses, agreements, or subscriptions come up for renewal, it’s an opportunity to reassess value for money and renegotiate terms and pricing. But even though it’s not hard to cancel irrelevant SaaS tools, busy finance departments can often lose track of renewal dates, especially if teams and departments make their own purchasing decisions.

Another problem spot is employee expenses. It’s one thing if your employees all use corporate credit cards and are dedicated about real time expense reporting, but in many organizations employees don’t meet this bar. It’s a particular issue when employees run up expenses on their personal cards, and then report a mass of spending in one go once a quarter, taking finance teams by surprise. 

Finally, many finance managers don’t have ongoing insight into sales and revenue figures. They might get forecasts and updates once a quarter, and continue making budgeting assumptions and finance decisions based on those statistics, which might be inaccurate and irrelevant by now. 

Spend Analysis Best Practices

Be detailed about your spend data classifications

When you categorize and classify your spend data, it’s important to go into sufficient detail, like storing line item information. If it’s too vague, or your categories are too broad, you’ll have a hodgepodge of data which you can’t analyze properly. 

Implement a common internal taxonomy 

As well as, or instead of, coming up with your own taxonomy, use one that’s already accepted, like the United Nations Standard Products and Services Code (UNSPSC), which is a common coding system for logging goods and services. It helps map spend into a single schema to make category spend analysis easier. 

Automate data processing

Gathering, cleaning, enriching, and standardizing spend data is time-consuming, plus it leaves room for manual errors to creep in. Data collection is easily automated, and there are plenty of tools that use artificial intelligence and machine learning to pull data from integrated platforms and preprocess it into a single repository. 

Bring together external data sources

Your suppliers have data too, and sometimes it’s better than yours. Including their data helps to make your spend data analysis more comprehensive, trustworthy, and complete. 

Adopt a permanent spend analysis solution 

Spend analysis can be frustrating and exhausting when you do it in an ad-hoc manner, but the insights it produces are highly valuable. Adopt fixed, standardized workflows for gathering, processing, and storing spend data, so you can refresh spend analysis easily. 

Collaborate with other departments 

Spend analysis is more powerful when procurement collaborates with other business units. Together, they can create a positive feedback loop for improving performance, and establish processes that deliver real savings to the management. 

Set and measure category strategies 

Use spend analysis reports to develop sourcing strategies that lower risk, increase value, and make supply chain more efficient. Set goals and review progress regularly so you can reassess them as needed. 

Act upon your spend analysis insights

Spend analysis insights are only really valuable when you act upon them. Actualize the savings opportunities you identify so you can cut costs, raise RoI, and make purchasing more efficient. 

Why You Should Use Spend Analysis Software

Although you can manage spend analysis with your existing business tools, automated spend analysis software helps streamline the process and remove friction. With dedicated spend analysis software like Mesh Payments, you can automatically bring together data from multiple locations, such as your ERP, Excel reports, expense reports, etc. 

Spend analysis tools also help unite data from different types of sources, like from invoices, purchase orders, and financial records. Because it’s designed with spend analysis in mind, this software is more robust and powerful than generic data analytics tools 

To learn more about what spend analysis software can do for your business, book a demo

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