Spend Analysis: What it is and Why it is Essential for Your Business

Spend Analysis

As a business owner, it is important that you are completely aware of where the company funds are going. While you might have an overall idea about the amount of money being spent, you need to know how much is being spent on salaries, utilities, travel and tools on a day-to-day basis.

Spend analysis ensures that you are not taken by surprise when expense reports are generated. In this article, we will discuss what spend analysis is, what it helps your business achieve and how you can do it yourself.

What is Spend Analysis?

Essentially, spend analysis gives you a detailed account of what is actually happening with company funds. By having a clear insight into all the areas that the business is investing money in, you gain the ability to plan for the future. 

Since you have all the documentation about company transactions, you can make changes to the spend structure of the company as well. Some examples of this can be increasing the operating budget of one of the departments, while cutting down on another, due to your findings in the spend analysis report.

What Does Spend Analysis Help You Achieve?

Not every business has the same problems to tackle. As a result, the budget allocated for the various departments is different. 

Moreover, the spend structure also varies based on your business model. With that in mind, here are some of the things that a spend analysis helps you achieve: 

  • Having a precise financial report at the end of the month and year 
  • Finding areas where you can cut costs
  • Predicting the expenditure for the coming months
  • Manage risk and expand your set of vendors
  • Spotting fraudulent payments and ensuring that all employee expenditure is authorized

How to Do Spend Analysis?

If you’ve never done a spend analysis for your business before, this section will help you learn about the process. It is an elaborate process, and will take time if you choose to do it manually. Here are the steps to get started with doing your own spend analysis: 

1. Set Clear Goals for the Business 

Before you come up with a spend analysis for your business, you need to have concrete goals about your company expenses. The long-term goal for financing should be what you end up with. 

You should come up with a total budget for all the departments and categorize them based on the decreasing order of costs. 

2. Find the Company Spend Data 

Unfortunately, the spend data of your company is not stored in one place. Oftentimes, very department calculates their own spending figures. But this is not true for all companies. Some of the places where you will find the company spend data is: 

  • Invoice processing tools
  • Financial spreadsheets
  • ERP
  • Company credit card statements

3. Centralize and Group the Data as You Go 

Once you have gathered the spend data of your company, you should organize them into one document. An Excel spreadsheet is the most simple way to do so, with details about money spent, date and time and name of the vendors. 

The frequency of the spending also needs to be accounted for, whether it is a one-time investment or a recurring subscription. When you group the data, you have a systematic report of all the departmental costs for your company on a regular basis. 

4. Analyze the Data 

Once you have the data collected, it is time to analyze it and see where all the money is being spent. Recurring subscriptions often take up a lot of space on your budget. If you do not need them, it is a good idea to remove your subscription. Moreover, you also need to assign a working budget to all departments and ensure that they are operating under it, based on the report. 

5. Use the Report to Plan for the Future 

The spend report gives others a clear view of the company finances as well. For the leaders of the organization, it becomes much easier to make important decisions. Moreover, you can also start making changes to the spending model today itself, so that the operations are smoother in the long run. 


Having a proper spend analysis report can optimize your business costs to a great extent. You can cut costs, and ensure that company funds are being managed properly on a regular basis. 

However, performing this process manually is often very tiring and time-consuming. Mesh payments’ spend management system can help you organize your company spending in one place and create insightful spend analysis reports very quickly. 

Choose a spend management tool that works for your company finances today!

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