PROACTIS Blog

“What is Spend Control?” (Spend Control Demystified - Part 2)

Charlotte Sutton
Charlotte Sutton,
PROACTIS
To repeat the earlier definition “Spend Control is the term given to all processes that an organisation uses to manage aspects of expenditure that are non-payroll related. It includes all forms of procurement and expenses”.

Some of the issues are down to inefficient procurement processes and fragmentation of data. Others are about not being able to deploy best practice policies because of the lack of a good framework.

Spend Control Solutions

Spend Control addresses functions such as spend analysis, procurement cycle automation, procurement sourcing, approval control, budget checking and commitment accounting, supplier invoice reconciliation and employee expenses.

The key messages and uptake of Spend Control is extending across a wide range of business sectors too. The market has witnessed serious growth across a range of services sectors, as well as retail, hospitality and distribution. The Public Sector has seen major growth too as local authorities and education establishments seek to improve internal controls and compliance.

The case for Spend Control is a compelling one that many organisations are adopting for the strategic activity of managing expenditure. But how do you know if your organisation needs Spend Control? The following are just some of the key performance indicators which you can use to judge your own organisation:
  1. Are more than 20% of your suppliers redundant or inactive?
  2. Is actual/budget variance on indirect expenditure greater than 10%?
  3. Do more than 5% of suppliers’ invoices require troubleshooting or clarification?
  4. Are more than 5% of purchases made without proper management approval?
  5. Do you struggle to analyse spend by vendor, cost centre, commodity, etc.?
A “Yes” response to any of these questions might suggest the time is right for your organisation to explore the benefits of Spend Control.

And now your problems begin – How to select and implement a solution – read our next blog articles in this series…