Have your small business costs been creeping up?
A CNBC survey shows that 47% of small business owners have passed recent inflationary and supply chain cost increases on to consumers with another 37% likely to follow.
Charging customers more shouldn’t be your only solution for rising business costs. It might not even be the right one for your business. Simply managing spending more closely might better serve your company and your customers.
So what is spend management, and what role does it play in the success of small businesses? Read on to see if it might be the right solution for better controlling your rising business costs.
What Is Spend Management?
Spend management is a process for tracking, analyzing, and controlling business spending. It goes beyond general accounting practices. It helps businesses to spot and stop overspending and then use the savings to drive growth.
For any business, controlling and cutting costs is important. But it can be critical to survival for small businesses that may lack significant capital. Effective spend management helps small businesses maintain control of and maximize the ROI of every dollar they spend.
So what does all of this jargon mean? To better understand what spend management can do, consider the following example.
How Managing Spending More Effectively Can Cut Costs: An Example
You’re probably not tracking your business expenses in a black ledger. Still, accounting software can be almost as manual.
Consider the time spent on purchase requests and expense reports. They must be filled out, approved, and consolidated in your accounting system. It isn’t until all is said and done that you can get a clear picture of how the money was spent and whether those dollars were spent wisely.
It is hard to save money that has already been spent.
A spend management solution known as p cards can eliminate the need for expense reports or purchase requests and allow you to track and manage expenditures across all departments and employees in real time. Imagine how much paperwork, time, and money can be saved with this one tool.
And P cards are just one example of how streamlining the process of managing spending can reduce costs so you can grow profits. The more you learn about p cards and other spend management tools, the better you’ll see how they can help protect your company from excessive and rising costs.
Is a Spend Management Solution Right for Your Small Business?
If you don’t have a clear picture of why and where every company dollar is being spent, you could run into trouble and out of cash. While implementing a spend management solution comes with its own costs, they are costs that can save you money in the long run.
The right spend management tools can help you spend less time accounting for costs and more time cutting them. In turn, the savings can help drive company profits even when inflation arises.
We want to see your small business thrive. Explore our business section for more tips and advice.