What is Business Spend Management?

John Schouten: "Business Spend Management (BSM) is a strategic approach to managing all expenses and related processes within an organisation. This includes reviewing contract terms, creating purchase orders, and processing invoices. BSM covers both direct spend (costs associated with the production of a product or service) and indirect spend (costs not directly related to production). It enables you to automate and analyse your organisation's financial and procurement processes. With BSM, you can enhance your organisation's financial impact, reduce risks, and improve efficiency."

The key benefits of BSM for your organisation are:

• Cost Savings: By automating processes such as invoice processing and procurement, you gain more visibility and control over expenses, achieving significant cost reductions. Manual tasks are minimised, and workflows are optimised.

• Risk Reduction: BSM reduces compliance risks and human errors through streamlined processes and enhanced data visibility, ensuring better audit preparation and regulatory compliance.

• Improved Supplier Relationships: A centralised management environment for suppliers enhances relationships and collaboration, potentially leading to more favourable contract terms.

• Data-driven Decisions: Access to real-time data and comprehensive reporting capabilities allows your organisation to make better-informed decisions, resulting in improved financial planning and strategic procurement.

Business Spend Management impacts both the Finance and Procurement departments of your organisation:

• Vendor Management: This allows you to centrally manage all supplier information, including expenses, contracts, risk profiles, and assessments. It leads to well-maintained supplier relationships and improved collaboration.

• Sourcing: Supports the strategic search for the best suppliers based on internal needs and project specifications. The process covers everything from procurement needs to contract signing, resulting in more efficient supplier selection.

• Contract Management: Enables you to manage the entire contract lifecycle, from preparation to renewal or termination. Approvals and digital signatures ensure compliance and traceability, guaranteeing optimal supplier performance and minimal risks.

• Procurement: Automates the entire procurement process, from purchase recommendations to placing orders with preferred suppliers. It ensures cost control and regulatory compliance through digital approvals and payment processing.

• AP (Accounts Payable) Automation: Efficiently and accurately manage invoice processing, leading to improved cash flow and better supplier relationships. It reduces administrative burdens by automatically matching invoices with purchase orders or contracts, speeding up approval processes and minimising human errors.

• Spend Analytics: Provides real-time insight into all organisational spending through dashboards and reports. Understanding spending patterns helps identify bottlenecks and make data-driven decisions, leading to better-informed and strategic decisions.

While Business Spend Management involves all departments within your organisation, Finance and Procurement (purchasing) departments are primarily responsible for its implementation. We often see the IT department involved due to security concerns.

• Procurement Department: With BSM, you can set and monitor procurement strategies for both short- and long-term goals. You gain insights into spending categories and integrate key procurement processes, such as contracting and invoice validation. Read more on the page 'One Application for You as CPO'.

• Finance Department: BSM provides the necessary insights to achieve your financial objectives. With centralised spend management, you gain better control over expenditures and reduce compliance and risk issues. Read more on the page 'One Application for You as CFO'.

• IT Department: BSM allows you to manage your IT landscape strategically. Integration with your ERP is also conducted under the supervision of IT.

Your ERP streamlines business activities such as finance, HR, and inventory management. Integrating a BSM platform with your ERP enhances the efficiency of your Source-to-Pay process, effectively amplifying the value of your ERP:

• Up-to-date ERP Data: Integrate and leverage current data from your ERP system within the Source-to-Pay process, ensuring fast and error-free handling of procurement and invoicing processes.

• Advanced ERP Integrations: With our ERP partners, we stay updated with market developments and incorporate them into our standard offerings. We provide advanced features for each ERP system.

• ERP Independence: Organisations seek independence in integrations and often use middleware software. ISPnext offers a standard set of APIs for developing your integration.