7 Steps to Effective Spend Management

Tori Katz

June 16, 2022

Table of Contents

• Free Supplier Risk Scorecard Download
• What is Effective Spend Management?
• The 7 Steps to Spend Management
• Summary: Effective Spend Management
• Get Started on Spend Management with ControlHub
• Learnings
• What is spend management, and why is it crucial for startups?
• How do I start with spend management for my startup?
• What's the best way to manage spend data efficiently?
• How can I clean and organize my spend data effectively?
• Why should I analyze my spend data and how can it benefit my startup?
• What's the next step after analyzing my spend data?
• How can spend management help me predict risks?
• How can ControlHub help my startup with spend management?
• What is Source to Pay?

What is Effective Spend Management?

Spend management is essentially the practice of reducing procurement costs by managing your expenditure in a way that is efficient and time-saving. Spend management strategies involve collating, collecting, categorizing, defining preferred suppliers, and evaluating spend data, then using the insights obtained to make informed decisions about other sectors in your company.

Decisions made from spend management affect all aspects of the procurement process in a company.

The 7 Steps to Spend Management

STEP 1: Document All Sources of Expenditure

Here are some common expenditures you can start with:

• Salaries and benefits for employees
• Premises rent, mortgage or property tax
• Licenses and subscriptions
• Advertising and marketing
• Insurance premiums
• Training

STEP 2: Create a Repository of Expenditure Data

You need to store expenditure data in a centralized repository managed by the accounts department.

STEP 3: Verify and Clean Expenditure Data

Cleaning data means finding and removing inaccuracies, while verifying ensures data integrity is maintained.

STEP 4: Categorize the Data

The data should be categorized depending on the company’s objectives and operations.

STEP 5: Critical Spend Analysis of Data

This step involves analyzing collected data to draw helpful conclusions.

STEP 6: Implement Budget Changes and Budget Control

Establish strategies for new goals and control techniques to prevent waste.

STEP 7: Use Data to Predict Expenditure Risks

Use your spend analysis data to observe trends and make predictions.

Summary: Effective Spend Management

You can achieve effective spend management today in these seven steps:

1. Document all sources of expenditure
2. Create a repository of expenditure data
3. Verify and clean data
4. Categorize the data
5. Critical analysis of data
6. Implement budget changes and budget control
7. Use data to predict risks and inform management