How Spend Management Platforms are accelerating business, channeling inventory for ease-of-doing businesses When speaking of spend management, the crux lies in the effective automated administration of organizational finances to ensure real-time tracking, a smooth flow of spending, payables, receivables, and reconciliation.

By Yadvendra Tyagi

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When you walk into a shopping mall, you are bound to get surrounded by salespeople who lure you into buying another green scarf or an irresistible pair of black shoes. And as you head back home, having used credit cards, cash and UPIs like magic wands fulfilling your wants and wishes, you grapple with trying to keep track of all your payments. It sounds like an uphill task, doesn't it? Now consider the burden of businesses that cater to spending in bulk and not just on occasional shopping sprees. With over 167,076 new businesses being set up in FY22 alone, the Indian economy has witnessed tremendous business growth across various sectors. However, this hike in business ventures is accompanied by hurdles in managing spending in highly competitive and digitized markets.

In 2018-19, Goldman Sachs came out with a report on How the next payments frontier will unleash small business. The report mentioned how nearly 70% of the US economy paid by paper checks, incurring $2.7 trillion in B2B administrative costs- of which 80% was paid by small businesses. The report also highlighted the fact that at the time, B2B payments was one of the biggest untapped market opportunities for the payments industry. In India, more than 90% of small and medium businesses are cash- and check-intensive, followed by payments via NEFT.

As the pandemic set in, it became increasingly necessary for businesses to go digital, and this transformation had to be incorporated globally. Being one of the world's fastest growing digital economies, India adopted digital processes at an unprecedented rate. And enterprises have rapidly accepted digitally enabled financial services to strengthen their payment processes. The sheer volume of transactions that businesses deal with daily ushers in the need for an emissary to streamline spend management for businesses to thrive. With automated and integrated solutions, spend management platforms have begun acting as a concierge for mid-market enterprises (MMEs) and startups as they spend and invest.

Businesses are implementing digital and automated solutions to their processes with the aim of reducing costs and improving efficiency. FinTech platforms are offering end-to-end payment solutions to integrate with ERP systems and provide intuitive user interfaces. According to a recent report on B2B Payments in India, fintech platforms are gaining prominence and becoming the front-end shifting the ERP and legacy systems.

When speaking of spend management, the crux lies in the effective automated administration of organizational finances to ensure real-time tracking, a smooth flow of spending, payables, receivables, and reconciliation. In today's zealous markets and the cumbersome payments, businesses often toil with manual processes which leaves scope for human error. Managing payables manually is a sluggish, paper-intensive procedure, frequently resulting in delays. These inefficiencies further highlight the reputation damages when it comes to vendor management, payment penalties brought on by delays, and generally greater efforts made during audits to track the permission trail.

In contrast to this, spend management platforms use modern, innovative software designed to limit direct human input, process massive amounts of data and channel the receipts to the necessary recipients.

Automated systems would also enable companies to conveniently fetch/submit their bills and receipts via a single platform, with automatic approval or rejection facilitated by the system, diminishing the manual interval.

In the current data-driven landscape where the Indian market is increasingly promoting online transactions, it is imperative to address the significant amounts of data silos generated by businesses. These silos stem from payments made across different departments and types of spending, such as supplier payments, utility payments IT and SaaS based services, which often require separate tracking. Spend management platforms offer a solution to this challenge by enabling businesses to monitor diverse payments through a unified payment portal. By doing so, these platforms overcome the issue of disorganized data while offering real-time visibility.

According to theGoldman Sachs report, the estimated B2B volumes are supposed to reach $200 trillion globally by 2028. And, like Marie Kondo to spending, to keep a track of these volumes, these spend management platforms have decluttered spending for businesses. Providing real-time payments via spend management platforms offers businesses an enhanced understanding of spending patterns. This insight empowers firms to make informed decisions regarding resource allocation while simultaneously identifying opportunities for cost reduction. By analyzing their spending data, businesses may discover that they are overpaying for specific products or services. This information allows them to negotiate better pricing with their vendors or switch to more cost-effective alternatives.

True to the principles of decluttering, these platforms don't just limit them to one closet of payments, they organize all aspects for businesses. Spend management platforms also enhance the process of managing receivables. Utilizing these platforms enables the automation of the invoicing process and receipt generation, thereby facilitating the prompt and precise dispatch of all invoices by businesses. By tracking payments and invoices, companies can gain insights into their cash flow and take action to improve it.

Knowing your expenditure and gaining discernment also contributes to a company being vigilant against fraudulent or nefarious payments. Through the real-time monitoring of their spends, businesses can expeditiously detect any suspicious transactions and undertake further investigation. This proactive approach can effectively prevent potential financial losses and safeguard the company from the perils of fraudulent activity.

One of the greatest authors, Arthur Conan Doyle, wisely said, "It is of the highest importance in the art of detection to be able to recognize, out of a number of facts, which are incidental, and which are vital." Spend Management Platforms have found their footing in this art of detection as well. They detect inconsistencies between a business's internal records and the corresponding bank statements and provide reconciliation mechanisms aiding these detections. Transaction reconciliation is a critical process in financial management that ensures the accuracy and integrity of a company's financial records. The manual reconciliation of transactions can be a time-consuming and error-prone process. However, with the advent of spend management platforms, this process has been automated to a great extent, enabling organizations to effectively manage their entire cash flows.

With various solutions in their arsenal, spend management systems are revolutionizing corporate setups in India. According to a whitepaper on Rising Digital Business Spends,the business spend management industry in India is ready to grow to US$ 15 trillion by 2030. After the pandemic, the adoption of digital payments has surged, and more and more companies are relying on these platforms to revamp their operations. With spend management platforms, businesses can focus on their core operations and growth strategies without worrying about managing volumes of transactions or keeping track of every penny they spend. Much like investing in a pair of vintage designer shoes or a fine cashmere coat without worrying about keeping the tags, companies with spend management platforms can accelerate their business growth without fretting over transaction volumes.

Yadvendra Tyagi

Co-Founder, EnKash

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