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How Divvy defines spend management

How Divvy defines spend management

10 min read

Customers come to us from all starting points: Some are still manually collecting paper receipts and invoices or sharing a few physical cards around. Some are waiting 30+ days to see if they’ve gone over budget for the month. Others use multiple software tools to keep track of different kinds of spend—from AP to T&E and back again. Many have complex and confusing approval processes that involve lots of back and forth email chains, and lots of waiting. 

Regardless of where they start, finance leaders come to Divvy desperate for better controls and visibility.

Today we’re breaking down the problems with legacy spend management and the tools you need to bring your spend management into the modern era.

What is spend management?

Spend management is the umbrella term for a lot of financial functions, including paying invoices, managing credit cards, and running expense reports. It also has to do with reporting and forecasting against budgets

While spend and expense management often overlap, expense management is usually more focused on departmental and card spend. Finance leaders tend to lean toward spend management as the more strategic sourcing of company funds. The best spend management solutions bring all company spending into one place for smarter decision-making

How is spend analysis done?

In order to properly analyze how company funds are being used, you need to actually know where all the money is. Spend analysis is the process of bringing all spend data together—from vendor purchases to SaaS subscription to one-off employee purchases. 

When done well, your spend management strategies will help your company stay in-budget and scale for growth. Unfortunately, many businesses have fallen victim to old-fashioned, legacy solutions that create a lot of manual work for finance leaders and small business owners. These inefficient and complex processes are the old way of managing finances—and they’re not working.

What you’re doing isn’t working

Finance teams typically think of their spending in two buckets: T&E (travel and expenses) and AP (accounts payable). While both kinds of expenses affect company budgets—and more importantly, the bottom line—business owners and finance leaders tend to separate these funds in their minds and in their software.

T&E spend with no limits or control

For T&E, financial processes have been particularly inefficient. Businesses typically have a corporate card for only a few special employees. These few cards are shared between employee spenders and passed around when team members are going on trips or buying lunch. 

Finance teams try to keep track of the money spent on those cards with an expense management software that is separate from their card provider. Every now and then, a bank will offer some kind of corporate budgeting software, but it’s extremely limited and immature. 

If employees don’t have access to the company card, they’ll pay for business expenses using a personal card. Sometimes, they don’t have any other option—doesn’t matter if the cost is $5 dollar or $5000.

Think about that for a second: Businesses are forcing their employees to front company cash and wait for 30+ days to get reimbursed. It’s a no-interest loan from employees, without thought for their personal financial situation. 

And, in the meantime, the company is flying blind on who has spent what that month. 

A controller has no idea how many company dollars have been used until all the expense reports or reimbursement requests come in. Not only is it a hassle to get all this information in the first place, but finance teams are paying for crappy expense reporting tools. Businesses are putting their teams through this hellish process, and paying for the privilege!

AP spend separated from the rest

On the AP side, businesses typically rely on their bank bill pay system or a third-party software vendor to send ACH payments or check. 

But here is the issue: banks are terrible at building software, and third-party vendors are expensive. 

That means that most business owners and finance teams are trying to work around poor software solutions while still paying money for these tools—they’re paying to pay their vendors.

The process of managing dozens of vendors and their invoices is incredibly manual and cumbersome. To top it all off, these poor processes keep AP payments totally divorced from T&E payments. Why is everything cobbled together using multiple systems, leading to a month-end fire drill and endless reconciliation?

There’s a better way to do spend management

Now that you have a headache, let’s talk about how it should work.

Our customers have to tackle a lot each day and spend management tasks eatup a lot of time and energy. Things like tracking down receipts, searching out the right approvers, wondering where the company cards are (and if they’re safe), setting up budgets, making sure no fraud is happening—these are big time wasters for any business.

To save time managing your finances, businesses should have one platform for all spending, both T&E and AP. 

We’ve built Divvy to consolidate spend and eliminate headaches. Our platform gives VPs of Finance, Controllers, and CFOs total visibility and total control. Business admin can issue credit cards to anyone in the company and control how much spending power those credit cards have via delightful software. Vendor relationships and associated invoices are centralized in the same place, meaning all spend is tracked and measured with smart, software-based budgets.

Budgets that actually work

All spend in Divvy, from T&E to AP,  revolves around budgets—this is different from every other spend management solution. As an admin or finance leader, you can finally create budgets that actually have teeth. Literally no one can ever spend over budget. 

With Divvy, you’ll never go over budget again.

While an employee may spend in isolation, a VP of finance cares more about group spending. What’s another word for group spending? Budgets. 

The problem with simple card controls is that you have no way as a finance leader to ensure that the overall budget isn’t overspent. But in Divvy, that’s not the case. With Divvy, you can create budgets for anything. 

  • Q4 marketing budget? Check. 
  • A weekend off-site budget? Check. 
  • Do you want a quarterly, weekly, or daily budget for something? Check. 
  • Do you want to look back on your budget history, or look forward to future periods? Check, check.

How Divvy budgets protect from overspend

When you use Divvy, everyone gets a corporate card which makes tracking “who spent what?” a breeze. These cards have $0 allotted to them until an admin or budget owner assigns a team member funds from a budget. This means that you know the spending limits before employees spend—and they’re forced to stick to them. 

But don’t be fooled. Just because our budgets protect you from overspending doesn’t mean they are cumbersome or rigid. It’s easy for an admin or budget owner to send someone funds when needed or employees can request them in a pinch. In a few taps on your mobile device, team members have what they need. 

Our goal is to give our customers control WITH flexibility. It’s normal to need to adjust budgets, but you should always know when someone wants to spend more than you’ve given them.

We’ll repeat it: With Divvy, you’ll never go over budget again—and that’s something that simple card controls can’t say.

Get peace of mind

Spend management in Divvy feels different to our customers because it is. 

We proudly offer the flexible control businesses need, while making the process easy to use and intuitive. All of this culminates in saved time and money for our customers. 

Who knew budgets could be so powerful?

Get started with Divvy today.

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