Spend Management 2.0 Is Connected and Contextual

Holistic visibility over a business is what best positions organizational leaders to grow that business.

After all, executives must first see costs to cut them, as well as envision opportunity areas to invest in them.

“What we are seeing now is in my mind the next wave of innovation,” Oded Zehavi, CEO at Mesh Payments, told PYMNTS during a recent conversation. “The future of spend management is where everything connects. It’s not only about control, it’s about control that syncs with your ERP and other finance systems.”

The payment landscape is in the midst of a pivotal migration toward modern and increasingly digital solutions, many of which are designed to help organizations achieve sustainable scalability through actionable transparency.

Read more: Finance Leaders Invest in Modernization, Take Aim at ‘Technical Debt’

Still, Zehavi says modern spend management solutions only have 1% to 3% of the market, with 98% of businesses still using a tech stack absent automation and without synchronization and other modern features.

“It’s very tough to change habits … historically in the minds of CFOs any new systems meant a long deployment, a lot of cost, and it was much more difficult to calculate an ROI [return on investment] before starting the project,” Zehavi said.

“Now there is a new breed of solutions that are much more cost effective, where the deployment takes a relatively shorter time, and it connects more and more. Companies that have moved their infrastructure to the cloud now have standard options on the accounting side, the HR side, that can be easily integrated without too much effort. So the ROI is much more clear,” he said.

Another big reason for companies dragging their feet boils down to simple inertia. An object at rest tends to stay at rest and, as Zehavi says, “nobody ever came around and offered them something better.”

Spend Management Progress Comes in Waves

In Zehavi’s view, before the COVID-19 pandemic companies tended to see spend management as nothing more than receipt collection and reimbursements around travel and other company-related expenses.

“COVID changed that,” he said, “and now [spend management] is about how do you orchestrate payments and control visibility in organizations that are mostly distributed and remote. How do you pay the tens or hundreds of staff services, your media agencies and media in general? Now [spend management] is a different challenge, much bigger and something that in my mind only technology can solve.”

That’s why we’re seeing a recent huge burst of change and renewal of the CFO stack that enables finance teams to solve for these problems, Zehavi noted.

Having a modern operational foundation capable of leveraging the latest technology makes a business nimble and properly equips them to respond appropriately to environmental changes.

It all ties back to the notion of visibility. In order to fix the problem, it’s necessary to see it first.

Still, “people that don’t come from the payment space think that the data in the payment transaction is very rich, which is not totally accurate,” Zehavi said. “You may have some information about the merchant, a timestamp, merchant category, but in many cases you are almost blind. At the end of the day, the payment information is not itself strong enough to enable you to make wise decisions that will be fully automated, and that’s why there’s a need for additional layers — a contextually informed conversation between payment data and external sources of data is what provides the valuable information that automation can be built on.”

Once businesses start to get those insights, Zehavi says, the process stops being reversible — companies will never go back to the traditional, unsophisticated financial instruments they once used in the past.

“You would be surprised,” he said, “by how many finance teams still have this process where at the end of the month they download all their card statements and somebody needs to understand each line and confirm what it means.”

Mesh’s own spend and expense management solution can give finance teams between 10% and 30% of their time back with savings that come from automating previously manual tasks.

“It doesn’t happen overnight,” Zehavi cautioned. “There’s a balance between convincing companies to do things your way, the optimal way, or trying to adapt the platform into some of the pre-existing. The approach you take impacts the ROI of the solution.”

But at the end of the day, time saved is money earned.