Payments Innovation

Turning Unplanned Spend Into Spend Management Innovation

Spend Management: Simpler and Faster Payments

In the middle of an otherwise productive day — one of those shifts when the whole team is not only ahead of schedule, but likely to get ahead of the game and take one or two extra jobs or tasks — few things can ruin that mojo more than waiting on approval for an expense to finish one job and move onto the next.  There’s the paperwork that might need to be filled out, and then trying to get in touch with that one supervisor who needs to sign off on this particular in- field purchase. All of this friction can lead to that worker left waiting, cooling his or her heels in the truck, as the traditional spend management process grinds on.

So much for getting ahead.

But this is 2019, and we are living in an increasingly digital economy for which seamless, frictionless transactions are becoming the norm. When it comes to spend management, advances in mobile technology – coupled with advances in how traditional payments products are used – are bringing a new efficiency to an area that is a common pain point for businesses of all sizes, while also reducing the margin drain caused by all that waiting. That’s the main theme of a new PYMNTS interview between Karen Webster and PEX CEO Toffer Grant.

Moving Away from Paper

Across the entire digital world, payments are, of course, getting faster, with wages and disbursements getting to recipients quickly or even instantly as more businesses chase those opportunities. At the same time, B2B transactions — along with payments and related processes in healthcare and other areas —  are surely, if slowly, moving away from analog and paper and further into the digital realm. Spend management is also following that trend, though there is still much work to do, of course.

“You want to keep that efficiency train running,” Grant told Webster when talking about the appeal of tying spend management more closely to software, and the need to use digital tools to blend the online and offline worlds of spend management. After all, the more you streamline spend management, the more work gets done — and the more control companies have over expenses.

For Grant, that means innovations that give companies the chance to use a single platform to manage spend – and the ability to push funds instantly to network-branded debit cards for employees who request specific amounts for specific purchases, and who can use those cards at stores to make those purchases on the fly.

For starters, that gives workers and their companies clarity over how much needs to be spent and where. It also gives companies many degrees of freedom over their spend management programs while preserving their margins. A card in a worker's pocket carries a zero balance until the exact amount of a purchase is pushed to it. Using an app, the employees would make that request, which in turn would be authorized by a company-approved administrator, compressing the wait time to a few minutes instead of a few hours or more.

Supply Run

In practice, Grant explained, it is simple. Workers who know what they need can pre-emptively put in the request for funds before arriving at the store, which could save time. Or, if the business prefers, that request can be made at the point of sale. “It depends on the business needs,” Grant said.

In any case, the idea is to save valuable time that eventually adds up — and can also result in the company being able to take on more work. Time is money, after all, and all those non-wasted dollars add up, he said. “Those are extra margin points” that help the bottom line, Grant added. “It makes a difference, whether you are running a family business or a larger, more sophisticated company.”

Audit Trail

Moving more spend management to digital also can give another benefit to companies: control. “You have an audit trail,” Grant said. “You are creating a whole other data component here, getting the full breadth of knowledge about that particular purchase and how it was authorized.” And that data stays with the company after, say, a particular employee leaves. That control can matter significantly in spend management, given all the unplanned spending that takes place via employees out in the field. “You can only plan so much,” Grant said.

The notion of control also applies to the spend management platform itself. “It’s a major shift in process,” he said. “Rather than calling or texting someone from outside the platform, you are doing it inside the platform.”

And the requests for spending approval can be visible to multiple administrators, a transparency that can also benefit a business. “You’ve created an awareness” of spending that is likely to be much more clear than it would be via paperwork, along with an awareness of the requests that come in from specific employees — all of which can be analyzed by higher-ups.

Speed, of course, is among the main motivations for the efforts to move more spend management to digital. “You want to give employees the ability to move as quickly as possible,” Grant said.

Spend management, always a vital issue in the worlds of payment and commerce, promises to gain more focus in the coming year or two. That’s not only because of the general move toward digital, but because if credit tightens during an economic downturn, companies will face even more pressure to control their expenses. And that’s where digital has a chance to step up.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.