What Do CFOs Need to Know About Business Spend Management, Anyway?
“When the storm hit back,” recalls Jeremy Hamon, Head of Group Finance at Primetals Technologies and CFO of the financial entities in the group, “what I missed in the way we were giving targets was understanding that there’s a story behind every number. I crunched numbers and gave timelines on payment terms adjustment. I started to give quarterly updates but did not realize that my colleagues already cared about each of those numbers a long time before I even did. They wished me luck if I was negotiating in their name, simply because they already did try hard many times before.”
Spend management: stop crunching numbers and start building financial resilience
Every crisis presents a company with an opportunity to survive in the moment of disruption and to thrive once adversity has passed. How will your company fare? In our experience, it often comes down to the preparations CFOs make in times of relative stability.
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Prior to the Covid-19 pandemic, Primetals Technologies had invested in advanced cloud technology that helped the finance department improve its cash, liquidity, and risk management by harmonizing a variety of spend management processes. Jeremy continues:
“I always use our platform to have a clear and immediate view of what’s happening to our financial assets and where we stand. During the very first lockdown, like many companies we had to stop our revenue stream for three months. And we didn’t always know what kind of government support would be available in each country to sustain that. But we were able to forecast when and where we would need cash — and we used our platform to help us work as an in-house bank. We sped up centralizing the finance function to help entities struggling in different parts of the world. And treasury and supply chain started working together to expand the implementation of supply chain finance. Having that tool in place meant we could turn a pandemic into a catalyst for change.”
With choppy waters here to stay, you might feel like it’s too late to take meaningful action that moves your company out of recovery mode faster. The good news is that there’s never been a better time to invest in those capabilities.
So where should a CFO begin?
You’ve actually taken the first step simply by virtue of reading this far and being open to challenging your current understanding of spend management. It’s a discipline that has traditionally been the domain of procurement, with finance being at the end of the chain to process invoices and mired with a lack of visibility into cash, assets, and financial liabilities and obligations.
As you’re quickly realizing, spend management is so much more than procuring. Or sourcing, invoicing, making payments, handling contracts, managing suppliers, or doing any single business activity alone. Spend management — or, as we refer to it, Business Spend Management (BSM) — is a comprehensive, technology-based approach that allows CFOs to fortify balance sheets immediately and simultaneously set up their organizations to thrive.
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What is Business Spend Management (BSM) and why is it important to CFOs?
Thanks to advances in technology, CFOs have the opportunity and visibility to understand spending practices across their organizations and apply precision tools — not blunt instruments — to contain costs, invest in growth, and optimize working capital. With the added insight these technologies offer, Business Spend Management (BSM) has emerged, and is empowering finance leadership to better understand — and influence — how resources are being used across their company. With increased visibility across all spend types, from COGS to operating expenses, finance leaders are better able to make the informed decisions necessary to ensure their company remains competitive.
What resources are available for CFOs to learn more about BSM?
Our latest guide, The CFO’s Guide to Business Spend Management, outlines how BSM technology can help CFOs solve the challenges of legacy spend management processes and systems, contain costs, unlock cash flow, improve liquidity, reduce risk, and enable sustainable growth.
- An overview of the risks of siloed spend management systems and practices
- Insight on why BSM is important to strategic financial management and the organizational control BSM technology yields
- An exclusive look at how and why finance executives at Mirati Therapeutics and VF Corporation are implementing Coupa BSM software and the outcomes they achieve
- A checklist to assess how much value you’re capturing in your finance organization right now
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