AI-Driven Spend Analytics to Improve EBITDA
Combine advanced analytics and expert know-how to reduce non-optimal spending and improve internal spending policies.
Understanding Spend Leakage
Spend leakage refers to the use of company resources in a non-optimal fashion, often termed as "Tail Spend". It includes spending on employee purchases, reimbursements, and operational materials. Process Tempo provides a platform and plan to address this issue effectively.
What is Tail Spend?
Tail spend constitutes non-strategic expenditures made up of numerous transactions across various merchants. Managing this spending can be challenging due to its breadth and volume.
Potential Savings
Estimates suggest spend leakage reduction can save 10% to 50% of total tail spend annually. Here’s what it could mean for different company sizes:
Small to Medium-Sized Company
- Employees: 200-500
- Annual Spend: $10M
- Potential Savings: $500,000/year
Medium-Sized Company
- Employees: 500-1000
- Annual Spend: $50M
- Potential Savings: $2.5M/year
Large Company
- Employees: Over 1,000
- Annual Spend: $200M
- Potential Savings: $10M/year
Benefits of Spend Analytics
Reduce Wasteful Spending
Identify patterns to cut unnecessary costs.
Optimize Contract Spending
Enhance negotiation with accurate data.
Implement Smarter Policies
Develop data-driven policies.
Identify Spending Patterns
Understand spending trends across business units.
Address Spending Culture
Drive behavior change with data.
Identify Potential Fraud
Detect non-compliant activities
Quick Wins with Spend Analytics
The Evaluation
Load spend data into Process Tempo to highlight exceptions and anomalies, providing metrics to adjust policies.
Types of analysis performed during the evaluation stage:
- Changes in spending behavior turning certain times of the year. For example, an increase in spending during the holidays.
- Patterns between employees and denied transactions
- Patterns that repeat weekly. For example, supplies always purchased on a Monday.
- Political donations
Policy Tuning
The next step in the journey is to begin to fix the root causes of non-conforming spend by reviewing existing policies to see if they still make sense. Policies can become stagnant over time and therefore do not always reflect what is in the organization's best interests.
Automation
In order to take proactive steps and to automate policies the organization will need a platform that can automate this effort.
Powerful automation features:
- Proactive alerting
- Automated exception handling
- Dynamic policy tuning
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