Spend management: From chaos to control with AI.
Spend management: From chaos to control with AI.
How we got to where we are today.
There have already been several revolutions in the spend management space — from the advent of web-based data collection and analysis in the 1990s to the rapid rise in SaaS platforms designed to track and understand spend across organizations. How much further can spend management progress? One might assume that transformation in this space has limitations or may produce diminishing returns.
However, due to explosive growth in the field of artificial intelligence (AI) over recent years, the methods businesses use to manage their spend are continuing to find new heights of efficiency and speed. Organizations in every industry are exploring exciting new AI use cases, from marketing and sales to engineering and product development. Companies that don't leverage AI to automate their financial operations risk stifling their future growth.
We’ll dive into the latest in AI as it relates to finance and spend management, but first we need to understand why these advancements matter so much.
Chaos versus control.
In many ways, varying degrees of chaos have been the status quo for businesses. They’re still managing their finances manually, with spreadsheets and grueling, drawn-out close processes. Or they’re not entirely sure what’s being spent and by whom.
Research recently commissioned by Brex in partnership with WBR Insights indicates that most organizations (67%) are using four or more SaaS platforms to manage different types of spend. Employees have to dig through these disparate systems to find answers, often after the money has already been spent. These approaches are five, 10, or even 15 years behind what modern AI and automation technologies can enable.
And that means the difference between chasing spend and directing it. Merely managing spend after it happens may be “the way we’ve always done it,” but it can present significant challenges and drawbacks. With this approach, businesses often face a lack of visibility into where and how their money is being used globally. As a result, financial surprises, budget overruns, and missed opportunities become common. To avoid these issues, it's essential to shift the focus toward controlling spend proactively.
Control is the desired future state of finance, where spending is controllable before it happens and appropriate guardrails can be put in place. Organizations require control — especially when it comes to employees spending money. But the vast majority of spending decisions occur outside of the finance team, and often across the globe due to the rise in remote work. So how can finance better understand and manage such large volumes of spend more easily?
The answer is artificial intelligence.
Smarter financial controls will be driven by AI.
Like many industries and disciplines, the next great leap in spend management is coming because of well-trained AI models and machine learning. These technologies will automate the menial tasks for employees doing the spending and for finance teams closing the books. Plus, leaders embracing AI will be better positioned to control spend before it happens — with fewer inputs and less effort from their team.
AI drives valuable business efficiencies through spend management automation. Some of these features Brex has built into our financial services and software since day one include:
- AI-enabled policy controls to automatically restrict spending to approved amounts and categories.
- Auto-filled reimbursement requests for out-of-pocket expenses using data from each purchase receipt.
- Autonomous receipt and memo generation to meet IRS or other local tax requirements, save employees time, and make finance teams’ lives easier.
- Merchant categorization using proprietary Brex technology to help businesses reduce manual categorization and more easily close their books.
- Auto-mapping transactions and related categories, fields, and more to your ERP for two-way sync in real time.
With AI, managers can transform their workflows so in-policy spend is auto-approved — and they can focus on only reviewing expenses that need a careful review. With expense review accelerated and all transactions automatically categorized and compliant, companies spend less time completing their month-end close.
Brex’s AI-led platform also creates more business value by offering smart features that suggest, benchmark, and surface insights into company-wide spend. These AI-powered capabilities:
- Surface smart suggestions for things budget selection and approvals automatically guide employees for improved accuracy.
- Perform deep analysis to benchmark performance and compare current business activities to similar company benchmarks.
- Provide relevant insights on corporate spend and help answer critical business questions in real time.
Combined, such AI-led functionalities help finance leaders and managers streamline routine tasks, understand performance trends, and unlock new business opportunities.
The potential benefits of AI.
AI is a rapidly evolving technology. Language-learning models have advanced so quickly, and every week reveals new frontiers of what’s possible, so there’s an element of fear and uncertainty about what this means for jobs going forward. Will whole departments be replaced by computers that can do the job more quickly and accurately than humans?
So far, that seems unlikely. The more likely scenario is that people trained in the nuances of AI will use the technology to supplement their existing work and to make their jobs easier.
Plus, the advantages of implementing AI in your finance function could be enormous. Aside from the efficiency gains and faster close process, when they embrace AI to control spending proactively, finance leaders can also gain these benefits:
- Reduced overspending and increased compliance because AI can restrict out-of-policy spending before it happens rather than after.
- Greater visibility into overall spending thanks to smart categorization and automated expense reports.
- Operational agility from the decreased manual work needed to close the books.
- Scaling operations without adding costly resources.
AI-driven spend management promises to shift employees' and accountants' focus from "repetitive and routine" to "unique and strategic." And the impact will be exponential as each business scales.
Discover more about how Brex brings groundbreaking AI tools to finance teams here.
To learn more about how AI-led technology automates low-impact tasks while delivering big returns, check out our "step-by-step guide to getting more from company spend."