How to choose the right spend management software for your business

Managing spending can feel like a breeze when you run a small business with only a handful of monthly transactions. But as your business begins to grow, you’ll likely find yourself searching for the best spend management software to help you keep things running smoothly. 

In a scaling company, hands-on processes — like emailing in receipts, handling reimbursement approvals on Slack, and tracking expenses through spreadsheets — that served you pretty well in the early days begin to pile up. Every new hire, vendor, and card adds friction. Approval emails get lost, receipts go missing, and month-end close begins to take days, instead of hours. Spend management software exists to solve this problem. But with myriad options on the market, choosing the right solution for your business can feel like navigating a complicated maze.

In this guide, we’ll explain what spend management software is, the features that matter most, and how to choose the right spend management software for your company, based on size and stage.

Spend management software helps businesses track, control, and optimize company spending. 

It replaces manual processes — like spreadsheets, paper receipts, and email approval chains — by automating these workflows and bringing them into one system. The best spend management software gives finance teams real-time visibility into where business money is going and reduces manual work. 

Here are some of the core capabilities that spend management software typically include:

• Corporate or virtual cards with spending controls 
• Automated expense reporting and receipt capture
• Approval workflows for purchases and reimbursements 
• Budget controls
• Bill payment
• Real-time reporting
• Accounting integrations

Businesses at every stage and function can benefit from the features and real-time visibility that spend management software offers — but each stage or function might draw different advantages. Here’s a brief look at how different companies, from startups to enterprise teams, can benefit from these tools.

Startups

Early-stage companies often start with the founder managing all spending manually. But as expenses increase, founders may find themselves dedicating more time to approving purchases than growing the business. At this point, spend management software can make a big difference and free up valuable time. 

As your team and spending avenues grow, spend management software can help distribute purchasing power (with features like employee cards and budget limits), while maintaining control and visibility. 

Small and medium-sized businesses (SMBs)

Once businesses and teams start growing, so does spending. Managing these mounting expenses will require a different level of purchasing authority. Setting up automated reporting and systems that facilitate faster reimbursements can help. 

Most businesses at this stage begin looking to replace manual systems (like tracking expenses in spreadsheets) by automating workflows, including expense reporting and receipt capture. This can help increase real-time visibility and lead to cleaner books and faster closes — without needing to hire additional finance staff. 

Enterprise finance teams

Larger enterprise finance teams usually have more complex requirements since they manage multiple departments, legal entities, currencies, and approval chains. Enterprise spend management software that offers more advanced controls, reporting, and permissions can be especially useful at this stage. Look for platforms that can handle complex approval hierarchies, multi-entity reporting, and nuanced compliance requirements across departments and locations.

HR and operations teams

Spend management isn’t only a finance function. HR teams often manage employee reimbursements, such as recruiting expenses, employee perks, and corporate cards. And operations teams may have to oversee software subscriptions, vendor payments, travel, and office spending. 

Having spend management software that allows for flexible permissions and controls for non-finance users can streamline these processes in companies in which multiple teams manage different functions.

Spend management software varies, and different platforms offer different capabilities. Here’s what to look for when you’re comparing options.

Employee cards

Look for a platform that allows you to issue physical and virtual cards with customizable spending limits, merchant restrictions, and department-specific controls. That way, employees will be able to make purchases without having to wait for approvals each time, and finance teams can still maintain oversight through built-in controls. 

Approval workflows

Relying on manual approvals can create bottlenecks. The best spend management software lets you create approval rules based on amount, department, or category. For instance, if a $50 software subscription requires the same level of approval as a $10,000 vendor contract, work will slow down because of unnecessary bureaucracy. That is why it’s important to look for automated spend management software for CFOs that lets you set different rules for routine purchases versus those for larger purchases. 

Real-time reporting 

Real-time reporting dashboards make it possible for finance teams to monitor budgets, identify unusual spending, and understand cash flow as transactions happen, without waiting until month-end. When your team has current information, they’ll be positioned to make more informed business decisions.

Expense categorization

The best spend management software allows for automatic expense categorization, which could eliminate hours that were once spent categorizing expenses manually. When expenses are categorized by GL code, department, or project as transactions happen, the time your teams has to spend on reconciliation at month-end shrinks 

Budget controls 

Budgeting works best when your approach is proactive, rather than reactive. Look for spend management software that allows you to set spending limits by team, department, or project, and get alerts when spending approaches or exceeds those limits. 

Accounting integrations

One of the best spend management software features for finance teams is native syncing — whether that’s with QuickBooks, Xero, or other accounting software that your company uses. These integrations help to synchronize transactions automatically, which reduces duplicate data entry and makes reconciliation much easier at month-end. 

Automation

Automation is often what differentiates great spend management software from the basic ones. The best SaaS spend management software offers automations for receipt matching, policy enforcement, and anomaly detection. Many also use AI to flag unusual transactions or duplicate charges.

With so many options on the market, choosing the right solution for your business can feel overwhelming. Here’s a framework you can use to find the tool that’s best suited to your company’s needs.

Assess your business needs

Start by looking at your company’s particular workflows and pain points, rather than perusing generic feature lists. A business that has complex approval chains versus one with only three employees will have very different requirements.

Consider these questions:

• How many employees need credit cards? 
• How complex are your approval chains? 
• Do you need multi-entity or multi-currency support? 
• What’s creating the most significant bottlenecks in your business?

Consider scalability

Get clear about your plans and possible paths as a business, and select a platform that can grow with you. If you’re evaluating top spend management software as an early-stage company, make sure the platform you choose will be able to handle the complexity you expect to have in two years. Switching platforms later can create a lot of unnecessary friction and costly work. 

Evaluate integrations

Check how well the tool integrates with your existing accounting software, banking platform, and HR systems. Having disconnected tools can create a lot of manual work and reduce visibility. 

Compare pricing and implementation requirements

Pricing models vary between tools. Some have fixed subscription fees, and others charge per user or based on spend volume. As you assess each platform’s pricing models, look out for hidden fees,  integration costs, and implementation requirements. 

Different types of businesses prioritize different capabilities when choosing spend management software. Here’s a look at what matters at different levels and business types.

Before choosing a spend management platform, ask vendors:

• How long does implementation take?
• How quickly can we issue cards and onboard employees? 
• Which accounting platforms does your software integrate with?
• Can approval workflows be customized?
• How does pricing change as our spend grows or headcount scales? 
• Does the platform support multiple entities and currencies?

When it comes to choosing the best spend management software, here are a few mistakes you’ll want to avoid.

Mistake #1: Buying for today’s needs only

It’s tempting to go for the simplest and cheapest option in the market because you want to get started immediately. But if that tool can’t scale alongside growing headcount, transaction volume, and complexity, you’ll have to migrate to another tool in a year or two. Having to switch later is disruptive and time-consuming. 

Mistake #2: Not prioritizing ease of use and adoption

The shiniest spend management software isn’t very helpful if employees avoid using it. Simple interfaces and intuitive workflows typically lead to higher adoption across teams. Prioritize ease of use and adoption.

Mistake #3: Overlooking integrations

Spend management software that ticks all the other boxes but doesn’t integrate with your accounting software will actually create more manual work. Before committing to any platform, make sure it fits and syncs with your financial workflows.

The right spend management software will reduce the operational burden of tracking, approving, and reconciling spending and give you better visibility and stronger controls. Anything that complicates your finance stack, rather than simplifying it, is worth reconsidering. 

As you evaluate your options, make the choice based on your company’s size, complexity, and growth trajectory, not just the longest feature list. The key is to focus on the workflows you want to improve and involve the people who will be using the tool — like finance, HR, and operations teams — up front, to make sure the software will meet your team’s needs and, ultimately, get adopted.. The goal is to simplify your financial system and build a strong foundation for growth. 

Explore how Mercury helps startups and growing businesses simplify spend management integrated banking, company cards, and easy financial workflows — all in one place.