How to build a spend management strategy from scratch

As a business grows, spending naturally becomes more distributed. For instance, employees throughout the company might purchase software and departments will likely manage their own budgets. New vendors could get added along the way, and subscriptions might renew automatically with little oversight. Individually, these expenses may not seem significant. But taken together, they can add up to unnecessary costs. 

Without consistent oversight and approval processes, you'll lose visibility into where your money is going. This is a common challenge: Only 18% of organizations that the American Productivity and Quality Center (APQC) surveyed have fully integrated financial and operational data environments — and this can slow organizational decision-making.

Thankfully, there’s a solution: A thoughtful spend management strategy can bring structure and clarity to this type of business complexity. Whether you're building your finance team for the first time or replacing processes that no longer scale, creating a clear framework now can prevent costly inefficiencies later. Here’s how to get started.

A spend management strategy is the system that a business uses to plan, approve, track, and optimize company spending. It combines policies, approval workflows, reporting practices, and technology, so that every dollar spent aligns with business priorities.

Although every organization will need to develop its own tailored approach, effective spend management strategies typically stem from the answers to these questions:

• Who can make purchasing decisions?
• What approvals are required?
• How are expenses tracked and categorized?
• Who owns vendor relationships?
• How is spending reviewed over time?

Your framework should make these decisions easier. Be sure to document your strategy, so each department has the guidance they need to operate efficiently and your finance team can maintain visibility into company-wide spending.

For a deeper dive, read our guide to spend management best practices.

During their earliest stages, many companies operate successfully even without documented spending processes. Eventually, however, growth may introduce enough complexity that informal systems become harder to manage.

Here some are common signs that your company needs to formalize its spend management strategy:

• Tool sprawl: SaaS subscriptions are multiplying across teams.
• Overlapping vendors: You’ve signed contracts with multiple vendors that provide similar services.
• Unclear approval paths: Employees aren’t sure who to ask for approval before making purchases.
• Limited real-time visibility into business spending: Budget overruns and other spending issues aren't identified until month-end close.
• Increasing manual work: Finance teams are spending more and more time reconciling expenses.

These challenges often appear gradually, rather than all at once. Establishing clear controls early makes it easier to scale and can help you avoid a mess of administrative work later.

Most spend management frameworks follow the same core steps. Starting with a clear understanding of your company’s current spending habits will make it much easier to introduce processes that align with your needs (and ones that employees will actually follow).

1. Define your objectives

Before reviewing transactions or writing policies, decide what you want your spend management strategy to accomplish. Every element of your strategy should support those objectives.

For some businesses, the priority is gaining better visibility into organizational spending. Others may want to shorten approval times, improve forecasting, reduce manual finance work, or eliminate unnecessary software costs. As your business grows, your priorities may evolve, but having clear goals from the beginning will make it easier to evaluate whether your processes are actually improving financial operations.

2. Conduct a spend audit

Before introducing new policies, take time to assess and understand how money currently moves throughout your business. Review every major category of spending, including:

• Corporate card transactions
• Employee reimbursements
• Bills and invoices
• Recurring vendor payments
• Department budgets
• Software subscriptions (and their renewal dates)

As you review spending, group expenses by department, vendor, payment method, and recurring commitment. Look for patterns and repeats, such as duplicate vendors, overlapping subscriptions, inconsistent approval practices, and spending that may no longer support business priorities. 

While conducting this audit, look for opportunities to simplify your financial operations. You might identify ways to consolidate vendors, renegotiate contracts, or eliminate finance tool sprawl (like subscriptions that no longer provide meaningful value), for example. Along the way, decide whether a centralized spend management approach would make the most sense for your organization.

3. Map your current workflows

Once you've identified where money is being spent, document how spending actually happens.

For each major spending category, identify:

• Who requests purchases
• Who approves them
• How payments are made
• Who reconciles transactions
• How spending gets reported

Many organizations discover approval bottlenecks or duplicated work simply by documenting their existing workflows. By mapping these processes, you’ll create a baseline that makes future improvements much easier to measure.

4. Define clear spending policies

An employee spending policy works best when expectations are straightforward and easy to follow. Provide standardized documentation, such as an expense policy template, to help foster consistent adoption across teams.

Your spending policy documentation should clearly define:

• Approval thresholds
• Department spending limits
• Corporate card usage
• Reimbursement requirements
• Required documentation
• Criteria for vendor selection 
• Exceptions and escalation paths

When employees know which purchases require approval, what documentation is expected, and who owns each decision, routine spending can move faster. Review your policies regularly as your company grows to ensure that these guidelines continue to reflect how your business actually operates.

5. Assign ownership across the business

Finance shouldn't be responsible for every spending decision. To avoid approval bottlenecks for routine purchases, define who’s in charge of which spending decisions and assign responsibilities throughout your organization. For instance, finance typically oversees reporting, compliance, and policy governance, whereas department leaders manage spending within their budgets.

When you’ve got clear policies in place, budget owners will feel more confident when evaluating purchases against business priorities, and employees can more easily follow established purchasing and documentation requirements.

6. Build a SaaS spend management strategy

Software is often one of the fastest-growing operating expenses for modern businesses. Since subscriptions often renew automatically, duplicate platforms may go unnoticed for months, causing unnecessary expenses to multiply.

To create a SaaS spend management strategy that works for your business, follow these best practices: 

• Assign an internal owner to every subscription.
• Track contract renewal dates.
• Remove unused licenses.
• Consolidate overlapping tools.
• Review vendor performance and return on investment.

7. Choose tools that support your strategy

Wondering how to choose the right spend management software for your company? The best platform will be one that seamlessly supports the processes that you've already established, instead of forcing teams to work around the software. Ideally, it should also unite your current workflows and tools. When your spending systems — including cards, reimbursements, bill payments, accounting, and reporting — all live in separate systems, your finance teams might spend valuable time reconciling data, rather than analyzing it. Bringing these workflows together will improve visibility and help everyone work from the same financial picture. 

When you’re ready to compare expense management software solutions, look for capabilities that will support your finance workflows, including:

• Corporate cards with customizable controls
• Bill payment workflows
• Accounting integrations
• Budget tracking tools
• Real-time reporting dashboards
• Automated approval routing

Be sure to evaluate each platform’s overall automation capabilities, too. Automated expense management can reduce the need for slow, manual work by streamlining approvals, expense categorization, and reconciliation, and it can improve consistency across the organization. These workflows also can give finance leaders faster access to accurate data, making it easier to identify spending trends and respond quickly as business priorities change.

8. Create a reporting rhythm

Once you’ve crafted your spend management strategy and launched it across the company, be sure to implement a regular cadence of reviews to help ensure that spending continues to align with your business priorities as the organization changes.

Your monthly reviews could include:

• Comparing your budget to actual spending (variance analysis)
• Vendor performance reviews
• Assessing your full suite of SaaS software and upcoming renewal dates
• Leadership reporting
• Policy reviews

These monthly reviews aren't just an opportunity to confirm that spending stayed within budget. They can also help leaders identify recurring cost increases, monitor software adoption, and evaluate vendor performance. And, they can help you spot opportunities to improve efficiency before small issues become larger problems. Over time, consistent reporting supports better forecasting and more informed financial decisions across the business.

Once you've established the foundations of your strategy, use this checklist to make sure you've covered the essentials:

• Audit all operating expenses.
• Document existing purchasing workflows.
• Define approval policies and spending limits.
• Assign ownership across departments.
• Review SaaS subscriptions and renewal dates.
• Centralize spending data, where possible.
• Automate approvals and expense management.
• Review reports regularly. 
• Refine your spend management processes as your business grows.

Your strategy doesn't need to be perfect on day one. It should provide enough structure to improve visibility for your current workflows while remaining flexible enough to evolve alongside the business.

Building a spend management strategy is an ongoing process. Most companies refine their policies, workflows, and reporting as they grow. Ultimately, the goal is to create shared processes that keep financial decisions consistent across your organization, without slowing the business down.

Mercury brings together banking, corporate cards, expense management, bill pay, and accounting automation in a single platform, giving growing businesses the tools to support a more connected approach to spend management as their operations evolve. 

If you’re already using Mercury, getting started with expense management is a natural next step.