What is spend visibility and why does it matter?

Most founders can tell you roughly what the company spent last month. But it’s less likely that they’ll be able to tell you how much the company’s spending today, across every card, vendor, and subscription. This gap is normal in the early days. But at some point, just having a rough sense of business spending stops being good enough. 

Spend visibility is knowing where your company’s money is going as it goes there — not finding out three weeks later during close. It's an operational capability, not just a reporting feature, and, like any aspect of operating, it gets more complex as your business grows. 

When you’re ready to move on from time-consuming workflows, like manually reconciling expenses and wrangling spreadsheets, to a more robust system, make sure you understand the importance of spend visibility. You’ll be better positioned to smoothly scale your business if you put the right tools in place early on. 

To help you get started, this guide covers: 

• Why spend visibility matters
• Signs you lack spend visibility
• How to improve spend visibility
• Spend visibility vs. spend control
• What to look for in a spend visibility solution

Looking for a spend visibility definition? Essentially, spend visibility is the ability to see, understand, and monitor how money is moving through your business in real time. This includes who’s spending money, what they’re spending it on, and whether or not these expenditures line up with your budget. Spend visibility encompasses every dollar that’s leaving the company, from card purchases and vendor payments to subscriptions and reimbursements.

Expense tracking is the process of logging transactions after they’ve happened, usually so you can categorize them for taxes or pay someone back. 

So, on a practical level, what’s the difference between spend visibility and expense tracking? Take this example: Expense tracking can show you that your marketing team spent $40,000 last quarter. But a well-run spend visibility system can show you that number in real time. It can also break spending patterns down by tool and campaign, flag rogue charges from an unapproved vendor, and show you that the team is on pace to blow through its Q3 budget by mid-August — while you still have time to respond.

As your company’s financial operations become more complex, having spend visibility becomes essential. The valuable insights you’ll gain from spend visibility will shape nearly every financial decision you’ll make as your company grows.

Cash flow

You can only manage cash flow if you know where your cash is and where it’s going. If you’re using multiple disconnected cards, juggling a variety of vendor relationships, and relying on your employees to submit expenses once a month, you’ll always be working from an incomplete financial picture. This can lead to unpleasant surprises, like realizing you’re short on cash for payroll because three vendor invoices cleared the same week.

Budgeting

It’s hard to stick to a budget when you have multiple teams and employees spending money, and no easy way to see what’s been spent. Most founders who don’t have a real-time system in place to monitor spending end up learning about problems, like a budget overrun, during month-end close — after the money’s already gone. With one, you’ll be able to catch a department trending over budget in Week 2, for example, and not in Week 6.

Decision-making

Every choice you make — whether to hire, renew a vendor contract, or try to stretch runway for another quarter — depends on knowing what you’re actually spending and when. So, when you work from current spend information, rather than month-old numbers, you’ll be able to forecast more accurately. 

Financial accountability

As you hire team leads and department heads, you’ll need a way to hold them accountable for their budgets, without personally auditing every transaction. When you set up a centralized system,  you’ll be able to see spend by team or by person and spot patterns. This means you’ll have the information you need to have specific conversations about individual line items, instead of making vague comments like, “We need to tighten up.”

If you think you may need to improve spend visibility at your company, there are a few signs to look for. Some of these are obvious. Others creep up on founders who’ve been so focused on product and sales that they never noticed that their financial operations weren’t keeping pace with headcount. 

Manual processes

If your process for tracking spending involves pulling data from your bank, your card provider, and a spreadsheet of reimbursement requests and then manually reconciling all three, you’re already behind. Manual work introduces errors, and it means your view of spend is always a few days — or even weeks — out of date.

Budget overruns

If a department blows past its budget and doesn’t find out until someone flags it afterward, that’s a sign that the decision makers  lacked real-time visibility into their team’s spending. One overrun might be a fluke, but a pattern across teams usually points to a visibility problem.

Poor reporting

If pulling a spend report for your board or investors takes days of manual work, your systems probably aren’t giving you visibility — they’re giving you raw data that you have to process by hand. When you have streamlined processes that support good visibility,, the underlying data will already be organized and current, making the process of generating a report relatively quick and painless.

Slow month-end close

A slow month-end close is usually the clearest symptom of a visibility issue. If your team spends the first two weeks of every month reconstructing what happened in the last one by matching receipts to statements and chasing explanations for stray charges, you’re not managing spend or time effectively. 

The good news is that each of these issues has a practical solution. To start, change how spend flows through your company, including where it starts, how it gets captured, and how fast it reaches an expense management system that can actually make sense of the numbers. Here’s what you’ll need to do.

Centralize your expense management system

To centralize spend, make sure you’re routing as much of your company's spending as possible through a single platform. 

Start by connecting your operating account, card spend, and vendor payments through the same platform, wherever possible. From there, route vendor payments through that connected system whenever you can, too. You don't have to eliminate all your payment methods overnight, but every method you keep should still route back to the same connected system.

Distribute employee cards

When you set up corporate cards and connect them to a centralized system, you’ll be able to see purchases as soon as they happen. For instance, if you select employee cards with analytics for team-level spend visibility, then you’ll be able to use tags to easily track which department, project, or person is responsible for which transactions. 

And if you’re serious about increasing your spend visibility, make sure you give corporate cards to everyone who spends on your company's behalf, not just the people who ask for one.

Set up real-time reporting

Setting up a centralized system with tagged spending (as described above) is most helpful if you can see the spending as it happens, instead of having to wait for a monthly export. With real-time reporting, you’ll be able to spot issues immediately. For instance, if a team is trending over budget or a vendor charge looks off, you’ll see it while it’s still early enough to act.

Automate your spend tracking 

By using up accounting automations, you can keep your reporting accurate, without someone having to manually reconcile every expense. You can set up automations to automatically categorize transactions, match receipts to charges, and immediately flag any purchases that fall outside of your expense policy. Since manual workflows are prone to human error, automations can help your financial data stay more consistent and reliable.

Add accounting integrations

Look for accounting integrations that let you connect your banking, cards, and accounting software to your expense management platform. If your employees use corporate cards, these integrations can populate your general ledger with transactions as soon as they occur.

Spend visibility and spend control are related, but they solve different problems:

• Spend visibility: Visibility means seeing spend — knowing what’s happening, in real time, across the company. 
• Spend control: Control means setting rules that shape spend before it happens. This could include implementing card limits, category restrictions, and approval workflows that stop purchases before they go through.

If you’re wondering, “How can a business enhance spend control and visibility?”, here’s the thing: You can’t enhance one without the other. If you have visibility but not control, you’ll still see problems clearly, but only after the damage is done. If you have control without visibility, you’ll be setting limits without data on how your company actually spends, so your limits might be ineffective. 

When you bring control and visibility together, you’ll see the benefits from each approach simultaneously.  For example, real-time reporting will surface timely data, so you can tailor your spending policies and limits to what that data shows.

Whether you're comparing options for employee card providers with analytics for team-level spend visibility or looking for a broader spend management platform, there are a few capabilities that matter more than the rest. Here’s what to look for:

• Analytics: Look for platforms that break down spending patterns by team, category, and vendor. You’ll also want a real-time view that flags any categories that are currently trending over budget.
• Controls: Make sure you can set limits, policies, and approvals at the team or individual level. Make sure you have the tools necessary to stop or flag a transaction before it clears — not just after.
• Integrations: Check that you’ll be able to connect the tool directly to the accounting platform you already use — such as QuickBooks, Xero, or NetSuite — so transactions sync automatically, instead of requiring a manual export.
• Reporting: Confirm that you can pull a custom view by team, category, or time period on demand, instead of having to wait for a static report that’ll quickly become outdated.

The work of increasing spend visibility — by setting up one connected system, providing cards for all employees who spend, and using automation to handle reconciliation — will pay off at every stage of growth. After all, a company that can see real-time spend will be better positioned to make wise hiring decisions, negotiate vendor renewals, and close the month quickly and accurately.

Companies that know what they're spending today make better decisions tomorrow. Mercury helps make that possible by bringing cards, reimbursements, approvals, and accounting together in one connected system. Explore the Mercury demo today.