Integrating spend management solutions to grow your business

Growing a digital commerce business relies on positive cash flow so you can channel your resources into building your brand and customer base. But, the rush to realise your company’s strategic vision for growth makes it easy to sacrifice cost control.

Your logistics and spend management processes are only going to become more complex as you grow, so, by emphasising financial and operational visibility early on, you reduce the risk of cutting into profits down the road. 

Integrating spend management solutions into your tech stack can play a key role in giving you that visibility, efficiency and liquidity — all of which facilitate healthy long-term growth. 

With expert advice and tried-and-true formulas and best practices, we explore how you can overcome some of your biggest business inefficiencies with support from a spend management solution.

Issues and inefficiencies your spend management solutions need to address

Before investing in a spend management solution, you need to get clarity about the black holes, or untracked and misunderstood expenses, in your budget. Let’s unpack a few examples.

Overspending on marketing

What makes marketing spend tricky is that some experts will tell you to invest more in social media and Google Ads to scale faster, while others will encourage you to put all your eggs in the organic marketing basket. The reality is that, for sustainable growth, most cases require investment in a hybrid approach, which involves a combination of both paid and organic tactics. 

But how do you know if you’re tying up too much of your capital in marketing spend? Determine your marketing ROI by calculating your return on ad spend (ROAS) and the return on organic content spend (ROCS).

Determine your ROAS with this formula

• ROAS = (Revenue made from ads - cost of ads) / cost of ads X 100

You can break this down for your TikTok, Facebook and Google Ads campaigns. Then compare which are most successful and make future investments based on your return. In general, it’s good to aim for an overall ROAS of 400%, or $4 made for each $1 you spend.

Determine your ROCS with the same formula

• ROCS = (Revenue generated from organic content - cost of content) / cost of content X 100.

The great thing about using ROCS to track organic marketing spend? It’s compelling to the C-suite. As the CMO of marketing at Zapier said to Director of Content Lane Scott Jones when looking at her ROCS numbers, “With these ROI numbers, tell me why I shouldn’t give you advertising’s entire budget right now?”

If you determine that you’ve overspent on marketing, that might be the reason your dedicated cards for marketing spend are getting blocked by traditional banks, which often aren’t set up properly to fund a marketing engine.

Inventory mismanagement

Your inventory, like your brand, is your business’s bread and butter, but it can work to your disadvantage without enough oversight. Supply chain issues, the push and pull of supply and demand and seasonal fluctuation can all drain your cash flow buffer. 

If you suspect your inventory is what’s putting a strain on your finances, it could be because:

• Your capital has been tied up in inventory for too long — Inventory is a huge expense for many ecommerce businesses, with many having to re-stock four to six times a year, even before they know if they’ll see a return.
  
  
• You need a better inventory management method — Consider whether a combination of methods like just-in-time (JIT), first-in-first-out (FIFO), ABC analysis, or economic order quantity (EOQ) would allow you to keep track of excess inventory and plan your sales and marketing campaigns accordingly.
  
  
• You haven’t taken a look at your historical data — Determine how seasons and holidays impact buyer behaviour and keep track of your average units sold over time, average time it takes to order new inventory and average amount of capital you have on hand to order new inventory.

Supplier and vendor payment delays

If your accounting team handles your supplier invoices manually, you could be incurring costs due to missed invoices, data entry mistakes and even fraudulent or duplicate invoices.

Another possible issue? Limited cash flow. Supplier payment delays have also become a bigger issue after recent market turmoil, triggered by a narrowly avoided U.S. and European recession last year. 

Last year, a PayIt survey found that 27% of SMBs in the UK admitted they were owed £5,000 to £20,000 in unpaid invoices, and 55% said their late payments problem had only gotten worse over the previous year.

This issue puts strain on both the vendor and the supplier side of ecommerce businesses, meaning that those that act as suppliers themselves for wholesale buyers aren’t getting paid, and aren’t, in turn, able to pay their own suppliers.

Untracked software and subscription costs

According to Gartner research, 83% of software buyers make decisions as part of a diverse, cross-functional committee, including the C-suite, department leads and other staff members. This isn’t necessarily an issue, but if that describes your business, it could mean that your Head of Finance needs custom controls in place to ensure your spend is properly managed. 

To get more financial oversight, your IT and finance team should conduct regular software audits to track all current subscriptions and contracts and make sure the software your business utilises is worth the investment.

Lack of financial visibility for strategic insight

When your finance team serves as a function of your C-suite rather than a strategic partner, it’s harder to develop a realistic long-term vision for your business that also takes your current financial and operational limitations into account. 

So, if you find that your financial goals aren’t keeping pace with your overall business goals, it may be time to “take a step back from triage mode,” says Camunda CEO Jakob Freund in a piece for Forbes. 

According to Freund, doing so allows you to examine your own strategic processes with more clarity. ​​”Viewing processes in a holistic manner — how they integrate, their reusability and their alignment with business objectives — lays the groundwork for effective automation.”

Benefits of integrating spend management software with your financial systems

Manual spend management processes are costly in terms of time and strain on available cash flow, making ambitious growth goals harder to reach. So let’s explore how integrating spend management software can help give you more control over your business finances. 

Increased financial visibility and real-time data

A dedicated digital commerce spend management platform can serve as your business’s financial central command centre. 

See what available funds you have and where you’re spending the most so you can make tweaks to your accounting and processes as you go. The best part? Today’s spend management software solutions offer mobile apps so you can check on your business analytics from anywhere.

Enhanced cost control and risk management

Many digital commerce businesses grow internationally, but financial institutions tend to charge high foreign exchange (FX) rates when you pay international suppliers, vendors and employers in multiple currencies. 

You can address this with spend management tools that are designed so you can manage multiple international bank account number (IBAN) accounts in your preferred currencies and control them all from one dashboard.   

You can also track how you’re spending all available currencies, which helps you stay compliant with tax regulations in every country.

Streamlined processes with automation

Manual processes are commonplace in early-stage businesses, but they can cost you time and resources and may lead to tax and legal compliance issues due to data-entry errors.

Fortunately, spend management software doesn’t mean you’re giving up control over your processes — instead, it allows you to create the custom rules, templates and workflows that make sense for your business. You can even implement tax codes and automate payments and transactions so suppliers and vendors never have to wait. 

Increased liquidity for ad and inventory spend

Staying liquid is essential for growth so you always have the capital you need to spend on marketing campaigns, inventory, logistics and fulfilment and overall process optimisation. 

But that’s not always possible when banks charge high interest rates on loans. What’s more, most banks won’t offer capital for media buying, which hampers your ability to build your online brand. That’s where spend management tools made for digital commerce come in — they can offer you capital for media buying and inventory financing to ease your cash flow.

Key features of a spend management solution for digital commerce

So, how do you know which tools are best for your digital ecommerce business? Let’s look at some of the features you should prioritise:

• Access to capital and the ability to manage all your financial operations in one place: 
  Juni does what the legacy banks can’t — offer you flexible capital while allowing you to track all of business spend, from team expenses to supplier invoices, in one place*. Even if you don’t take advantage of financing, the visibility and control alone will give your finance team more strategic insight.

• Integrations with your preferred accounting and storefront tools: 
  Design better approval, accounting, spending and fulfilment workflows with a platform that can integrate with the tools you’re already using, like Shopify, Amazon, Stripe, Fortnox and Netsuite.

• Low FX fees across your most used currencies: 
  Set up and manage multiple IBAN accounts and pay international suppliers safely with secure SEPA and SWIFT transfers. 

• Custom controls for cards: You can also manage all business cards individually from one centralised dashboard, so it’s easy to curb team member spending that may be getting out of control.

• Automated invoice management and receipt matching: 
  Juni can collect and scan your invoices automatically. They can also pre-fill all the important payment details and match your paid invoices to the right transactions.

Grow your business with Juni’s spend management solutions

Every business expense — from team member cab rides and coffees to software procurement — will catch up with you in the long run if you don’t get control of it now. So, if you’ve been struggling to stay liquid amid market turbulence, it may be time to consider spend management solutions for granular visibility into your finances. 

Not sure where to start? Juni allows you to view and manage expenses and payments from any device. We also offer multiple cash flow solutions so you can implement your spend strategies faster and more effectively.