Spend management is the software a company uses to control and record the money it pays out. A company pays in two ways. Its employees spend money on the company's behalf, for example on a hotel, a taxi or a lunch with a client. And it pays its suppliers' invoices, usually some weeks after the goods arrive. An invoice is the bill a supplier sends, listing what was delivered and how much is owed.
Each kind of spending has its own tools. Employee spending runs on corporate cards and expense management software. Supplier payments run through accounts payable, the team and the software that pay a company's bills.
Consider a 200-person software company in Visakhapatnam. One month, a sales executive flies to Mumbai to meet a client. She pays ₹9,500 for the hotel with her company card. The card system checks the payment against her limit as she pays. The expense management app then asks her for a photo of the receipt, and her manager approves the claim on his phone.
The same month, the company buys 40 laptops for ₹28 lakh. The supplier's invoice arrives by email. Accounts payable (AP) automation software reads it and matches it to the purchase order and the delivery record. It then schedules the payment for the due date. The money goes out from the company's bank account. For a smaller company, this is often a business current account run in an app, on a partner bank's licence. That arrangement is called banking as a service. On the supplier's side, accounts receivable (AR) automation software matches the ₹28 lakh that arrives to the right invoice. Finally, the company's treasury management system shows the new cash balance across all its bank accounts.
The old way of spending was to pay first and check later. At the end of the month, an employee in the accounts team collected the bills and checked them against the bank statement. This check is called reconciliation. The new way is to set the rules first. The card system holds each employee's limit before she spends. The AP software checks each invoice before any money goes out. Every payment is then recorded in the company's ERP, its main accounting system.
AI models now do much of the reading and matching. A person approves only the exceptions, such as an invoice whose amount does not match the order. This way of working is called human in the loop. Much of this work is done in India's shared service centres. A shared service centre is an office that does back-office work, such as paying invoices, for a whole company or for many companies.