New Directions in Spend Management Tools
Most nonprofits are now familiar with cloud-based payment and corporate card management systems as the pandemic accelerated broader adoption of these systems. However, if you ask nonprofits if they are completely satisfied with these solutions, you will likely hear them say something like, “Yes, BUT…,” which is the exact opposite of what you would expect to hear. As more nonprofits embrace these technologies, we hear frustration from clients on issues such as:
- Why don’t more of these tools integrate with my general ledger (GL)?
- After-the-fact expense report approvals are great, but is there something that allows me to approve in advance?
- We have too many digital subscriptions on one person’s card – it’s a pain if they leave the organization!
Historically, we’ve seen separate solutions for bill payment, corporate card management, and spend management. Recently, this has begun to change with more all-in-one software solutions that integrate these components into a single platform. Also, the traditionally separate solutions are moving to acquire or develop their own integrated platform.
Key considerations for selecting the platform right for your organization
Many of these newer, integrated systems offer plenty of features. However, before diving into features, it’s important to consider your requirements such as:
- GL integration – Does the proposed solution integrate with your general ledger accounting software? If so, make sure to take a deep dive into how it integrates and whether there are elements in your GL that won’t sync.
- Consider the number of people that need physical cards versus just needing virtual cards. If you are a travel-heavy nonprofit, you’ll want to verify that the physical card side of the platform supports the needs of travelers.
- All platforms are only as good as their connections to corporate cards. Make sure to evaluate if your card will connect, otherwise you may find yourself manually pulling in credit card data.
- Underwriting – Most of these systems use tightly integrated approaches between the credit card and their software. Be sure to explore whether you can qualify for the card limit your nonprofit needs or if a prepaid plan could work.
- Approval workflow – Most integrated systems come with a basic approval workflow. Review your requirements with the vendor. Some systems allow for more complex approval workflows at a higher price point.
- Purchasing – Many of these integrated systems are just beginning to bring purchasing requests and two- and three-way matching into their systems. If your nonprofit has a PO system, carefully evaluate whether the provider can sync to your system. Additionally, if you have more sophisticated purchasing requirements, such as approved vendors and items, your options in the marketplace will be different.
Virtual cards and up-front approvals
One of the key features that these new platforms are bringing into the marketplace are virtual cards. These allow a manager to pre-approve spending for a specific purchase, trip, or subscription. This essentially creates a one-time use card for the employee to use and approval is obtained up front rather than after the fact. Additionally, these virtual cards are perfect for nonprofits that manage multiple subscriptions on cards; each subscription can be on its own virtual card and independent of the individual’s own card.
Keep in mind that virtual cards are still relatively new to the marketplace, and some vendors do not currently accept them. We believe over time more vendors will accept them as comfort with the payment type grows in the marketplace. Finally, most of these platforms have robust policy enforcement and spend controls. Some will even automatically lock out the card and request repayment if a user fails to include a receipt.
As these integrated platforms jostle to position themselves in this new spend management space, I believe we’ll see more robust features set at competitive prices that will be attractive to nonprofits. If you’re frustrated with your current choices in the marketplace, we can help you navigate and evaluate alternatives to find the tools that work for your nonprofit!
Jeff loves helping nonprofits achieve financial excellence through improved monthly reporting, cashflow management, strategic planning, and systems design.
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