How AI-powered spend management is driving a new era of business efficiency

By Abhishek Saxena, MD and Co-Founder of Omnicard

In today’s competitive business landscape, success is often determined by how organisations navigate opportunities and challenges. While businesses primarily focus on product innovation, market expansion, and customer acquisition, spend management is critical to ensure long-term success.

The absence of spend management exposes businesses to high-risk expenses, hindering the identification of valuable clients and opportunities to eliminate unprofitable spending. Data anomalies further increase the manual workload for employees, and the inability to set expense targets based on data prevents significant cost reductions.

Traditional approaches to managing this financial ecosystem consume time and resources that could be better invested in strategic decisions. Besides, businesses need accurate data on their day-to-day expenses across all categories to make informed decisions. This is where artificial intelligence (AI) emerges as a transformative force, promising to revolutionise how businesses handle spending.

Spend management and its market potential

Spend management is an essential component of financial management. It enables businesses to monitor and control their expenses effectively, ensuring operations remain cost-efficient and sustainable.

The demand for spend management platforms has surged in recent years as companies seek to eliminate operational inaccuracies and gain deeper insights into their finances through advanced analytics. The global spend management market is experiencing remarkable growth, projected to reach $4.7 trillion by 2027, with a CAGR of 10.2% from 2020.

In India specifically, B2B spending is expected to surpass $15 trillion by 2030, creating an urgent need for AI-powered spend management solutions to handle this massive scale of transactions.

AI, a gamechanger in spend management

Beyond answering questions or speeding up tasks, AI offers transformative possibilities for businesses. AI can improve business operations by automating repetitive, time-consuming, and error-prone tasks. It can reduce errors by up to 80% compared to manual invoicing, lower inventory carrying costs by 20% to 50%, and enable AI-powered agents to handle customer queries, providing seamless 24/7 service.

AI further helps minimise manual errors and effort in data entry and HR processes, facilitating smoother client onboarding and hiring.  Despite AI’s widespread adoption across various business functions, from customer service chatbots to predictive maintenance in manufacturing, its potential in B2B spend management remains unexplored.

AI can help in automating mundane processes like managing extensive data on products and services. AI-integrated spend management tools enhance transparency, providing clear visibility into all expenditures and allowing businesses to identify risks and take proactive measures quickly. Modern AI-powered platforms excel at intelligent data processing, offering automated extraction from various document formats, real-time categorisation of expenses, intelligent matching of purchase orders, invoices, and receipts, and automatic detection of fraudulent activities.

Benefits of AI-integration

AI capabilities extend far beyond basic automation. It has significantly contributed to spend management and business intelligence through advanced analytics and other features.

Predictive analytics: Through predictive analytics, AI transforms financial planning by providing accurate spending forecasting based on historical patterns and budget optimisation. This predictive capability enables businesses to make proactive decisions rather than reactive adjustments, changing how organisations approach financial planning and control.

Compliance and risk management: These factors can significantly enhance spend management with AI. It enforces regulatory requirements, monitors transactions for policy violations, detects suspicious patterns that might indicate fraud, and ensures strict adherence to approval workflows.

Cost optimisation and data intelligence: Cost optimisation is a key reason why AI is becoming indispensable for businesses. While business data across various categories may be extensive, AI helps cut down on manual effort by detecting anomalies in such vast datasets and preventing fraud. This data is also used to forecast business expenses and predict future trends. Businesses can also use predefined rules to train AI models to auto-approve requests. This speeds up approvals, reduces manual work, and flags risky requests for further review.

AI’s role in spend management has become vital for businesses aiming to improve operational efficiency and achieve greater cost savings. Moreover, businesses can also benefit from partnering with service providers that offer spend management solutions for handling day-to-day cash flows with efficient cash management. When AI powers such services, they become more effective in helping businesses strategically allocate resources and make data-driven decisions that align with their long-term business objectives.