What’s business spend management (BSM)? A guide for travelers

It’s hard to run a successful business when you don’t know where every dollar is going. There are so many expenses to track—travel, supplies, software, and more. Without a solid automated system, it’s easy for cost savings to slip through the cracks.

More and more companies are optimizing business spend management (BSM) to stay on top of spending and avoid unnecessary costs. It’s a system that gives you visibility into company expenses and helps you control them so you can make better decisions.

In this guide, we’ll explain BSM, why it matters, and how you can use it to improve your bottom line.

What’s BSM?

Business spend management is a comprehensive approach that companies use to oversee expenditures. It’s more than just keeping receipts organized; it’s a complete framework that combines tools, data, and processes to manage spending across every part of the business. 

Think of it as a way to bring all spending activity under one umbrella, like ordering supplies, booking travel, or managing vendor contracts. With BSM, companies can control, optimize, and minimize spending on the goods and services necessary for operations. It helps avoid waste and gives visibility into spending patterns, enabling better decision-making.

BSM is often part of a company’s larger procurement process, offering a holistic view of a company’s financial activities to reduce risk and help the business run more efficiently. Unlike expense management, which usually focuses on tracking individual employee expenses (like meals or taxis), BSM takes a broader view, including areas like procurement, supplier relationships, budgeting, and compliance.

Why is business spend management important?

With a management solution like BSM, tasks like booking hotels, managing invoices and per diems, and using travel tools become more streamlined and cost-effective. Accurate, up-to-date spending data also means businesses can find opportunities to cut costs and make more strategic decisions about allocating resources.

Imagine a company that relied on manual travel and expense tracking but noticed some major oversights and overspending issues in its annual audits. When the team implemented an automated BSM tool, they cut unnecessary travel costs by over 20%. By setting clear rules and gaining instant visibility instead of waiting for the end of a fiscal year, they could make smarter choices around flights, hotels, and even meal allowances. 

Key areas of business spend management 

A strong BSM strategy supports cost control, improves decision-making, and increases operational efficiency. Here are four core areas where BSM makes a measurable impact.

Procurement and purchasing

This involves acquiring goods and services needed for operations. Effective procurement strategies ensure quality while minimizing costs. Centralizing procurement through a consistent and efficient global BSM system can also improve supplier relationships.

Expense management

Tracking and controlling employee expenses, including travel and entertainment, ensures compliance with budgets and policies. Using BSM expense management tools can streamline this process.

Budget tracking

Keeping an eye on real-time budgets helps businesses avoid overspending and stay on track with financial goals. When teams can see how much has been spent—and what’s left—they can make quick adjustments before problems arise. This is especially useful during projects when costs shift. Keeping clients informed of changes avoids unpleasant surprises and protects profit margins.

Compliance and audit readiness 

Maintaining accurate records and adhering to financial regulations is essential. BSM systems facilitate compliance and simplify audit processes. Switching to a BSM platform can also reduce audit prep time—many automatically categorize and store expense receipts, helping avoid lost paperwork and saving time for other tasks.

Benefits of business spend management 

Implementing BSM offers a number of advantages:

• Improved productivity: Automating spend processes reduces manual tasks, freeing time for strategic activities. Many businesses see a drop in admin hours when they implement BSM, reducing the need for manual approvals and data entry.
• Better negotiations with suppliers: Data-driven insights enable more effective negotiations, leading to better terms and pricing. 
• Cost savings and enhanced sustainability: Identifying inefficiencies and redundant expenses can lead to significant cost reductions and promote sustainable practices. Using key data lets companies see patterns, like employees consistently booking last-minute flights. Flagging these trends can lead to improved policies and savings.
• Risk reduction: Using BSM enhances visibility and control, mitigates financial risks, and ensures policy compliance. Using BSM dashboards lets you spot irregular spending patterns so you can spot fraud before it becomes a bigger problem.

How to implement a BSM strategy in business travel: 4 steps

To bring BSM into your business travel program, you’ll need a clear strategy and the right tools in place. Here’s how to get started.

1. Assess current travel and expense practices

Start by auditing your current travel policy, approval workflows, and reimbursement process. Look for gaps, inefficiencies, or unclear guidelines that may lead to overspending or non-compliance.

2. Use expense tracking software for visibility and control

Implement software that offers real-time visibility into business travel expenses. These tools help teams stay within budget, flag out-of-policy spending, and simplify reconciliation for finance teams.

3. Create a dedicated BSM team for business travel expenses 

Assign a cross-functional team to oversee travel spend, enforce policies, and surface trends. This group should also explore cost-saving opportunities and ensure alignment with company-wide financial goals.

4. Monitor and improve continuously

Set a regular cadence to review travel spend data and gather feedback from travelers. Use these insights to refine your strategy and keep your travel program efficient and cost-effective.

Take control of business travel spend with Engine 

Managing business travel expenses can be complex, but the right tools make it manageable. Engine offers an all-in-one platform that connects with airlines, car rental companies, and hotels to simplify travel management. With real-time expenditure visualization and cost-efficiency tools, Engine empowers businesses to take control of their travel spending, ensuring compliance, improving budgeting, and avoiding unnecessary costs. 

Don’t let business travel spending spiral. Take charge with Engine to start tracking, planning, and saving smarter today.

FAQs

What’s the difference between business spend management and traditional budgeting?

While traditional budgeting sets spending limits, business spend management (BSM) is a more active, day-to-day approach. BSM uses real-time data and spend management tools to monitor where money goes across departments, from procurement to travel. This gives businesses the visibility they need to stay on top of costs and make smarter decisions throughout the year, not just when planning annual budgets or during audits.

How can small businesses benefit from spend management tools?

Small businesses often assume that spend management software is just for big corporations, but it can be a game-changer for businesses of any size. Tools designed for business spending give small teams better control over cash flow, reduce manual invoice processing, and automate purchase orders, freeing up time for more strategic work. With the right setup, even small teams can track real-time expenses and negotiate better deals with vendors.

Can BSM support sustainable and ethical sourcing practices?

BSM, along with a strong spend management strategy, can support sustainability goals by offering greater transparency into supplier choices and purchasing habits. With automated systems and centralized data, companies can prioritize vendors who align with their values, whether that’s low-emission shipping, ethical labor practices, or local sourcing. Strategic sourcing backed by clear data helps align procurement decisions with financial and environmental goals.

What role does automation play in business spend management?

Automation is one of the biggest advantages of modern BSM. It helps streamline everything from approving expenses to managing supplier invoices. By reducing manual workflows, businesses can avoid errors, process payments faster, and keep records more organized for audits. Automated systems also make it easier to enforce polices and stay compliant, giving finance teams more time to focus on strategic planning.