Spend Management overview

Ensure that your budget is followed with Spend Management. Spend Management provides a way for companies to control spending according to a specified budget, informing you of when an expense exceeds the set budget. It can be configured to validate transactions from General Ledger, Accounts Payable, or Purchasing. You can even include committed expenses, which are previously approved purchases but no AR sales invoice has been sent, as part of the calculation.

Spend Management:

  • integrates with and validates a specified budget in spending for GL, AP, and Purchasing, supporting better control and financial planning
  • supports dimension-based validation
  • provides insight into budget impact during the expenditure process
  • sends proactive email notifications to budget administrators, summarizing transactions that have been posted which exceed the budget
  • can automatically stop or warn when transactions are posted that exceed the budget
  • captures if a transaction was within or exceeded the budget in the Audit Trail

About Spend Management

In many companies, expenditures are processed by several staff members that impact the common budget. As you enter these transactions, it isn't practical to stop and run a budget report for each transaction being entered.  It can be some time after a transaction has been posted when someone notices the budget has been exceeded. The need for insight into a budget in real time is doubled when a transaction requires approval, and the budget needs to be factored into the approval decision.

Spend Management automatically takes care of this tracking and validating for you, providing easy control over expenditures based on your overall budget. Spend Management validates expenditures against your budget, which helps you easily keep track of expenditures that can cause you to exceed the budget.

Flexible configuration

Spend Management configuration is flexible. If you find unexpected but necessary expenditures that would exceed the budget, you can configure Spend Management to warn on budget overages. This still allows these transactions to be posted. Alternatively, you can save the transaction as a draft then adjust the budget used for Spend Management to allow these transactions to be posted.

In companies with more than one entity, Spend Management:

  • validates against the base currency, because budgets are created for the base currency of the company.
  • is mostly configured at the top level, though there can be some entity-specific configurations.
    • Top-level configuration includes defining your Spend Management budget, notification preference, validation settings, and committed expenses. You can also define your Purchasing transaction definitions and Item GL Group mappings to be used with Spend Management if they’ve been created at the top level.
    • Entity-level configuration includes defining entity-level Purchasing transaction definitions and entity-level Item GL Group mappings.

Who uses Spend Management?

Any company that wants to enforce a budget and control spending might benefit from Spend Management. The application might be especially interesting and useful to:

  • Accounting and finance teams
  • Business unit and department budget owners
  • CFOs
  • Project managers
  • Grant managers

The person who creates the budget, the person who configures Spend Management, and the person posting expenses can be different people. Each needs their own permissions for their area, but no special permissions are needed for Spend Management beyond subscribing to Spend Management itself.

Key Spend Management features

Expense validation

Expense validation looks at the budget, starting date, duration, the dimensions used, and whether to include any committed expenses in user-defined books.

For expenditures that are entered onto a transaction with Spend Management enabled, Spend Management validates the transaction spending by taking the budget calculated for the time period selected in setup minus the actual expenditures to that point. After an expenditure is posted, it's factored into future validation immediately.

If an account is credited during one of your transactions, then Spend Management takes that credit into consideration. For example, if the budget for an account is R1000, but it gets credited for R500, then Spend Management now considers the total budget of this account to be R1500.

If you included a user-defined book for your committed expenses, then Spend Management also adds this amount into the validation formula, so that remaining budget is always equal to the original budget amount minus actual and committed expenditures. Additionally, Spend Management can also be configured for balance sheet accounts to support asset purchases.

Learn more about Spend Management validation.

Dimension-based validation

Spend Management can validate a budget by any dimension, both standard and user-defined. For instance, your company might budget by the department or location dimensions.

Any dimension you intend to use for Spend Management validation, ensure that the dimension is enabled in Purchasing, Accounts Payable, and General Ledger. If it's not, you won't be able to select the dimension when you configure Spend Management.

For example, if you plan to use Department, Location, and Class dimensions in Spend Management, then all of these dimensions must first be enabled in Purchasing, Accounts Payable, and General Ledger. You would then enable the dimension in Spend Management. This is true, even if you only use the Class dimension in Purchasing transactions only and plan to use Spend Management only in Purchasing.

If you set up your budget using dimensions, Spend Management honors those dimensional budget limits and uses them during the validation process. When validating against dimensions, any combination of dimensions must match that exactly in the budget.

For non-matching dimension combinations, use the If a budget has no match, treat budget as zero checkbox to treat non-entries as account-dimension combinations that don’t have any available budget.

When you validate by dimensions, ensure that your budget include values for those dimensions. Learn more about Spend Management validation.

Feature Details
Expense validation  
Dimension-based validation  
Adjusts with budget changes

If your budget changes, Spend Management handles the change going forward. Past transactions posted in applications validated by Spend Management aren't affected by the change, but new or revised transactions are validated against the updated budget.

For example, if a department has a budget of R5,000 for a particular reporting period, transactions will be validated against that budget value. If the budget is changed halfway through the reporting period and the department's budget is now R8,000, any new transactions are validated against the R8,000 budget.

If a transaction that exceeded the R5,000 budget limit is edited and saved, now it's validated against the updated budget, not the original one.
Stop or warn notifications

When Spend Management validates a transaction against a budget, it can either warn or stop a user when the transaction posted exceeds the set budget.

If Spend Management is set to:

  • warn on a budget overage, then users can still post transactions that would exceed the budget. It also gives time for the users to talk to their budget administrator and make adjustments to the budget before the transaction is posted.
  • stop on a budget overage, then users will be unable to post any transaction that would exceed the budget. In these cases, the budget administrator has to adjust the budget before the transaction can be posted.
Proactive email notifications on budget overages

In addition to stop and warn notifications given at the time the transaction is posted, a budget administrator can receive alert emails on budget overages on a daily, weekly, or monthly interval. These alerts include a summary of every transaction that exceeded the specified budget during the selected interval in applications configured to warn on a budget overage. The transactions are listed in the email by application from oldest to youngest.

Email notifications are only sent on those transactions that result in a budget overage. For example, if Purchasing is configured to stop if the specified budget is exceeded, but Accounts Payable is configured to warn, then you’ll only receive email notifications on budget overages related to your AP supplier invoices because Intacct will prevent any transactions that exceed the budget if posted in Purchasing.
Spend Insight

With one action, see the amount of the budget that's already been spent and committed, and how much will remain in the budget after the transaction is posted.

The Spend Insight feature has a permission item related to it, so you can control who does and doesn't have access to insight into your budget and spending.

Learn more about using Spend Insight.
Spend history Your spend history per transaction is tracked in the Audit Trail, providing insight into the budget condition at the time the transaction was submitted.
Include committed expenses, if applicable

Some organizations have set aside committed expenses in a user-defined book to track commitments and include those commitments on reports. For example, many organizations set aside funds for contracted supplier expenses or want to reflect approved purchases into the equation for funds available in the budget.

If your company uses user-defined books, you can include these committed but not yet released expenditures for Spend Management validation to ensure your budget stays within its limits.

Learn more about including committed expenses.
Support for balance sheet accounts

For balance sheet accounts, Spend Management uses the ending balance for budget, actual, and committed entries and subtracts the current purchase to determine if the remaining amount is within the budget.