When was the last time you did an audit of your SaaS subscriptions? Do you have office supplies on auto-delivery? What about other memberships set to direct debit?
As your business grows, there are likely several recurring purchases and subscriptions you’ve set up over the years. But are these ongoing expenses still relevant or useful for your operations?
While they might seem small, unnecessary recurring subscriptions can chip away at your revenue and impact your bottom line.
Ready to get out of auto-pilot and take the reigns of your businesses' cash flow? We're diving into how zombie spend can be a silent business killer and a stack of practical strategies to ditch it once and for all.
Ready to dive in? Let’s begin.
What is zombie spend?
Have you ever signed up for a paid subscription but never actually used the tool you're paying for? This is a perfect example of zombie spend.
In a nutshell, zombie spend occurs when a company continues to pay for goods, services, and subscriptions that no longer serve them.
SaaS subscriptions tend to be the most common example, as they're small expenses that can easily slip through the cracks. Plus, direct debits mean that your team could pay for the same tool twice, for outdated tools, or even forget to unsubscribe from software (even once you've switched to a new platform).
What causes zombie spend?
If you’re worried about zombie spend in your business, you’re not alone.
It's common to get overwhelmed with the number of subscriptions and software needed to operate, and it is hard to stay on top of them all.
Let’s dive into some common causes of zombie spend.
1. Lack of visibility on spending across your organisation
One of the biggest contributors to zombie spend is a lack of visibility of organisational expenditure. Having real-time visibility of all organisational purchases allows you to have greater control over what your employees are spending.
This means purchases can be approved, denied or even eliminated if duplicates or unnecessary expenses come up.
2. Auto-renewal of subscriptions or duplicate subscriptions
As mentioned, one of the main contributors to zombie spend is auto-renewals and duplicate subscriptions that aren't tracked and therefore fall through the cracks.
If multiple employees are paying for the same subscription, you’re left with duplicate subscriptions that aren’t necessary for the business.
Auto-renewal of subscriptions that are outdated or aren’t being used anymore can cause wasteful spending, too.
3. Manual processes with human error
Using manual processes to track business spending can increase the chance of human error. If you're relying on your people alone to review transactions and reconcile expenses manually, it's easy for duplicate or redundant expenses to go under the radar.
Plus, doing things manually means your team is tied up in routine admin tasks, rather than more strategic work, like finding ways to optimise your budgets or redirect cash flow into revenue-driving projects.
How to reduce zombie spend
There are plenty of ways to reduce zombie spending in your business, from conducting regular reviews of your budget and expenses to setting category-level spend controls and limits for your employees.
Let’s run through some important steps you can take to reduce zombie spend.
Tip 1. Smart budgeting
Budgeting is essential for any business, but smart budgeting can be one of the most helpful ways to reduce zombie spend.
Budgeting software consolidates all your transactions in one place, giving you greater control and real-time visibility of where your business's money is going.
Long gone are the days of multiple spreadsheets or manual expense tracking. With the right expense management tool, you can easily track all purchases to ensure you spot duplicate subscriptions or outdated tools that are no longer useful for the business.
Tip 2. Category spend controls and limits
Without spend controls and limits, employees can make unnecessary purchases that contribute to wasteful spending. Employees may be blissfully unaware that they're participating in wasteful spending, like duplicate subscriptions.
That’s where corporate cards with category spend controls and limits come in. By using corporate cards with spend controls, you can proactively prevent wasteful transactions and ensure every company dollar is used to benefit the business.
Tip 3. Better spending visibility and insights
Having visibility and insight into how your business transacts through spend management software can help you better control business spending. This means budget owners and managers have insights and control of every transaction before they even happen.
With Cape, you can set monthly individual limits for each employee, allowing real-time reporting and visibility over each transaction. If you notice anything that seems unnecessary, you can take action before it's even purchased.
Tip 4. Consolidating subscriptions
Many businesses rely on subscriptions and software; however, they can get costly when you add them up. If you're not keeping tabs on what subscriptions you're paying for, this can be a major contributor to zombie spend.
One way to combat this is to regularly review your subscriptions to understand which ones benefit the business. Be sure to spot duplicate subscriptions and eliminate them to reduce wasteful spending.
Another great way to reduce zombie spend with subscriptions is to look out for discounts. If you know some subscriptions are essential to your business, look for deals on yearly plans instead of paying more monthly, for example.
Zombie spend can cost your business thousands of dollars and dramatically affect your bottom line. Often unnecessary purchases are buried in invoices and can slip through the cracks without anyone noticing how costly they are.
But with spending controls, implementing smart budgeting, and consolidating your subscriptions, you can significantly reduce the chance of zombie spend and scale your business for success.
We have a solution to meet your needs today and as you scale and grow.
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Cape acknowledges the deep connections of Aboriginal and Torres Strait Islander communities to Country. We pay our respects to the Traditional Owners of the lands of our team and customers across Australia. We recognise the continuing contributions of indigenous communities in Australia and around the world. We pay respect to all Aboriginal and Torres Strait Islander Elders, both past and present and are committed to continually learning from these powerful traditions as individuals and as a wider team.
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