7 Generative AI Use Cases that Maximize Spend Management Efficiency

Generative artificial intelligence (GenAI) is the most recent technological innovation to navigate through the hype and achieve productivity gains for businesses in the right context.

Within spend management, GenAI is enabling process efficiencies and delivering significant value to the office of the Chief Financial Officer (CFO). In fact, 51 percent of finance leaders plan to adopt some form of AI in the corporate finance function in 2024.

At Tropic, our approach to Intelligent Spend Management is focused on building upon traditional spend management capabilities by incorporating our distinct dataset and AI-driven processes to optimize procurement and sourcing decisions.

Here are seven GenAI use cases that Tropic is building and optimizing to empower our users:

1. Assisted Purchasing and Policy Compliance

Although purchasing policies and workflows are crucial, they often remain overlooked until a purchase is necessary. The sheer increase in requests and transactional nature of purchasing demands a more guided and intuitive experience as traditional approaches rely on tacit knowledge or conditional workflows, making configuration and navigation difficult (and time-consuming).

GenAI can simplify this by enabling conversational interfaces for setting up and navigating workflows, increasing compliance and efficiency. Imagine being able to:

• Create an instant workflow by simply typing, “All software purchases greater than $25k must go through a budget approval first by the Department Head. After that, it goes to the Department’s Finance Business Partner.”
• Initiate purchase requests with simple commands like “I want to buy Tropic, it’s going to cost somewhere between $X and $Y, and I’d like it to hit my budget this quarter.”
  • Then, follow the guidelines of an Assisted Purchasing Agent that can respond back to employees with “I can help you with that. Let me guide you through the process. Here are the steps we’ll go through to get this approved by the end of the quarter. I have a few questions to support you."

2. Supplier Discovery and Strategic Sourcing Support

Staying up to date with the vast array of suppliers is difficult. Traditional approaches favor specific suppliers due to incumbency, familiarity, and/or referrals. Disciplined sourcing and discovery efforts take hours of planning, time, and additional resources to do research, issue RFXs, review responses, and provide decision makers information to make informed decisions.

GenAI can enable strategic sourcing decisions without the need for extensive manual research, accelerating these processes by:

• Automating RFX (or broadly, document) creation.
• Summarizing private and publicly available information about suppliers.
• Surfacing pros and cons, usage summaries, risk vectors (and much more) to vet suppliers.

3. Contract Review and Risk Detection

While contracts are the backbone of business agreements and provide critical metadata that powers Intelligent Spend Management, the “legalese” and potential hidden risks/obligations make them difficult to parse, understand, and recognize. 

GenAI can significantly enhance contract review processes by automatically analyzing large volumes of contract documents, identifying key clauses, obligations, and potential risks, allowing buyers to focus on strategic decision-making rather than getting bogged down in manual reviews.

Teams can quickly act on areas of concern, such as non-standard terms or high-risk clauses, and review GenAI suggested mitigations or alternative language, ensuring that contracts align with the organization’s risk tolerance and compliance requirements.

4. Spend Classification

Categorizing spend accurately is critical for visibility and control, but traditional methods can be labor-intensive and prone to errors. Misclassified spend impacts budgeting, forecasting, and business planning.

GenAI revolutionizes spend classification by automatically categorizing spend data based on name recognition and matching, historical patterns, contextual cues, and business rules. 

Not only does this capability speed up the classification process, but it also improves accuracy and mitigates errors. Organizations can gain deeper insights into spending trends and identify savings opportunities. 

5. Shadow Spend and Supplier Detection

Unapproved suppliers and shadow spending disrupt procurement processes by introducing risks and inefficiencies. Ingesting data from multiple sources to surface shadow suppliers and spend such as ERPs, identity providers, social logins (and many more) provides a wealth of information, but matching and mapping the names against known spend can be an arduous, manual task.

GenAI proactively match-and-map items, analyze patterns from multiple sources, and identify anomalies in the supplier and spend data to detect shadow spend. This automation within Intelligent Spend Management helps organizations gain full visibility, allowing them to focus on strategic decision-making rather than manual data reconciliation.

6. Spend Benchmarking and Forecasting/Planning

Accurate forecasting and benchmarking are essential for effective financial planning and budgeting.

GenAI enhances these processes by analyzing historical spend data, market trends, and external factors to generate precise forecasts and benchmarks. This allows finance teams to make informed decisions, optimize budgets, and set realistic financial goals. 

Intelligent Spend Management uses GenAI to provide dynamic spend forecasting and benchmarking capabilities, enabling organizations to anticipate future spend patterns, compare performance against industry benchmarks, and adjust strategies proactively to stay on track with their financial objectives.

7. Data Extraction and Data Hygiene

Clean, accurate data is the foundation of effective spend management. However, extracting and cleansing data can be challenging, especially when dealing with unstructured or semi-structured data sources.

GenAI excels at:

• Extracting relevant information from various data formats, including invoices, contracts, and purchase orders, and transforming it into structured, usable data.
• Identifying and correcting data inconsistencies, duplicates, and errors, ensuring that organizations have a reliable dataset for analysis and decision-making.

This capability within Intelligent Spend Management automates data extraction and hygiene processes, reducing manual effort and enhancing the quality of spend data, which in turn drives better insights and outcomes.

GenAI in Intelligent Spend Management

By integrating GenAI into Tropic’s Intelligent Spend Management platform, we’re enabling buyers and the Office of the CFO to work more efficiently, make smarter decisions, and deliver greater value to their organizations.

Whether it's automating routine tasks, enhancing data accuracy, or providing deeper insights, GenAI is transforming spend management and helping Tropic push the boundaries of what’s possible in this category. 

Request a demo to see what Intelligent Spend Management is all about.