Market Volatility is Here: The Cost of Bad Spend Management Just Went Up

After stocks soared in late 2024, the market is now serving up a harsh dose of reality. Inflation, geopolitical uncertainty, and stalled IPOs are making companies rethink their financial strategy. 

As capital markets tighten, companies can’t afford to operate on outdated financial strategies. The CFOs who recognize this moment as a reset opportunity, rather than a crisis, will emerge stronger. The question is: Are you playing defense or positioning your business to win?

The Biggest Mistake CFOs Are Making Right Now

In moments like this, CFOs are looking at any place to tighten the belt–and what can CFOs control more than anything else? Their own program spend. I’ve seen this lead to a number of smart people talking about cutting spend management. On paper, it might make sense. It gets rid of a line item, reduces costs, and looks like you’re pulling back on “non-essential” tools. But this is exactly the wrong move.

Here’s why:

1. Blind spots cost more than you think: When companies stop managing their spend proactively, waste piles up fast. Auto-renewals slip through, teams buy duplicate software, and contract negotiations get missed. Cutting spend management doesn’t reduce costs. It creates hidden leaks that add up to way more than than your spend management program was costing you. 
2. Uncertainty demands control: CFOs can’t afford to guess right now. Market swings and interest rate shifts will hit companies differently, and leaders need clear visibility into spending to adjust in real time. A company that doesn’t know where its money is going has already lost control.
3. Cutting spend management now is like cancelling insurance in a storm: One missed renewal can easily cost more than an entire year’s investment in spend management. And the hidden costs pile up fast:
   
   • Your team drowns in manual work: More time spent chasing approvals, less time optimizing financial strategy.
   • Rogue spending creeps back in: Employees start making ad-hoc purchases that bypass procurement policies.
   • Approval workflows break down: Financial discipline weakens, and risk exposure increases.
   • Your leverage in vendor negotiations disappears: Without data-backed insights, you’re negotiating in the dark.

In fact, uncertain markets are when you need spend management the most. When every dollar counts, shouldn't you know exactly where each one is going?

How to Play It Smart in 2025

While we’re barely a quarter into 2025, and I’ll be the first to admit, no one can predict the future, I can say with confidence - the market isn’t handing out easy wins right now. 

The IPO boom many of us expected in 2025? On pause, with many companies choosing to hold back until conditions improve. M&A deals? Slower and more selective, with only the healthiest companies attracting buyers. CFOs can’t rely on a big liquidity event to bail them out right now, they need to build their own financial stability.

That starts with taking control of spend. Here’s how smart CFOs are approaching this market:

• Audit every dollar – This isn’t just about reducing costs; it’s about making sure every expense is strategic and aligned with long-term goals.
• Eliminate surprises – No more auto-renewals sneaking through or budgets getting burned on software no one uses.
• Leverage data for negotiations – Suppliers and vendors are feeling the pressure too. CFOs with clear, benchmarked data can have their teams negotiate better terms and improve their contracts.
• Cut waste, not strategy – Reduce inefficient spending, not the tools that give you control.
• Stay ready to move – In a volatile market, agility is an advantage. Companies with real-time visibility into spending can make fast, informed decisions while others hesitate.

What Happens If CFOs Get This Wrong?

For companies that mismanage this moment, the risks are real:

• Wasted runway: Without a grip on spending, companies burn through cash reserves faster than planned, forcing reactionary cuts.
• Higher costs later: Companies that eliminate, or don’t move towards, spend management now will pay more later in costly contract mistakes, missed savings, and financial inefficiencies.
• Lost investor confidence: Investors are scrutinizing financial discipline more than ever. CFOs who demonstrate tight control over spend and cash flow will win their trust, and future capital.

The Opportunity At Hand for CFOs 

In reality, volatility forces better financial discipline. When markets are flying high and capital is easy, waste gets ignored. But faced with the unknown, the best CFOs and financial leaders step up and take control.

The companies that come out strongest aren’t just the ones that survive, they’re the ones that use pressure to build smarter, more efficient financial systems. When the market rebounds, they’ll be ahead, while some companies will be scrambling to catch up.

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Double Down on Spend Management Now

Right now, some CFOs are making the mistake of pulling back on spend management to save money. And to that, I say, don’t turn off the headlights while driving in a storm.

• The cost of one missed renewal or a bad contract can wipe out any savings from cutting a spend management tool.
• Finance teams already stretched thin will get bogged down with manual work, making it even harder to stay on top of spending.
• The best CFOs aren’t just surviving this market, they’re increasing visibility and optimizing within it.

Tropic is built for this moment. When the market is unpredictable, CFOs need clear data, proactive insights, and a real-time view of their spending. It’s about having the power to act fast and stay in control.

So, what’s the move? Companies who take control now and sharpen their financial discipline will be the ones leading the next cycle. The ones who panic-cut in the wrong places? They’ll be left catching up. Make your move.