Government leaders around the world are faced with the ever-growing challenge of efficiently managing public finances while ensuring transparency, accountability, and effective resource allocation.
A key factor in the success of government financial management is effective Public Expenditure Management (PEM). PEM can be defined as public sector budgeting that is focused on the results and outcomes that a government achieves in line with its national development plan. Rather than simply focusing on cost, PEM sees expenditures as a way of producing outputs which are needed to achieve desired outcomes.
There are numerous benefits to effective PEM, but at its core, PEM helps to ensure that public funds are spent efficiently and effectively, supporting the delivery of important public services.
Effective Expenditure Management Using Digital Tools
In practice, PEM encompasses a range of essential functions related to government spending and financial control. These functions include purchasing, procurement, contract management, grants, and social programs. Each of these functions has its own set of processes, and many governments now recognize there is a huge opportunity to use digital tools to improve how they manage expenditure, analyze data and make effective decisions about spending.
Moving away from manual processes – or processes across a range of systems which don’t talk to each other – improves data security, access to information, and allows for better use of time.
The FreeBalance Accountability SuiteTM is used by governments around the world to manage public finances and is designed to meet governments where they are on their digital journey. Within the FreeBalance Accountability SuiteTM is a range of (PEM) Public Expenditure Management modules which can manage all government spending functions comprehensively. This goes beyond the typical accounts payable functionality found in the private sector. Here are some of the key features that set our solution apart:
- Expenditures and purchasing: FreeBalance’s (PEM) Public Expenditure Management modules supports controls for standard expenditures, including payment management, multiple purchasing vehicles, and the purchasing cycle. This means governments can effectively manage their budgets and ensure that funds are allocated where they are needed most.
- Procurement: (PEM) Public Expenditure Management supports tendering, eProcurement, contract and spend management, allowing governments to streamline procurement processes, reduce costs, and enhance transparency.
- Grant and social programs: Managing government grants, loans, and contributions is simplified with FreeBalance’s tools, ensuring that resources are directed towards programs that benefit citizens most.
Importantly, (PEM) Public Expenditure Management modules can be leveraged regardless of the organization’s current stage of digital maturity. Benefits can be realized at digitization, digitalization and digital transformation levels (find out more about these in our recent blog post, A Guide to Public Financial Management Transformation) and FreeBalance PFM experts are on hand throughout to support governments take these steps toward PFM reform.
Digitization: Laying the foundations
Digitization is the initial step on the path to digital transformation. In this stage, governments are often focused on automating manual processes and establishing a digital presence. (PEM) Public Expenditure Management supports digitization by providing essential functions, including e-procurement, e-grants, and online social programs and lays the foundation for more efficient and transparent financial management.
Key benefits of using FreeBalance tools for digitisation of public expenditure management include:
- Improving the delivery of e-procurement services, e-grant management, and online social programs, without automated integration with back-office functions
- Quickly and easily generating purchase requisitions, purchase orders, goods receipt, goods returns, and expenditure vouchers.
Digitalization: Enhancing efficiency and control
As governments progress through their digital evolution, they begin to integrate digital tools with their back-office functions. (PEM) Public Expenditure Management drives efficiency and better control over financial processes by:
- Improving efficiency and transparency in e-procurement, e-grant management, and online social programs with automated integration with back-office functions
- Integrating purchase requisitions, purchase orders, goods receipt, goods returns, and expenditure vouchers into expenditure cycles with commitment controls.
Digital Transformation: Reaching new heights
Digital transformation is the ultimate goal for governments seeking to revolutionize their public financial management. At this stage, real-time data enhances the agility and transparency of financial processes, equipping finance leaders with the tools they need to make strategic financial decisions. FreeBalance’s Public Expenditure Management tools offer a range of functions to support governments including:
- Providing a real-time “free balance” view across all expenditure systems
- Validating vendor procurement eligibility with tax compliance
- Supporting a single vendor identity across all government systems
- Enabling agile procurement, public-private partnership, and public investment management cycles
- Integrating and automating e-procurement with controls and rules
- Providing outcome-based performance transparency.
If you would like to leverage almost 40 years of experience of digitization, digitalization and digital transformation of expenditure management in your organization, contact one of our PFM experts.