By Joe Fox
While nearly every organization wants to increase growth and drive profits, few realize how much procurement automation can accelerate the path to success.
Here’s a common picture for growing organizations: As the company scales, more resources get allocated to sales, product development, innovation and marketing, while operational functions – like spend management, purchasing and accounts payable – quickly become non-priority tasks. But operating this way risks negatively impacting your bottom line, and exposes the business to large amounts of unmanaged spend, operational costs, payment inaccuracies and potential compliance violations.
The kicker: Despite the lack of attention, the work still needs to get done, which eventually forces organizations to hire more staffers.
Every organization – from startups to Fortune 100 enterprises – should prioritize spend management. The benefits are immense: lowest costs for goods and services, improved budgeting and forecasting, reduced costs related to manual labor, visibility into liabilities and additional budget to invest in growth.
The easiest way to elevate your approach to spend management is through automating and digitizing the procure-to-pay process. Here are the four essential areas that every organization should digitize:
- Digitize Suppliers: Building your own supplier directory and marketplace increases visibility and control while making purchasing easier for your employees. Employees gain access to a universal, digital catalog (that houses only approved suppliers) to find and buy the goods and services they need to drive the business forward. With everything digitized – including supplier communications – time-consuming manual processes, like phone and email, are left behind, enabling suppliers and employees to engage more efficiently.
- Digitize Purchasing: Manual purchase processes waste time and money. By digitizing the purchase process, including requisitions, approvals, goods receipt and purchase orders, business purchasing gets easier and faster, and your control over what’s being spent improves drastically.
- Digitize Invoices: Leveraging an integration or supplier portal to connect directly with suppliers for invoicing reduces labor costs, delays and errors associated with paper and email invoices, and centralizes key information. Procure-to-pay digital platforms also use automated 3-way matching (PO, Invoice, Goods Receipt) prior to payment approval to avoid over-payments and duplicates. Not only do these steps save you money, they also save your suppliers’ payment settlement costs – resulting in additional discounts offered for your business.
- Digitize Payments: Eliminate the drawbacks of paper checks – manual work, lost checks, risk of late payments – and unlock the benefits of 100% digitization. Typically handled through ACH or Virtual Card, automated payments improve your realization of negotiated discounts, improve tracking and lower cost per payment.
Once your procure-to-pay process is digitized, you can proactively perform spend analysis across all related categories, helping your business optimize spend by supplier, category, budget and pricing associated with critical goods and services.
The common thread between these four steps: increased visibility, efficiency, control and savings – all of which ultimately lead to better financial decision making and improved control of spend against budget, allowing you to optimize spend toward strategic objectives and to more accurately direct spend both when times are good and when the economy requires quick response to control budgets more tightly.
Ready to learn from your peers who are improving spend management and elevating financial performance? See how Forest Lawn automated its procure-to-pay process here.