Managing services spend has always been an uphill climb for procurement teams. Services costs are tough to predict because the scope of a service often shifts.
Managing services spend can also feel like a tug of war. Focus on gaining more control over services spend, and you sacrifice speed. Improve speed, and you lose control. But there are ways to rein in your services spend. Here’s how to improve services spend management and gain control over service spend once and for all.
What Does Services Spend Include?
Here are a few examples of items that may fall under your team’s services spend category:
- Temporary labor
- Consulting services
- Marketing services
- Facilities management
- Printing
- Food services
Because service costs are less predictable than goods, they can be difficult to manage. And when procurement loses track of spending, the organization might hemorrhage money, miss out on supplier discounts, or overlook spend opportunities.
What Makes Services Spend Management Challenging?
Are you wondering what makes services spend so difficult to manage? Here are a few common services spend management challenges:
It can be difficult to predict costs.
Services costs rely on hard-to-predict factors. After all, estimates are just that: estimations of a job’s cost. When the job is complete, your invoices, purchase orders (POs), and order receipts often don’t match. Those misaligned spend figures require extra time to fix and steal time away from more strategic work.
It’s difficult to optimize for speed and control.
Services spend is notoriously difficult to manage. Most often, the more controls you put in place to oversee services spend, the slower your processes become. Focus on completing the services P2P process quickly, and you lose control. That push and pull can wear down your team and leave you with either sluggish payments or uncontrolled spending.
Inefficient processes waste time and money.
Because services pricing is difficult to pin down, orders and invoices often don’t line up. At the same time, your team may need to constantly update POs to ensure costs are visible and up to date. This all means more work, more errors, delayed payments, and less time to focus on your procurement strategy.
3 Ways to Improve Your Services Spend
Here’s how to secure more control over spending and manage services spend more efficiently:
- Simplify your services spend processes.
The easiest way to grab more control over services spend is to adopt a P2P solution that includes an intuitive digital marketplace. These tools let employees browse approved suppliers and make purchases. In turn, they avoid unapproved buys, and you can capture the spend data needed to make strategic decisions.
Advanced P2P solutions also let you set up two- and three-way matching. For services, the system can help users to set up a process and price the service based on scope. From there, the system easily matches services to contracted rates. This simplifies purchases for employees, encourages more adoption, and gives you more service spend control.
- Optimize for speed and control.
Some companies like to focus on speed during the services spend process. For instance, you may prefer setting up blanket orders and letting employees run with them. Others want to see exactly how many hours are spent on what. An automated P2P system gives you both speed and control over services spend.
These systems make it easy to see rates for available service contractors or job estimations and make purchases quickly. They also allow end users and suppliers to easily update more granular PO details based on the latest information. That way, when an item or service is added to a job, the end user or supplier can update that info, and those details automatically update within the platform—which acts as a single source of truth.
- Connect your platform to suppliers.
Advanced P2P solutions connect your teams with service suppliers and external partners on one platform. These tools allow suppliers to provide pricing information and availability and immediately update you with the latest scope or details of a job. Essentially, they lay out the most current service spending details in a single place. That makes it easier to see rates or availability, make flexible spending choices, and act out smarter strategic spending decisions.
Learn to Elevate Your Entire Procurement Operation
With an e-procurement solution, procurement leaders can simplify services spend management, widen spend visibility, and plan out a better procurement strategy. And there are more ways procurement can use the latest SpendTech™ to hit company goals.
Read our resource, Spend Matters: The Evolution of Corporate Procurement Systems, to learn how to use the latest technology to elevate your procurement operation.
