Digital Spend Management: What’s Next in Procurement, Invoice and Payments?
The way in which we shop, purchase and pay in our personal lives is almost completely digital and automated. Think about it: we search and buy with one-click on sites like Google and Amazon. We use automated check-out at the grocery store. We pay friends and families with Venmo, and manage the majority of our banking and payments online or through mobile apps.
So why are so many businesses relying on outdated and manual buying processes at work? Manual business purchasing is inefficient and time-intensive, and can create problems around trackability, accuracy and spend visibility. It’s also costly – the high cost of managing paper-based processes such as purchase requests, purchase orders, vendor invoice processing and check payments eats away at margins and drains team productivity.
Consider this McKinsey study: organizations waste between 3% – 4% of their overall external spend on excess transaction costs, inefficiency and noncompliance. To put this in perspective, for an organization with $2 billion in annual spend, eliminating the errors and inefficiency caused by manual procurement processes could result in an additional $70 million a year in bottom-line savings. For a mid-market organization spending $1 million, that’s at least $30,000. No matter your size, the savings (or waste) is significant.
Beyond the financial benefits, digital transformation is operationally urgent and critical in today’s environment – especially with most organizations operating remotely because of COVID-19, which adds even more challenges to an already complex procurement and AP process. And remote work isn’t going away anytime soon. In fact, nearly three-quarters of CFOs expect to transition a number of previously on-premise employees to remote work setups permanently in the aftermath of COVID-19.
Digitization also equips finance and procurement leaders with more visibility and control. When employees can easily search and purchase goods and services from a central marketplace of pre-approved vendors and suppliers, organizations gain more visibility while cutting down on maverick buying. With this improved spend control, financial leaders can better understand where money is being spent, when and with who. This transparency provides critical insight into both current and historical spend, equipping CFOs to make smarter decisions about investments, budgets, suppliers and more.
Given the economic crunch many businesses face today, every dollar, insight, spend management and productivity gain matters. To learn more about how you can increase efficiency, improve visibility and lower costs through digitization, check out our recent webinar with Vroozi CEO Joe Fox and Nvoicepay VP of partner management Mark Penserini.