Digitize and Save: 3 Cost Control Strategies for 2021

Executives are looking to procurement and finance teams to play a key role in increasing financial resiliency. This requires an increased focus on cost control and business spend management.

How can AP and procurement leaders make an immediate impact? The first step, especially in a world where remote work is the “new normal,” is going digital.

Here are three ways organizations can leverage digitization, analytics and procurement technology to increase efficiency, cut costs and improve financial resilience:

  1. Simplify and modernize the way you buy

Your employees need quick and easy access to the goods and services required to run the business.  You need to ensure the team purchases within budget, from approved suppliers and takes advantage of pre-negotiated rates. Some may view these as competing priorities, but they actually go hand in hand. Both of these goals can be achieved by digitizing and modernizing the buying experience.

To start, provide employees with modern, mobile and digital catalogs and marketplaces that include products and services from approved suppliers. The key is ensuring your purchasing processes are simple to understand, easy to use and mimic the way we shop in our personal lives – think Amazon or Google. When business buying is simple and accessible, employee adoption increases, which improves corporate financial controls and eliminates maverick spend.

Simply taking advantage of pre-negotiated discounts and contracts, instead of purchasing in a one-off fashion, can save organizations 15-30

  1. Ditch paper checks and vendor invoices

Manual purchasing and AP processes cost time, money and lead to costly errors. This year, make it a priority to eliminate paper-based and time consuming tasks from your financial operations. Automating business buying, invoice management and payments enables your employees to focus their time on high-value work.

Financial activities like invoice reconciliation, budget checks, payment approvals, cutting paper-based checks and management of paper documents are all ripe for automation. By digitizing vendor invoices for example, you can seamlessly track, control and confirm what you are buying electronically – resulting in a 40-50% savings on the cost to manage invoices manually. Digitization also helps increase financial control by automatically identifying errors, duplicates and overpayments so you can ensure you only pay for what you order and receive.

When it comes to the AP process, moving from manual to electronic payments – and paying your suppliers and vendors the way they’d prefer (digitally) – boosts your relationship with third-parties, reduces fraud and saves you time. Most companies save 65-75% on vendor payment costs by going digital.

  1. Analyze business spend

Perhaps one of the most significant benefits of automating procurement and AP processes is all the spend data that is now available to the finance team – think purchasing activities, vendor invoice management and payments. Take advantage.

With full visibility into spend, organizations can better understand exactly where money is being spent, when and with who. This transparency provides critical insight into both current and historical spend, equipping teams to uncover new savings opportunities, make smarter decisions about investments and suppliers, and identify ways to increase spend under management. This visibility also provides the team with key performance indicators, like the percent of purchase orders versus non-purchase orders, which can be helpful during the budgeting process.

Is your team equipped with the right controls, technologies and processes necessary to manage costs, increase profitability and ensure financial resiliency in 2021?

Check out our latest report on the Road to Financial Resilience to learn more.