Effective Spend Management Starts with Procurement Software
Managing spend is a long process of collecting, categorizing, and assessing data spend habits in order to cut down on procurement costs, improve efficiency, monitor workflows, plus regulate compliance. The procurement cycle also involves various other activities such as requisition processing, inventory management, and sourcing. Every organization, regardless of size or type, spends lots of time and resources currently managing their spending. Let’s see the various phases within spend management and how a procurement software will impact your business.
Identify expenditure points
In any company, there are many types of instances for procuring goods and services. Some everyday expenses might include company rent, licenses, marketing, insurance, employee salaries and much more. Expenses can vary from business to business based on the nature of their transactions and industry. Therefore, managing spend should be carried out effectively and uniquely.
Analyzing and identifying each list of expenditures can be a challenge for any business let alone an individual. Automation can help sort out these challenges by eradicating duplication throughout the entire procure-to-pay cycle.
Centralized data repository
Data centralization is the key to the procurement process. With automation, your finance department can easily capture and maintain multiple records of spending. Centralizing data periodically can also help conduct audits more efficiently.
Centralizing sensitive data is critical. Needing to make sure the data is not accessible or visible to everyone. Therefore, data categorization can be done in simple chunks, with a unified view of the spend culture within the company and could help the business make wiser spending decisions in the future.
Data cleansing
As data is thoroughly and constantly analyzed and interpreted, accuracy is always highly ensured with automation, making it easier to draw inferences. Validating transaction data, including verifying data with the correct receipts and inventory has become easy. Data cleansing includes tedious activities, such as removing duplicate data entries, locating errors, and many more.
Spend data may not be accurate due to manual processing, and there might be a lot of differences in formats, data fields, and standards based on each employee habits. Defining a standard format for various domains is essential for the company to efficiently manage the expenses.
Spend data categorization
Spend data comprises various spend categories which are based on the organization’s specific operations. It’s imperative to have a spend category in common with each department to bring all expenses under one view and platform. Data can be categorized in more than one way based on your organization’s needs. Therefore, it becomes necessary for an organization to prioritize the categories, which requires more understanding on spend per vendor or activity.
Spend analysis
Analyzing collected, cleansed, and comprehensive data will help you analyze recurring spend activities and other anomalies which helps in calculating aggregates and percentage values. Technologies such as artificial intelligence and machine learning can also help analyze spend in a more efficient way, and can ultimately help organizations improve ROI.
Execution
Spend data can easily be collected and analyzed by the specific department if not organization-wise to monitor the data. Change management is also quite challenging; the process requires the acceptance and participation of all stakeholders involved.
Forecasting
The data being collected can help you forecast events better. Spend management enables you to get accurate data and enables you to track and identify trends which can help forecast future spending events. Electronic procurement solutions that leverage artificial intelligence can help categorize and manage spend in an improved way.
Although there are numerous other reasons, on top of what we have mentioned above. A procurement software can help in these specific three key areas listed below:
- Improve the bottom line
Procurement software can help enterprises in identifying savings opportunities and improve their capabilities of driving consistent results.
2. Risk mitigation
The risks your business could face increases as its employee count grows every day as well. SutiProcure helps you improve savings and efficiency while mitigating risks and helping your business analyzes the market thoroughly.
3. Emphasize what’s important
The procurement team shouldn’t need to spend time on traditional paper-based processes which are time consuming; they should instead redirect their efforts onto strategic work that serves to reach business goals. Automating processes through sourcing can help businesses broaden their views towards a procure-to-pay suite.
Final thoughts
Spend management takes the center-stage when expenditures start growing in any organization no matter the industry. Businesses should keep an eye on late payments, point discounts, or vendor performances. Considering spend process optimization could ultimately help manage spending before you lose control.
