Proven Benchmarks for Better Spend Management
Spend management, which involves sourcing goods and services, setting contracts and paying suppliers, impacts every employee in the company. As employees have to buy things that they need to do their jobs, they interact with every part of the spend management process.
To maintain efficiency and agility, the spend management process has to be fast and easy. According to a recent report, the four critical areas that manage this function successfully include process efficiency, digitization, compliance, and savings. Of all, process efficiency should be maintained to the highest degree in all organizations. Let’s take a look at four process efficiency benchmarks you’ll have to reach for:
Requisition to order time
Most companies allow only few people to make requisitions. This is a traditional method of making requisitions as you have to provide special training to the person. If access is limited to only certain people, it would add cycle time and reduce company efficiency. Spend management solution is user friendly and allows employees to make requisitions even on mobile devices.
Approvers for requisition
Approval is another factor that slows down requisition. The number of approvers required per requisition may vary from small purchase to large purchase. The best thing is to keep the number of approvals to minimum. Excessive approval requirements will slow down the process and cost the company in many ways. If your company has lengthy approval process, you can reduce the number of approvers and see which approval types is taking more time. Dynamic workflows can streamline this process by involving approvers needed by department, or division.
Expense report approval
Expense report approval should be done faster to help reduce friction for traveling employees, thus allowing them to stay focused on productive activities. Having policies that are simple, and easy to understand lets employees easily comply with the rules. Using mobile expense report solutions to fill in expense reports can ensure greater accuracy.
Invoice approval cycle time
Approving invoices faster will help accounts payable department to determine early payment discounts, manage cash flow and avoid late payment penalties. If your company is taking too long, reviewing matching requirements is better. Most companies require a 3-way matching between invoice, purchase order and receipts. Check whether a receipt is required for everything, especially for small invoices. As most employees may not understand receipt requirements, removing this step can speed up the invoice approval process. On a whole, allow people to receive and approve invoices on a mobile device without any delays.
With proper tools and processes in place, companies can reach these benchmarks very faster. Considering spend management software can be the best thing you can do to transform your spend management in a better way.
