automated purchasing

Go all the way when looking to improve purchasing

Automating the entire procure-to-pay process will result in significant gains across the entire organization.

Are you certain that your supplier network is the best fit for your business? Are you getting the best prices? It’s hard to know unless you are tracking your spend through an automated solution that standardizes processes, reduces exceptions to the rules, and ensures compliance. A bonus to automating how you purchase is that it will also transform how you pay and get paid.

Many firms may think in terms of automating their procurement or just their accounts payable and not realize that they can do much more. Automating the entire procure-to-pay process will result in significant gains across the entire organization.

When evaluating back-office automation, ask yourself the following questions:

  • How far are you willing to go with the automation process?
  • How will automation affect your business culture?
  • Who within the organization needs to be part of the automation process?
  • Who will be affected by the change?
  • What do you really want to change or enhance?
  • What problem are you trying to solve or what efficiencies are you trying to achieve?

Once you have answered these questions, you need to assemble the team that can oversee the project and ensure that the automation process is designed so that is addresses the needs of your operation. 

Be aware that automating the procure-to-pay process may also uncover areas where you are underperforming and bring to light areas that need to be improved.

There are both immediate and long-term benefits to automating the procure-to-pay process. One of the first things you will notice is a reduction in paperwork and an increase in compliance with your accounting rules and guidelines. Automation standardizes processes and reduces exceptions to the rules. Your back office staff should also be spending less time having to track down order-invoice mismatches. With an automated process, purchase order and invoice approval become seamless.

After approximately six months of full automation, you can perform a complete and accurate P&L analysis. At this point, you will be able to identify expenses that fall outside of corporate guidelines and you will gain insight into historically troublesome areas like indirect spend. Indirect spend can be brought into compliance with approved suppliers and procurement processes identified. In addition, having accurate information will now make it easier to forecast expenses more accurately which should give C-Suite executives confidence in their working capital decisions.

At some point, you will have enough information to complete a year-end review and do a complete analysis of where you need to make changes. You will be able to analyze spend with each vendor and supplier to see where your spend levels are. This will help you decide if it makes sense to consolidate spending with a few select suppliers in order to take advantage of discounts and to negotiate prices and discounts for the future that are based on what you are actually spending.

 

You need to answer some questions before implementing procure-to-pay automation, but once you move to automation, it will pay dividends for years to come.

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