10 Reasons Why Automation of Procure-to-Pay Cycle Is Critical
Organizations across the world are facing the brunt of rising commodity prices and increasing procurement costs. Executives are hard pressed to make a tangible difference to supply chain profits. But cost cutting is adversely affecting investment decisions and chances of expansion across the board.
Technology enables companies to look offshore for cheaper resources and raw materials. Procurement has become a more important process than it had been before and geographical boundaries to availability are diminishing. The procure-to-pay cycle is considered a crucial strategic operation, in which expenses need to be closely monitored.
Organizations need a comprehensive approach by which operations are aligned to lower procurement costs. Every department needs to be made accountable for its costs and effective use of assets. This is only possible through automation, which includes monitoring of requirements and expense optimization. It helps to procure the assets at competitive prices. Automation of your procure-to-pay cycle can bring immense benefits to minimal investments. Here are 10 of them.
- Save time
Automation means faster cycle times. An Aberdeen Group report found that organizations that have implemented e-procurement initiatives have halved their transaction cycle time. This means faster order processing, instant approvals, and better decision making. The future belongs to organizations that have automated systems, as speed, efficiency, and effectiveness of procurement solutions provide a competitive edge in the market.
- Save money
Big savings are now possible with manual procurement fading into the future. Shortened procurement and fulfillment cycles reduce administrative costs and improve staff productivity. Employees can use their time more strategically instead of pen-pushing. Consolidation of orders from different departments result in manifold advantages like decreased cost per transaction, reduced maverick spend, increased negotiation power, and volume discounts.
- Reduce errors
Automation ensures better accuracy. Multiple receipts, documents, and bills are no longer in the picture as vendors log in their quotes and departments key in their requirements. Endless matching and re-submission of documents are no more the order of the day. Clerical errors are minimized and you can identify the best and worst performing assets and other variables to plan for the future.
- Be compliant
Automated procure-to-pay solutions ensured standardized procurement practices, pre-negotiated pricing and real-time data that ensures compliance. Maverick spending comes down to zero as procurement managers look out to established vendors who provide better prices than the rest. Standardized equipment and products are bought only from vendors that ensure compliance across the board.
- Improve negotiations
Large volumes are open invitations for vendors who can provide discounts and still get better profit margins. When there is the consolidation of requirements from different departments, procurement managers and executives are better placed to negotiate stronger terms that deliver profits.
- Get vendor visibility
Automated procure-to-pay solutions provide better visibility to the procurement process and ensure single-window clearance. Vendors do not need to meet multiple stakeholders and fill up diverse forms just to quote the price. All they have to do is log in to the cloud-based system and fill up the electronic forms.
- Be better informed
Procurement policies can easily be accessed and any deviations can be instantly red-flagged. Executives, vendors, and agencies just need to access the procure-to-pay system for clarification about the process and polices to ensure compliance.
- Communicate completely
Procurement communication is never blocked as every transaction leaves an audit trail. The information that can be accessed immediately upon authorization and the entire pipeline is better managed.
- Enhance control
Executives and managers have access to real-time business data that can instantly refer to the financial health of their organizations. With automated procure-to-pay solutions, you can access all spending with the click of a mouse. Minute information that can change purchase decisions for the betterment of the company is available. Detailed control of the process helps limit spending and stick to the budget.
- Gain the competitive edge
Reduced costs, increased accuracy, better control, and transparency give you a smart, streamlined, resourceful supply chain. The smarter purchasing decisions boil down to better financial health that can give you a competitive edge in the market.
Automation helps you to build a smarter procure-to-pay system. It is imperative that organizations move on from cumbersome manual operations to cloud-based automation systems to streamline their supply chain and procurement processes.
Expensing platforms are easy to use and adaptable automated systems which facilitate procurement, invoicing, and expense management. With Expensing procure-to-pay systems, the procurement process becomes better streamlined, with faster cycle times and better control and visibility.
Melissa Patterson is a freelancer and has experience of over 5 years in expense and travel management software. She has in-depth knowledge about managing travel and different type of expenses incurred in the business. She writes about spend and procurement management software as a freelancer.