A robust, agile procurement process is more important than ever to your business. With rising costs and ongoing supply chain issues, procurement within your company is more critical than ever. Procure to pay technology will automate order management, vendor management, contract lifecycle, and accounts payable processes.
How Can Procure to pay technology help your business
We will review how a procure to pay technology can help your business and its impact on all procurement processes. A procurement solution will simplify these processes and give you visibility into all these parts of your business
1. Purchase Requisitions & Approvals
2. Procurement Budget Management
3. Vendor Contract Management
4. Accounts Payable Reconciliation
5. Procurement Trend Visibility
Purchase Requisitions & Approvals
Adding a purchase requisition process to your business gives you visibility at the very beginning of the process. A purchase requisition is created by a user who wishes to procure an item. They indicate what they want to purchase, when, and how many.
A purchase requisition will then be forwarded to the person responsible for procurement. A good procure to pay technology will make it easy for the end-user to get notified that someone has requested procurement. For the requestor, it will become essential to know when the requested item will be ordered and available.
An approval process is another vital component to implement in your business. Approvals can be added for all procurement or purchase requests over a certain amount. Adding an approval process will ensure that large spend requests don’t get processed without the correct authorization. Depending on your preferred structure, this may fall to a department manager or project lead.
Procurement Budget Management
Building and managing budgets in a procure to pay system can help you handle the spending across your business. Budgets can be built by function (accounting, sales, marketing) or by project, depending on your business needs.
Creating budgets by the function will allow you to handle your spending, especially if you have a specific department that tends to spend a lot.
Building out project budgets gives you a benchmark for spending by project and allows you to work to keep your spending within a certain threshold. For businesses that get their revenue by project, recording and tracking your project work by budget is an easy way to see if you are charging enough for your services. A project consistently coming in over budget is indicative of an issue that needs to be looked into, like higher material costs or poor management.
Vendor Contract Management
With commodity fluctuations and supply chain challenges, it becomes more important to have a record of your vendor contracts and their end dates. Being proactive ahead of contract renegotiation will help you keep the upper hand in vendor negotiation. You will be more likely to secure your current pricing for longer or, even in rare instances, negotiate a pricing reduction with your supplier.
A robust procure to pay technology will bring awareness to your vendor contracts and capture and record vendor communications, keeping negotiation transparent and documented and being organized and easy to deal with means that you can become a customer that suppliers will build a relationship. A productive and easy relationship with your vendor partner benefits both parties.
Vendor contract management can also allow you to monitor items you buy from multiple suppliers closely. If an item can be consolidated to a single vendor, this positions your business favorably in negotiations.
Accounts Payable Reconciliation
Your accounts payable team spends most of their time reconciling purchase orders with invoicing to ensure the correct invoices are paid on time. This time-consuming task involves working with suppliers and internal purchasers alike to solve variance issues and make sure the bills are paid on time.
A procure to pay system should automatically match your purchase orders to your invoices. Having this automation means that your team can cut out this manual process and only focus on invoices with a variance. This leaves more time for investigating issues and supplier communication as needed.
Procurement Trend Visibility
Having access to data over time with your procurement can unlock insights that will bring your business to the next level. A procure to pay system should have the ability to provide reporting and data insights for various aspects of procurement, from items to vendors to overall spending over time. Trends can be evaluated in several ways, including from one quarter to the next or comparing to the same time last year. This will depend on the structure of your business and if you tend to be a seasonal business or not.
Items – Understanding what items get purchased the most can allow you to consolidate your purchases where needed and even give you a glimpse into pricing over time.
Vendors – Reporting on suppliers will tell you how well a given vendor performs for your business. Whether or not purchase orders get filled or how long deliveries typically take, understanding a vendor’s level of service can equip you to make the best decisions about who to deal with.
Spend – with the above budget setting, it’s essential to understand how budgets perform over time. Do you have budgets that consistently go over or under? This not only helps you fine-tune your budgets but also helps you truly understand the costs within your business.
An easy to use procure to pay technology will make report running easy to access and understand. Some types will display information in a dashboard format, and others will produce more transactional detail. It is essential to have a system that makes insights in a way that works for you.
A procure to pay technology can streamline processes and unlock insights for your business in a way that a manual process could never achieve. From visibility to automation to process management, a system can enhance and improve the structure of your business.
Beyond excellent decision-making and business management, adopting a procure to pay technology allows you essential insight into your business. You and your team get to move away from manual, repetitive tasks and focus your attention on managing your business effectively. Tradogram is a cloud-based procure to pay platform with a wealth of features that help optimize procurement.