P2P Commitment Accounting
(Margaret's Story)
Commitment accounting is the ability to track the financial commitment of every purchase order from the moment it is approved addressing the problems of a manual purchasing system.
The Problem:
A manual purchasing system
Margaret produces the month end accruals to complete the management accounts and cashflow forecasts. The accruals represent her “best guess” of the purchase invoices and expenditure that failed to be approved and processed in time, usually by accruing to budget. The management then make all their business and subsequent purchasing decisions based on Margaret’s best guess, which is already weeks out of date.
The reason Margaret guesses is because the manual processes involved in raising orders, processing deliveries and in particular, getting the purchase invoice approved is slow, very labour intensive and ineffective. The first time Margaret knows a commitment exists is once the purchase invoice is posted to the accounts.
Margaret does the best she can with the tools and processes the company provides.
The Solution:
Life with Compleat Spend Control
The introduction of Compleat Spend Control has changed Margaret’s life.
Everyone in the organisation now raises purchase orders within Compleat for all expenditure, every time, and Margaret has instant access to the committed spend as it happens. Forward orders, contracts and call offs, rental agreements, renewal agreements and utility bills are all within the system, so Margaret knows she is dealing with facts.
Margaret’s cashflow forecasts now reflect the cash requirements of the organisation, day by day, as far into the future that purchasing commitments and obligations have been made, so she can see likely cash shortfalls, or surpluses, well in advance and pass the information to senior management in good time.
The financial management reports are now produced within days of the month end. With full commitment accounting in place, there is no longer the delay of waiting for purchase invoices to be approved and estimating the accruals for those that miss the month end cut off. The organisation has started working in real time, based on factual information that is updated moment by moment as the commitments are made.
Commitment Accounting and Austerity
Margaret now spends her time watching the cash horizon for potential problems and opportunities instead of guessing what took place sometime in the past. Margaret is in control. As a result, the board are now far better informed and in a more timely fashion. They have
full confidence in the accuracy of the cash requirements of the organisation that Compleat Spend Control has delivered and are in a
position to maximise the corporate ship’s business potential.
About Compleat Purchase to Pay (P2P)
Compleat P2P software is a 100% browser based application designed specifically to be used by staff involved in the purchasing process that have little or no experience or expertise of utilising business automation software. Staff user training can be achieved in as little as one hour, demonstrating the unique “ease of use” of Compleat. Compleat P2P can be deployed on a Microsoft SQL Server platform either locally or within a hosted environment. Compleat provides tight “packaged” integration with most leading accounting software products including Infor FMS SunSystems, Microsoft Dynamics GP, SAP Business One, Pegasus Opera II & 3, Sage Line 50 / 200 / 500 / 1000 and CODA Dream. The range of supported accounting systems is being continually extended.
Compleat also provide Compleat Employee Expenses automation.