While purchasing and accounts payable are often seen solely as part of the finance remit, they have far wider business implications and must be viewed with the same strategic thinking as any other business-critical function.
Purchases do not start with the finance department. It is business managers and budget holders who make purchasing decisions, yet any purchase problems are viewed as a finance issue.
Plus, of course, the goal of effective procurement is to achieve Best Value, balancing price, quality, supplier experience, sustainability and ethical supply – issues that clearly affect both finance and the wider business.
In this blog, we take at the look at the importance of corporate strategic thinking in the pursuit of the best possible purchasing and accounts payable system.
Understanding Purchasing Automation
Improving the purchase process – from getting the best suppliers on board through to the speed of purchase approval – affects every aspect of the business. As such, when considering an automated purchasing system, it is essential to understand the specific objectives of different stakeholders.
The impact of unmanaged expenditure on finance teams is tangible: inaccurate figures on committed spend, unexpected invoices that can undermine cash flow, and even excessive tie-up of capital.
But inadequate procurement processes can also be tough for the rest of the business. Are business managers frustrated by delays in the approval process? Is it leading to maverick spend because individuals can’t get approval in time to hit operational deadlines? And what about buying online? When there are so many great deals available on online channels – including marketplaces such as Amazon Business – how can any company justify placing a lock on B2B ecommerce?
The right automated purchasing system can address every one of these issues. By transforming the experience for business managers – providing access to the right suppliers plus easy approvals – there will be no need for maverick spend, and finance teams will have complete control and visibility overcommitted spend. No more cash flow curveballs.
Buy to Pay
Using an automated purchasing system to create an effective purchase approval process will save time for both procurement and the business. Real-time purchase automation will provide business managers with an up-to-date budget position – as well as provide the finance team with accurate committed expenditure figures.
Business managers can make purchases from the right suppliers at the right time to maximise business opportunities – such as early bird discounts – and meet deadlines; while access to online marketplaces, such as Amazon Business, enables companies to gain the convenience and cost savings offered online.
Purchasing compliance will also improve when procurement managers can secure the right deals with the right suppliers – suppliers who meet not only cost objectives but also the quality and sustainability goals of business managers. With accurate and up-to-date purchase data and the procurement tools to maximise its value, including supplier invoice data (header and line level for every invoice processed), contracts, order history, and supplier quotes, procurement teams have the depth of information required to make valid supplier comparisons.
By providing the spend data and the tools to make full use of it, procurement professionals can increase their productivity by more than 80% in identifying business savings. Critically, it also enables the finance team to ensure everyone continues to buy from preferred suppliers, at the right price, ensuring those cost savings are realised throughout the company.
This real-time view combined with effective purchase to pay processes can also enhance supplier relationships. Problems due to human error – such as payment delays – are eradicated; while the ability to flag exceptions allows finance teams to rapidly address problems that could otherwise cause business issues – such as delay in delivering an essential product or service.
The right purchase automation solution will improve the experience for everyone involved in the finance and purchase process.
Engaging Purchasing Automation Suppliers
Having considered the strategic goals of purchasing automation software and ensuring the needs of every stakeholder are considered, how do you find the right supplier? It is important to consider the specific needs of your business. For example, do you need the ability to approve purchases on any device? Do you need to integrate into an existing accounting system? Access online business marketplaces such as Amazon Business? Are there specific requirements, such as the ability to split coding on invoices at the line and header level?
A good debate between the finance team, business and vendors is essential to find the best purchase automation solution for your business.