For any hard-pressed finance team struggling to retain control over maverick spend, the idea of letting employees loose online can be pretty daunting.
In reality, however, with the right processes in place, there are numerous business benefits to online purchasing that can not only provide significant cost savings, but actually improve financial control, save time and, critically, provide finance with real-time spend visibility throughout the organization.
In this blog, we look at the benefits of B2B purchasing online, consider why some businesses might not have taken the first step, and show how accounting technology is helping raise visibility of online purchases as part of the accounting process.
Online Purchasing Benefits
There is still a perception that e-commerce is all about direct to consumer sales, but the fact is that online sales contribute significantly to B2B revenue. Data from Statista estimates online sales between companies hit £165.3bn in 2018 (the latest published figures) and the value of online sales is set to increase.
And this is not a new trend. Despite the perception that online buying is a new phenomenon in B2B, the majority of those doing it have been trading online for years. These firms have embraced the value and convenience of online buying. From the chance to explore a broad range of suppliers and find great deals, to the rapid response offered by next, even same-day delivery, buying online can be both convenient and financially sound.
Best Practice Model
However, the ease of access to multiple suppliers and the speed with which orders can be placed clearly raises concerns for any finance team wrestling with retaining control. From individuals buying outside pre-agreed contracts to a complete lack of visibility of online purchasing and payments, finance teams have very valid concerns about letting employees purchase online.
But as growing numbers of competitors embrace the power, convenience and financial value of online B2B, can any firm afford to miss out on the business benefits of online purchasing?
To make the most of the potential financial and operational benefits offered by online purchasing, firms need to take control. It is important to create a best practice model for online buying, a model underpinned by strong approvals processes. It is also essential to limit purchasing to a list of agreed preferred suppliers as this not only imposes essential control but also avoids time wasted by employees hunting around for what they may perceive to be ‘better deals’, precisely because they don’t fully understand the complexity of procurement processes or the time cost for finance to account for it.
Accounts payable automation technology plays a vital role in imposing control and enabling finance teams to realize the best practice model for buying online. With direct integration to online suppliers, combined with a purchase order approval process and budget checking, a finance team can be confident that employees are only buying from approved suppliers and within agreed limits. With this level of control, finance can confidently empower staff with the authority to purchase responsibly – from the right suppliers.
Extending this control to online marketplaces – such as Amazon Business – provides the business with the chance to leverage the highly competitive nature of a marketplace and gain access to prices that are almost always less than available on the supplier’s website.
Purchase order approval processes can be fully automated, reducing the time wasted chasing individuals, and avoiding delays; while the invoice capture, purchase order match and GL coding and approval process are also automated, avoiding the need for any manual intervention. Critically, finance has total visibility and control over the entire financial life cycle every purchase – meaning no surprise invoices and no unexpected cash flow curveballs.
Employees have the convenience of online purchasing; while the finance team can save both time and money, without any fear of maverick online spend. Furthermore, with real-time analysis of spend, finance can be continually reviewing supplier performance and identifying further opportunities to reduce costs.
Finance teams of every size of business now have the opportunity to enable their business to leverage all the benefits of the rapid surge in online B2B activity. Employees love making purchases online due to the ease and convenience on offer – and that activity can not only be managed by finance, it should also be encouraged. Without integrated online purchasing and accounts payable automation, finance teams will increasingly hold back their business from what is already inevitable progress.
Perhaps the biggest benefit is employees will always opt for online purchasing over every other methodology because that is what they do in their own lives. It enables finance to deliver a best practice model, maximizing the business benefits of online purchasing and gain total visibility and control over the entire process by delighting their employees. Now that has to be a first!
Explore our Compleat Guide to Accounts Payable Automation and find out how AP automation can deliver benefits for both AP and business managers, saving money, improving cash management and transforming procurement.