Business leaders may not always think they have the resources to track and dive into all areas of spend, as they may be focused on other goals such as increasing revenue. However, the advent of automated spend management — where e-procurement and spend management software are used to automatically collect and analyze spend data, along with other functions like supplier sourcing — makes procurement and overall spend management significantly easier for many companies. By investing in automated e-procurement and/or spend management tools or services, business leaders can gain a significant return by finding multiple ways to reduce overall expenses.
In particular, automating spend management helps companies:
- Secure best-in-class pricing
Rather than having employees manually search through catalogs and compare prices between vendors, e-procurement and spend management platforms can simplify the buying process. These platforms can automatically search their libraries of billions of SKUs to suggest competitively priced products and services that fit within a company’s finance controls, so companies can feel more assured that they’re not overspending.
- Negotiate better rates with suppliers
Automating spend management not only helps companies filter products and services down to ones with the best pricing, but certain platforms can go a step further by actually helping companies negotiate better rates with suppliers. This can occur in a variety of ways, such as by automating the RFP process so companies can more efficiently solicit and analyze bids, as well as by automatically analyzing spend data so finance and procurement teams can easily see how much they are spending with each vendor and how those vendors are performing in areas such as delivery fulfillment. If the data shows that a vendor has not been consistent with deliveries, for example, midsize companies can use that data as leverage to negotiate a better rate than their size may otherwise imply.
- Identify areas of overspend
When spend data automatically gets captured and filtered into easy-to-analyze dashboards, companies can more easily track expenses and potentially see where they’re spending more than they should. For example, a company may not realize how much it spends on travel across all employees if finance or accounting teams are piecing together manual expense reports. Yet by looking at spend data as a whole, a company may realize areas of overspend and take measures like implementing more stringent automatic approval thresholds. That means that if an employee attempts to make a purchase above a designated amount, that purchase will get flagged and not go through until it receives the proper internal approvals, allowing midsize companies to not go over budget unexpectedly.
- Reduce waste
Related to identifying areas of overspend, automating spend management can help companies find and reduce areas of waste, such as duplicate purchases, wrong orders, and billing errors. For example, without automated data collection, companies may not realize that two different departments are purchasing the same items, yet when purchases are filtered through a centralized e-procurement platform, automatic controls can be set up so that seemingly duplicate purchases do not go through without additional approval to ensure the validity of the purchase. Automated spend management platforms can also help cross-check invoices and payments so that companies do not waste money by accidentally paying more than necessary.
- Increase staffing efficiency
While automating spend management does not mean that all spend management related jobs will disappear, companies can reduce resources needed in what previously may have been manual, labor-intensive areas like processing invoices and setting up payments. As midsize companies grow, they don’t necessarily need to expand their procurement or finance departments as quickly if they can use automated spend management software to handle these types of tasks. Instead, staff can use their time more efficiently for more value-added activities like finding ways to improve their supply chain transparency or working across departments to set more accurate budgets and forecasts.
As these areas demonstrate, automating spend management can lead to a variety of cost savings that ultimately help midsize companies increase profitability and their overall purchasing efficiency. These increased savings can be vital toward helping midsize companies invest more money in other areas of their businesses that help them grow, rather than being held back by overspending on certain expenses.
To learn more about how your organization can automate spend management and streamline purchasing, schedule a free consultation with GoProcure today.
