Learn how to raise your mid-sized business’s profit margins with a digital procurement strategy, led by expert procure to pay solution providers.
Does your procurement system consist of a piece of paper that’s passed around until it eventually ends up in a dusty folder? Or does your department keep track of everything in a spreadsheet system that's just as easily lost in electronic sub-folders—if you remember to save it at all? If you're using a legacy system, it is time to consider an e-Procurement system that will put you back in control of spending, and save your company time and money. But what are the exact advantages of e-procurement that help you achieve these results? Let’s run through them now.
The top 8 benefits of transitioning to an e-Procurement system
1. Enhanced visibility
e-Procurement gives you centralized access to all your data. Track down a PO or an invoice and analyze metadata to find areas where you can improve your processes. This could mean tracking:
Areas where approvals take the longest and can be shortened
Vendors you spend a lot of money with (and who you might be able to negotiate better terms with)
Times to pay invoices to take advantage of early pay discounts and optimize cash flow
On-contract vs. off-contract spend
The sky’s the limit with what you can data mine.
2. Greater control over procurement processes
e-Procurement systems allow greater flexibility and control over every aspect of the purchasing process. From controlling who can input an order, to who can approve and purchase it, and finally, who can receive against or pay it—control is central to the modern e-Procurement system. You can even manage who can see the details of a transaction, and which details, after the fact. If you want control over not just what your organization spends but who in your organization can spend it, authorize it, and see it, then an advanced digital e-procurement system is what you need.
A common problem with legacy procurement systems is human error. A person captures incorrect data in a spreadsheet or fails to save their changes. A person goes on vacation and doesn’t approve a purchase order before they leave.
Modern e-Procurement systems use automation to alleviate these challenges. Instead of having one of your employees enter in a PO or invoice by hand, you can use one of the following options:
Automated PO generation
With these features you can automate data entry and rely on invoice matching capabilities and exception alerts to notify you when your numbers don’t match up, mitigating the risk in AP processes. Need someone to approve a high-priority purchase? Instead of carrying a piece of paper from desk to desk, the system can email each approver in sequence and let them approve right from their inbox to move the purchase along. Your approver is out of office? Let OOO (out of office) delegate approvals automatically send the document to an alternate or the next approver in the chain to keep things flowing and your business moving.
Budgets are a reality for every organization, and a hallmark of a great e-procurement system. With a legacy system, budget calculations are all done by hand or in spreadsheets. There’s low visibility, no real way to enforce approvals for over-budget purchases, and one wrong keystroke can spell certain doom.
Modern e-procurement systems will automate all of this and let authorized users know the available budget and the potential impact of spend before it is incurred. Best-of-breed systems will not only alert approvers if a request is over budget, but trigger special routing rules or approval workflows for over-budget expenses to ensure they’re properly accounted for. An additional benefit of a modern e-procurement system is that they also allow budgeting at both the GL Account and Project level, adding extra flexibility for your budgeting needs.
5. Easy vendor management
When you can view all of your orders for a vendor in one place, you can strategize remarkable cost savings. This includes:
Consolidating similar orders to take advantage of bulk discounts
Showing vendors how much you spend with them to negotiate discounts
See when non-preferred vendors are being used (and even put a stop to those orders to save money there, too)
This kind of metadata just isn’t available with a legacy system.
6. Reduced rogue spending
Rogue spending is a big issue for many companies. Around 40% of employees admit to having gone rogue—buying an item without proper approvals, or buying a different item than what was approved—at some point. With paper and spreadsheets, it can be easy to hide or mask a rogue purchase. Not so with e-Procurement systems. In fact, having an electronic audit trail that can’t be deleted is a powerful deterrent to rogue spending, so not only is it easier to catch, but you’ll have fewer instances of it to begin with.
7. Rock-solid audit trail
For many organizations, the question of what was purchased is not as important as knowing who interacted with that purchase, from request to payment. Paper and spreadsheets can track some of this information for you, but what if someone changed what was on that paper halfway through the buying decision? The truth is, with older systems, there’s really no way to know.
Modern e-Procurement systems, on the other hand, log each touchpoint and provide a detailed trail of exactly who did what. If the third approver added five extra widgets to your order, now you’ll know exactly when and where they did it, or better yet, be able to stop them from changing the order in the first place. Audits become a breeze, since there’s a detailed history of all changes to each request right there in plain sight for everyone to see, transforming what used to be a drawn-out chore into an easy exercise.
8. Save money
Switching to an e-Procurement system can not only save your business time, but most enterprise businesses save millions of dollars each year through reduced fraudulent spending, taking advantage of early payment discounts, and reduced headcount. Some companies have saved the equivalent of two to six full-time positions just by putting Fraxion into place to scale their operations, without having to add positions to their procurement department.
Take advantage of a modern e-Procurement system
An e-Procurement system can revolutionize your procurement process. Click here to read how you can get these procurement benefits (and many more) by choosing a platform that enables fully-digital procurement processes, with every time and cost-saving feature you need.