HOW TO MANAGE SPEND BEFORE IT STARTSHOW PURCHASING MANAGEMENT SOFTWARE HELPS MANAGE SPEND BEFORE IT STARTS
Five ways to get corporate spend under control
by Salim Khalife, Founder & CEO
You can’t manage what you don’t measure is an old management adage that still holds true, especially when it comes to your business spending. Companies that begin tracking and measuring their expenditures before they even begin spending are those best able to control expenses, comply with industry and business mandates and grow their profitability. Here we’ve highlighted five ways to get corporate spend under control and manage operational spend before it starts.
1. Overly-complex approval processes
Centralizing the purchasing functions of an organization is good for business. You gain buying power, better positioning with vendors and improved communications across all departments and cost centers.
Procurement and spend management software is the place to start centralizing your purchasing functions. With all direct and indirect spending routed through the same system, you can leverage your buying power, minimize waste and drive efficiency into the process.
2. Decentralize requisitions
While the purchasing process benefits from centralization, the requisition process benefits from decentralization. By limiting the ability to create requisitions to only certain users, or only when employees are on site, the entire process is slowed – or bypassed – creating bottlenecks that kill efficiency.
Empower employees across all departments to make use of the requisition function to save time and eliminate inefficiencies. Functions like guided buying catalogs make it convenient for employees to pick from a list of company-selected items and easily create a requisition to be routed for approval. Mobile access allows off-site employees to efficiently create requisitions and check on the status of existing requests.
3. Implement smart approvals
A well-designed and well-enforced requisition process is fundamental to managing spend before it starts. But if the approval process is overly burdensome and lengthy, employees may look for ways to work around the process, sabotaging your efforts to manage spending.
A secure, easy-to-use procurement solution with flexible approval workflows and mobile accessibility goes a long way towards promoting user adoption and bringing more of your spending under management.
4. Watch that budget
A company’s best efforts at spend management can be thwarted when purchases exceed budgeted amounts. Employees may simply not be aware of budget constraints when requesting items or budget values may be unavailable to them. This leaves the job of budget control with the approver(s).
Spend management solutions often incorporate advanced budgeting engines that enforce your corporate budget throughout the entire requisition and procurement processes.
5. RFQs keep pricing competitive
Even when you have established relationships with trusted vendors, it makes smart fiscal sense to ensure you continue to get the best pricing. But manually managing the request for quote (RFQ) process is time-consuming and leads to duplicate data entry when it’s time to award the contract.
Procurement and spend management solutions automate the RFQ process to simplify and streamline the tasks involved. For example, you can elect to hand-select the vendors you wish to bid, or let the software make smart recommendations based on factors like rank and commodity code. The system can email vendors notifying them of the new requests, and inform you when the bids come in. Once you decide on the winning bid, you can quickly convert it into a requisition without rekeying.
The key to effective spend management is to start before you spend. Paramount WorkPlace effectively manages all aspects of the procurement process. See it in action here.
About the author:
Salim Khalife is the founder, president and CEO of Paramount WorkPlace, a technology company that develops, sells, and supports advanced web-based and mobile requisition, procurement, and expense software solutions for mid-market organizations. The company introduced its first cloud-based SaaS requisition application in 1997 and continues to innovate and expand its partnerships and integrations ever since. Learn more at www.paramountworkplace.com.