It’s important to know not just what you spend, but what you spend it on and why. If your P2P automation solution doesn’t help you find this out, then you may not be making the best decisions for your business.
When it comes to purchase-to-pay (P2P) automation solutions, the focus has often been on the reductions in costs and inefficiencies due to a reduction or elimination of paper documents and manual processing. It’s undoubtedly true that these are extremely important results, but real power lies in knowledge; the knowledge of not just what you spend, but what you spend it on and why.
A PayStream Advisors report exposes the often overlooked power that can be unleashed by utilizing the right P2P automation solution. The report, “2015 Spend Management Report,” focuses on the way spend management solutions can turn P2P information into dynamic value. The report notes that reporting and analytics tools are “often built into an AP or procurement platform, and serve as a way to collect and analyze information gathered from transactions, employee activity, and supplier interactions incurred on the platform.”
In today’s business environment, collaboration is the key to success, especially in the entire supply chain continuum. That means that procurement and accounts payable need to work closely together and that software used should have functionalities that help both departments. When the PayStream Advisors report asked respondents why they wanted to automate their invoice management process, the top three reasons were clearly about reducing the cost and time of invoice management:
- Reduction in labor/processing costs – 54%
- Fewer lost or missing invoices – 31%
- Quicker approval cycles – 30%
However, when the focus turned to procurement rather than AP, the top three reasons shift noticeably:
- Streamline requisition and procurement processes – 83%
- Better visibility and transparency across procurement – 58%
- Improved control and security – 42%
PayStream Advisors recommends that companies ensure that any P2P solution they deploy should have robust and analytics tools built right into the solution. The main information these tools capture will be around spend, employee activity, vendor activity, process efficiency, and process discrepancies. Understanding which trends are impacting the business, positively or negatively enables companies to react quickly, optimizing positive trends and mitigating negative ones.
Too many companies, according to the report, focus too heavily on tactical capabilities when first searching for a P2P solution. When the solution has been implemented and integrated into the company’s ERP and shown to have positive results; that’s when the focus turns to strategic capabilities. This is the wrong approach. As the report states, “in order to get the most value from a P2P solution and gain a quicker ROI, organizations should evaluate all strategic abilities of their software options from the beginning of the selection process.”
To discover how to capture the real value of spend management, download the report.