Do you know what your company is spending on? The fact remains that many organizations aren’t aware of their own company’s spendings. Businesses, unfortunately, don’t understand the importance of spend visibility but it actually plays a huge role in the organization.
It allows businesses to know how money is being spent, and how to avoid “leaving money on the table“. It also enables organizations to detect any fraud or anomalous behavior within your company.
There are many examples of big corporations, particularly growing medium and large enterprises had to face the consequence of their inability to control company spending, all because there was lack of spend visibility within the procurement processes.
What is exactly spend visibility? Spend visibility refers to having a holistic picture of how money is moving through your organization. It also implies visibility of your company’s entire purchase cycle. For examples, if your company were to hire a vendor, how is the vendor selected and whether the vendor selected was the identified preferred vendor who may have a contract pricing with the company? Who in your company approved the quotation?
Spend visibility is the detailed and organized system of records of every order, right from the time when the deal was conceived to the time money leaves your company’s bank account. It provides a full picture of how every dollar is spent – hence giving the knowledge to identify fraud and any
There are a lot of benefits that come along with having a high spend visibility. Let’s explore them in the next section.
Benefits businesses can achieve through better spend visibility
1. Reduction of Maverick spend
What is maverick spend? Maverick spend refers to purchases made outside of agreed contracts, this is an additional cost for the organization.
Agreed contracts are usually paid for, meaning there is a specific cost paid for every contract. And some contracts have a minimum spend requirement. When employees order separately, and not from the preferred vendor, the organization may not be able to achieve the minimum spend and hence losing the preferred pricing that the procurement team has bargained for. This is an extra cost to a company and when compiled can be a substantial amount.
By having spend visibility, maverick spend activities are identified and can be addressed to the different stakeholders who may be conducting this without knowing that it affects the company’s bottom line.
The best way of addressing this course ensuring that purchases are made with the preferred vendor with using an e-Procurement platform that has a customized company catalogue which locks down the vendor selection. Doing so will help limit off-contract purchases or from expensive vendors and suppliers.
2. Identifying saving opportunities
Spend visibility allows the organization to view purchases and the amount being spent. By tracking your company’s spending, you will be able to identify costings that incurred that could potentially be reduced and other various saving opportunities.
Having data of your company’s spend with your vendors give your the bargaining chip in having better pricing for your overall organization purchases. Informing the employees about the spend of the organization builds confidence in them while they undergo the procurement process in which they are responsible for.
What is stopping companies from having a good spend visibility? It could be several factors but it mostly boils down to having a good system that automates the tracking of a company’s procurement spend and the processes behind it.
When spend data is stored in multiple systems, this often leads to misplacement or loss of data. Sometimes the data-sets can even end up being incomplete due to being spread out in numerous systems. Doing so leads to employees losing track of what needs to be completed.
By not having a good automated system to store and process data, organizations are often left behind struggling to find and amend their data.
Achieving spend visibility through e-procurement
The concept of spend visibility being achieved throughout the organization can sound intimidating. Especially if your organization is worried about employees tampering or being overwhelmed with all the data that is presented to them. But not everyone in the organization has to be given complete access to all the data. E-Procurement platforms allow you to select the type of access need to be given for each department and or employees. E-Procurement platform can help place restrictions for employees which can prevent them from being overwhelmed with all the information.
Employees can feel a part of the organization
Since employees are given access to the organization’s spend they would feel more included in the organization. Employees stay informed and aware of the company’s current situations. Using a platform such as ADAM, allows employees to manage spend, through the financial analytics function.
E-Procurement platforms can also increase employee work productivity because they won’t be overwhelmed they do not have to constantly rely on their superiors for information.
E-procurement softwares such as ADAM is what your company needs to achieve all its goals. Contact email@example.com to start your procurement journey.