Is your purchasing and expense approvals process holding up your business?
When a small business owner hears about purchase and expense tracking, they immediately think of traveling sales people needing reimbursement for plane tickets, hotel rooms, and meals. For others, it is a process geared towards control, making sure monies aren’t being spent where they are not approved. Either way, purchasing and expense approval processes are generally viewed as “necessary evils” of doing business, and as such are often facilitated with spreadsheets to which receipts, invoices, quotes, or other documentation is attached. Reviewing and approving this information is generally a manual process which takes time and attention from other activities.
When times are good, when credit easy to come by and everyone is fat, no one sweats the small stuff. But times haven’t been good for a while and today the small stuff looms large, especially in small businesses trying to grow at a time when investors and customers are wary.
Yet, as with so many things in business and in life… it’s not a problem until it becomes an obvious problem. Most businesses don’t really recognize the amount of time they invest in these types of reporting activities, much less realizing that there are bigger business benefits to be achieved if only they would leverage technology to intelligently address the process. Redundant information entry and exchange is reduced, accuracy of expense reporting is improved, and data collection and integration eliminates the impact of re-entering information, or time delays in manual paper-based processes.
The growing problem at Blade, Verbeck says, was not so much that money was being misspent as that the work was burning up his and the finance department’s time. Requests and invoices piled up on his desk, distracting him from more valuable tasks, while employees were either waiting to purchase the stuff they needed to do their jobs or buying and expensing it.
In a recent article on CFO.com, David Rosenbaum describes several business experiences in addressing the payables approval process, and the benefits achieved through solving what was once not recognized as a problem. From simply reducing the amount of money spent on nonessential items, to finding cancelled contracts still being paid, a structured and intelligent approvals process can make big differences in a variety of areas. The essential element is a structured and intelligent process and not one designed simply to factor the spend into the cash flow.
The savings that can be retrieved by automating and rationalizing approval and purchasing processes are palpable (a 2009 Aberdeen Group study estimated that “improving the percentage of all non-payroll, tax, tariff, and fee-related spend” — that is, indirect, nonstrategic expenses — brought under the management of a dedicated group can help enterprises “achieve a 5% to 20% cost savings for each dollar brought under spend management”). But the real value, says Kristen Lampert, corporate-services manager at specialty-investment bank Ziegler, is de-risking organizational spending by making sure the approval chain has the right people weighing in on the right things.
There’s an old saying that “if all you have is a hammer, then every problem looks like a nail”, and Microsoft Excel has been the hammer of choice for many businesses over the years. However, there are some things that can (and perhaps should) be done better and more efficiently with a solution designed specifically for that purpose. Not everything is better in a spreadsheet.
Read the entire article on CFO.com
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