By Ray Welsh, Head of Product Marketing, FISCAL Technologies
All businesses are vulnerable to financial leaks, whether your business is a start-up or an established company, many risks can have serious consequences on your finances. The importance of assessing historical transactions thoroughly to identify any recurring weak spots is critical. Whether you are a small and mid-size enterprise or a global organisation, undertaking these measures will ensure your business is proactive, rather than reactive to these issues before it’s too late. Having the necessary AP technologies in place helps to identify red flags and eliminates the threat of human error.
In light of this, here are the five key benefits of assessing historical transactions thoroughly;
Discover and eliminates maverick spending
Maverick spend or any organisational purchase made outside of a formal purchasing process can result in unexpected purchases, leading to a cash-flow crisis. When purchases aren’t properly tracked, this results in data gaps, and as a result, the financial department is unaware of where the money was spent. This leads to delays at month-end close as well as the potential for fraud. Reconciling maverick spend can become the primary cause of bottlenecks within the AP organisation Without a system to continually check for the indicators of maverick spend, working in the background on your behalf, cash continues to leak out and cleaning up the mess continues to consume your team’s valuable time.
The solution to maverick spend begins with having the necessary AP technologies in place helps to identify red flags.
Improves oversight of vendor performance
Thankfully digital transformation has removed the paper document-intensive back-and-forth of completing a purchase that historically included items such as quotes, purchase orders, order confirmations, invoices, credit notes and receipts. Thankfully the environment has benefited from this transformation, it has however failed to reduce the number of documents required in a supplier transaction. If the necessary technologies and procedures are not in place these documents can become lost in the system, resulting in a waste of employee time, excessive spending, and poor supplier relationships. An effective Procure-to-Pay system consolidates the entire process into a single platform which improves efficiency, but without the contemporary controls needed to protect spending, P2P solutions can speed up cash leakage.
Improves budget control
Having the necessary AP technologies in place to track and check transactions can have a monumental positive impact on budgets and how they are controlled. It is sometimes the case that a budget-orientated mindset doesn’t always make its way into the Procure-to-Pay process within organisations. Possessing clear budget controls should be of the utmost importance within any organisations purchasing system. Through a singular purchasing platform, budget limits can be set for each department, resulting in ease of visibility within the purchasing dashboard. Assessing historical transactions via AP technologies will result in the necessary bodies having total visibility and control of departmental budgets, eliminating unwarranted spending and reducing financial leaks within the organisation.
Eliminates invoice errors
Incorrect invoices can come in many shapes and sizes, whether it be inaccurate costs, missing or incorrect purchase order numbers or duplicate invoices, this remains a common headache for many businesses. Any worthwhile purchasing process will automate checks and balances that will automatically flag invoice errors, potential duplicate invoices, and all other errors that account for invoice related cash leakage in an organisation. Having the right AP technologies in place will allow you to proactively audit invoices to check for errors, such as duplicates or overbilling. If your platform does nothing but eradicates overpayments, your organisation will have overcome one of the most common causes of unnecessary spending.
Removes manual processes
Manual processes are known to be error-prone and extremely time-consuming. Having the required AP technologies in place can eliminate the challenges and difficulties attributed to manual Procure-to-Pay processes. But when human processing is replaced with rules-based, automated systems, the time allocated to contacting vendors, following up with approvers, and gathering credit notes etc. continues unless smarter error detection is also introduced, alongside AP automation. Time wasted in P2P processing is a major financial leak that can be prevented with the right approach.