2. Run reports to analyze where you can save money. Finding ways to cut costs has become even more critical in a recession, when companies need to tighten their belts without undermining their ability to compete. Savvy companies are relying on spend analytics to achieve significant savings by realizing volume and early-pay discounts, ensuring they are benefiting from the terms of their contracts, and eliminating duplicate payments and costly late payment fees.
3. Take a hard look at strategic purchases. For commodity or non-strategic purchases, companies typically select suppliers based on cost. However, this approach won't work for strategic purchases. Companies can't afford to jeopardize critical areas that can make or break their businesses, particularly in an economic climate that doesn't leave room for error. In strategic areas, consider the overall value that suppliers provide, including quality, reliability and service. In some key areas, such as research and development, you may want to invest even more during a recession to position your company well for the inevitable economic rebound.
4. Gain efficiencies and improve processes. A large European brewer, for example, has achieved "no-touch" straight-through processing for more than 90 percent of its purchase order-based invoices. Look for ways to streamline operations and gain process improvements as a painless way to cut costs during tough economic times. Many forward-thinking companies are using key performance indicators (KPIs) to gain process improvement through ongoing measurement and monitoring. They are measuring current performance against goals and benchmarks to identify their strengths as well as opportunities for improving processes and saving money.
5. Take a holistic approach to procure-to-pay. In times like these, companies can't afford to have half a view of their financial operations, waste time through inefficiencies or work at cross-purposes. For example, relationships with valued suppliers could be damaged if Accounts Payable consistently delays processing their invoices. By implementing a holistic procure-to-pay system that automates the entire process from identification of a need, through planning and budgeting, to procurement and payment, companies will gain efficiency, visibility and value throughout the financial supply chain. They will be able to know where their money is going and how to find opportunities for cost savings, and they can ultimately make informed decisions about how and where to most strategically spend.
6. Find a solution that provides immediate cost savings and benefits. Today more than ever, companies need to find ways to achieve savings and efficiency in a very short timeframe. Investing in long-term re-engineering projects that promise future savings is no longer an option. Many are implementing technology that provides ROI within a matter of months.
When times are tight, knowing where you are spending your money and identifying effective ways to cut costs are very important. At the same time, savvy companies are looking at longer-term opportunities. They are using automated procure-to-pay systems to strategically focus on key purchasing areas, benefit from process improvements and more effectively manage their cash flow and working capital throughout the supply chain. By using technology for short-term as well as strategic, long-term gains, they are achieving key competitive advantages that will position them well when the good times return.
About the Author: Ari Salonen is general manager, North America for Basware, a provider of software solutions that automate the procure-to-pay process for enterprises around the world. You can contact the company at firstname.lastname@example.org or call 203-487-7900.