Spend Management

Overview

In today’s economy, it isn’t easy to increase revenues, so companies need new and less painful ways to increase profitability.

Although indirect spend isn’t the largest expense category for most companies, it can be ripe for savings and process efficiencies.

Put more spend under management

CODA Financials offers you a truly end-to-end spend management solution, covering the whole cycle from requisition through to payment. Our Spend Management module reduces costs by providing fast, controlled, online access to key procurement functions to all employees, and also delivers accurate budgetary control over expenditure. It helps a company establish controls and consolidate purchasing activity, and positions it to leverage the full buying power of the organisation.

The bottom line is savings

One of the most under-automated and under-controlled functions in companies today is the process for managing indirect expenditures. Indirect expenditures constitute items and services consumed in the normal course of operating a business, such as: office supplies, IT equipment, software, maintenance supplies, professional services, real-estate services and other outsourced services. Although indirect spend isn’t the largest expense category for most companies, it can be ripe for savings and process efficiencies. Therefore, the automation of indirect spend represents a “low hanging fruit” opportunity for companies looking to increase earnings. In today’s economy, it isn’t easy to increase revenues, so companies need new and less painful ways to increase profitability. The beauty of indirect spend savings is that savings fall directly to the bottom line, without crippling production or leaving you to agonise over layoffs. You can increase earnings per share – without increasing revenues or enduring painful cost reductions.

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Control – Consolidate – Negotiate

Automating the indirect spend process can provide significant savings directly to the bottom line. Once the proper controls and processes are in place, companies can consolidate suppliers and fully leverage the total buying power of their company.

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Control

Unfortunately, most companies have relatively manual procedures in place for indirect spend, resulting in mediocre controls, lack of budget accountability and a greater likelihood of fraud. Consequently, buyers and A/P personnel struggle to plug the control gaps with manual processes, spreadsheets, emails and an abundance of paper. For example, in an undisciplined environment, invoices arrive unannounced in the A/P department without a purchase order or a receipt confirmation. The A/P department reverse engineers the processes and tries to locate the buyer or budget approver. A/P demands a purchase order from the end user, checks for budget availability (even though it is too late) and tries to confirm that goods were received. Once this is completed and approvals are met, A/P can manually enter the invoice, match it to the receipt and the PO, check for returns and eventually submit the invoice for payment. Rather than controlling spend, this reverse process simply tries to account for what happened, after the company is committed and the goods are on their way. Furthermore, this process is highly inefficient and creates bottlenecks in A/P, who are forced to serve as the corporate watchdogs.

The CODA Spend Management tools are designed to help companies establish electronic controls throughout the process, while reducing the effort it takes to request, order, receive, invoice and pay for an item. By extending procurement functionality to all users and putting managers into an authorisation workflow, maverick spend is eliminated and budget accountability is established. With the proper requisitioning and purchase order approval process in place, invoices can be matched up quickly and electronically, without re-keying and unnecessary data entry. Invoice matching also ensures that adequate “goods received” processes are in place and completed before payments for items are made. With the CODA solution, you can be confident in the knowledge that you received what you ordered, and that you are paying for what you actually received.

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Consolidate

In many companies, indirect expenditures are spread or fragmented across multiple suppliers – all offering different prices, terms and quality of service. Meanwhile, the A/P and purchasing department is weighed down by managing an unnecessarily large pool of suppliers. Fragmented spending is particularly onerous in decentralised or multi-site organisations, where controls and processes are harder to implement. Remote requisitioners or buyers simply can’t see (or don’t have access to) the best supplier information before making a purchasing decision. In short, companies in this situation are not taking advantage of the best suppliers, while they are simultaneously incurring higher processing costs.

CODA Spend Management helps pool buying activity and helps you consolidate purchasing activity with the best suppliers. This begins by driving adoption across a wider corporate audience with our solution’s intuitive requisitioning and purchase order user interface. This ease of use drives adoption and puts more spend under management. The full volume of corporate buying activity is then funnelled to the best suppliers, offering the best prices and services. This process is further facilitated by providing electronic catalogues to end users, containing items from the best suppliers and at the best prices. Users can also “punch out” to preferred supplier web sites and return chosen goods into the approval process. The result of all these capabilities is fewer suppliers to manage; more spend under management and lower overall item prices.

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Negotiate

Every company wants to negotiate lower prices with suppliers, but they aren’t always in position to do so. Suppliers are more likely to provide negotiated prices or volume discounts when a buyer can illustrate a history of purchasing significant volumes. In manual or semi-automated environments, this information is nearly impossible to assemble and is exceptionally difficult to accomplish when buying is fragmented as described above.

The CODA Spend Management solution provides complete visibility to all buying activity, arming procurement managers with information for supplier negotiations. Purchasing managers can analyse buying activities by item, category, supplier, location, department, time of year and other user-defined criteria. With this valuable information in hand, procurement managers can negotiate volume discounts with preferred suppliers. These negotiated item prices are then placed in centralised catalogues where end users can enjoy negotiated prices and quantity discounts to help make their budgets stretch further.

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Spend Management – at a glance

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