Nearly every business relies on third-party products and services to run efficiently. There’s no escaping that. From issuing purchase orders to generating invoices, transactions between companies often involve multiple steps and take considerable effort to finalize.
Procurement is a point of weakness for many organizations. Being able to acquire the goods and services you need to create your own products, or run your business, is a skill that must be mastered. Inefficient procurement processes result in delayed payments, bad relationships with vendors, and potential inventory shortages.
So, what can a business do? The answer lies in implementing an efficient procurement software.
Procurement software is one solution that helps control spending, streamline approvals, and manage interactions between vendors and receivers – as well as between your own teams.
But why should a procurement solution be your next priority as a business manager? and what steps can you take to boost your finance teams?
What is procurement software?
Known occasionally as purchasing management software—a procurement software solution manages a supply chain by hosting all the steps of the purchasing process digitally.
Procurement teams start by deciding what to purchase based on current needs and budget. They then choose suitable vendors and find the right prices. Using procurement software, they generate and execute purchase orders, collect invoices, and issue payments to vendors. They also record communication between the company and the vendor.
This type of software also handles:
- Managing inventory and assets
- Controlling all spending not related to employee payroll
- Approving invoices and analyzing purchase receipts
The procurement process helps streamline communication between all stakeholders involved. This way, a company can properly manage its purchasing cycle and maintain optimal inventory levels at all times, maximizing profit on every purchase order.
Pro tip: You can learn more about how you can optimize your purchase order approval process by clicking this link.
How can procurement software help your business?
While procurement software solutions vary in functionality, they typically come with similar feature sets. Common inclusions are:
- Comparing purchasing options. By organizing product information into a readable format, procurement teams can quickly choose which goods and services make the most sense for their business.
- Handling purchase orders. It’s much easier to identify purchase order approvals and deliver them to vendors when everything is organized and in one place. Procurement software ensures nothing gets lost, misplaced, or overlooked.
- Managing billing processes. Procurement software aims to match invoices to individual orders and complete electronic payments if necessary.
- Supporting business intelligence. Because procurement software has access to purchasing trends and past financial activity, it can evaluate vendors and help find ways to negotiate better deals in the future.
- Tracking the catalog. Procurement involves creating digital catalogs of products and services. Teams have the ability to compare specifications and pricing to find the best vendors to order from.
- Facilitating collaboration. Having records of all communication between suppliers and stakeholders helps with future business decisions.
So, why do businesses invest precious resources into procurement software when they could do these tasks manually?
Automated procurement has significant advantages over manual methods, such as:
- Accelerating the entire process. Software automatically sends the necessary information to the right parties, resulting in faster request approvals, invoices issued, and payments made.
- Data collection. Collecting and managing the large amount of data from complex business transactions is an important step in improving your procurement in the future, and it’s much easier when it’s automated with the help of procurement software. For instance, you can cut costs and save on the budget when you identify and eliminate unnecessary spending in your process.
- Reduced cost. The transition from paper to electronic record keeping results in less hassle and fewer employees that need to be dedicated to the task. Automation additionally reduces overall time investment into procurement processes.
- Inventory control. Procurement software automatically reorders stock whenever it gets low, ensuring an uninterrupted supply chain.
- Transparent spending. By keeping all financial activity up to date and visible with insightful data, you can ensure only approved transactions go through, as well as cut down on maverick spend.
It’s clear that procurement software is the key to success in today’s market. But what factors should you consider when choosing the right solution?
How to choose your procurement software
Your company will come to rely on such a service for its vital financial data, so take the time to choose the most suitable procurement software for your team.
Ask yourself questions like:
- Should I go for a locally installed software package or a SaaS platform? We recommend the latter. The rise of cloud computing is becoming a trend in the market, as it offloads much of the updating and maintenance of the software to a third-party company. Hosting your procurement software in the cloud also ensures everyone can access the data, enhancing visibility across the entire supply chain and facilitating collaboration among your teams.
- Does it address your main pain points? If your company suffers losses from lack of communication, for instance, make sure the software solution you have in mind addresses it. Confirm that it’s easy to communicate both between team and internally.
- Is it legally compliant? Here, we are referring to common heavy regulations on business accounting. Keeping yourself compliant with laws like these is far easier with a cloud-based procurement software platform that eliminates any of that guess work for you.
- Can it generate analytics from financial data? Accurately racking data is a significant selling point for any procurement software, as it helps you draw actionable insights from all the data you collect. This leads to better, smarter decision making and financial planning.
- Is it secure? Data security has become a major talking point for businesses of all sizes and industries thanks to widespread data breaches. Does the procurement software you have your eye on have features that secure your supply chain?
- How well does it integrate with your other business tools? Companies nowadays use a variety of software solutions, including enterprise resource planning software and supply chain management suites. If you integrate these together, you get more streamlined cooperation amongst your teams.
- Does it have mobile support? Employees are becoming more mobile thanks to smart devices. Many impactful procurement platforms have an iOS or Android app to allow for faster communication.
- What about technical support? No matter what, there will be some circumstance where you could use assistance. Ensure that the service provider has instructional resources and live support in case you need it.
Let’s talk about some examples of procurement software to consider. Remember that the right choice depends on your individual use case and needs, so one solution that doesn’t work well for one company still might work well for yours.
Examples of top procurement software
All these examples vary in functionality and pricing. Take the time to compare your options to see what’s best for your business.
Ideal for mid-sized organizations, Approve.com is bound to boost the efficiency of your financial and procurement teams. Through vendor information management to faster approvals, you can streamline your procurement processes while gaining the visibility and control you need, with Approve.com.
Deployment is fully in the cloud, a comprehensive free demo is available, and support and documentation are plentiful – making trying it out risk-free. While some features are behind a paywall, there are several paid tiers to allow businesses of any size get the most out of their money.
Also good for mid-sized organizations, Coupa offers a powerful package and onboarding support. Customers who use Coupa enjoy faster processes overall. The feature set is rich and includes tools that will help with spend management. However, integration can be complex.
Medium-sized businesses often prefer this solution for spending management. Famous with companies internationally, Kissflow simplifies complicated workflows. It’s not difficult to use and will be useful to your financial team and all employees involved.
Keep in mind however, that while Kissflow offers a lot of customization options, many features remain too rigid for all employees to enjoy absolute ease of use.
Simplify your procurement process with Approve.com
Having a high standard for procurement and spending management is more important than ever before.
As more organizations are adopting cloud platforms to handle their internal finance processes, finding a procurement software package to boost your company’s efficiency must be at the top of your priority list.