Feb 04, 2021

How Procurement Automation Can Transform your Financial Operations

by Arielle Kushner

procurement automation

There’s no denying that automation is one of the biggest business trends of this decade. By turning to automated systems, companies are finding new ways to optimize spending and streamline processes without making excessively large investments.

A major task in line for automation is procurement. By cutting down processing times and removing the possibility of human error, automation makes the job of the procurement team much easier and far less risky to the business’ bottom line.

While the transition to automated procurement has its own set of complications (such as adding new training programs to allow employees to work efficiently with the new process), businesses are continuing to automate procurement and see the benefits of it. It’s one of the most significant steps to take to avoid getting left in the dust by the competition.

What is procurement automation exactly? How can it help your business? And what processes can you start automating today to get the most out of your investment? Let’s talk about automation for procurement teams.

What is Procurement?

Almost every commercial organization needs outside materials to create its products and services. That’s why procurement is a task common to almost all companies. Procurement is more than just invoices and payments. It includes vendor selection and approval processes, all of which take time.

Specifically, procurement in business is getting the right supplies from the right vendors. Procurement teams choose from a variety of providers to find the right price and get the exact products they need. They also handle the finalization of requests and approvals.

Today’s methods of procurement tend to be disorganized and rely on manual work. Having to track orders from an Excel spreadsheet or through paperwork can result in inefficiencies. With procurement being as important to a company as it is, it’s no wonder why automation is on its way for so many.

What is Procurement Automation?

Procurement automation is exactly what it sounds like. This type of software digitizes the process, freeing employees from having to do the repetitive tasks that make operations messy. The result is an accurate, streamlined process with more time for important tasks like decision-making and business strategy development.

Procurement teams aim to automate several functions:

  • Choosing suppliers
  • Communication among stakeholders
  • Ordering and receiving products/services
  • Documenting the process
  • Making future business decisions based on past activity and up-to-date data

Making the choice to adopt an automation software has been shown to greatly empower teams and companies as a whole. After all, automation makes the work of individual employees more manageable and facilitates communication between teams and departments. 

Let’s start by exploring how automated procurement can transform your internal finance process.

How can automated procurement help your business?

If we understand how important the procurement process is, it should be pretty obvious why automated procurement is a must-have in today’s workforce.

Submitting and completing procurement tasks digitally has many benefits when compared to manual methods. Here are a few of the biggest advantages:

  • Speed. Automation accelerates the approval process for procurement teams. If purchase requests ever get stuck or lost, or you’re having trouble keeping up with messy paperwork, you’re wasting time and could potentially introduce delays for your customers and suppliers. Automation helps to cut down and prevent this wasted time.
  • Efficiency. Anyone working in an office can tell you how cumbersome file cabinets can be. It’s too easy to lose purchase orders or requests, especially when your company deals with multiple suppliers. Organizing and securing your data can be a challenge as well. How can you analyze data efficiently in the future when it’s time to plan a budget? An automation platform is the answer.
  • Fidelity. Automation reduces the chance of human error, making it less prone to mistakes than manual procurement. Errors in procurement processes can have dire consequences for many businesses. Miswritten orders, for instance, can result in dreaded maverick spend.
  • Security. Because your data is stored digitally, only those given permission can have access to sensitive information. Everyday tasks in procurement can be documented accurately and securely through automation platforms.
  • Organization. Procurement teams have a lot to track, from purchase orders to agreements to receipts to communication with stakeholders. Organizing all the information through a procurement automation solution reduces delays and makes everything easily trackable. 

You might be asking how you can start the transition to automated procurement. One major step is deciding what exactly you want to automate. 

Remember, automation isn’t a magic bullet. You can’t just flip a switch and automate your entire financial and procurement process. Many solutions can make onboarding and therefore automation happen a lot faster. But automation is a step-by-step process that can also evolve over time. It’s best to start with an idea of what you want to achieve, like a team goal, and build out or customize your process from there. 

So where should you start? And which processes are the easiest to automate?

Top procurement processes to automate

There are multiple services and platforms out there to automate procurement processes for your team. Each one has its own benefits, features, and selling points. You can choose the one that fits your use case the most, but some common processes include:

  • Purchase requisition. Teams with automation software can create, approve, and track purchasing requests with only a few clicks. They can route information across multiple decision-makers and coordinate discussion to streamline the purchase requisition and approval process.
  • Purchase orders. Not to be confused with requisitions, purchase orders are one of the tasks that many businesses struggle with. Process fragmentation is the primary issue here since there are usually multiple stakeholders and suppliers to deal with. By adopting an automated process, finance teams improve productivity and save on costs.
  • Financial visibility. Part of procurement is generating data regarding order history, past purchases, and previous contracts. This information gives you an overview of the financial activity of the company and can help you make more informed business decisions later. Automation collects and displays this data so it’s easily digested and not overlooked.
  • Invoice management. Invoices typically go through several steps: verification by the financial department, approval, payment, and order fulfillment. Badly managed invoices can result in delays and unexpected spending. Many platforms integrate well with your current financial tools like ERPs so you can keep using what you already know best.
  • Vendor management. You’ll have better relationships with your vendors when you have a fast and organized procurement process. This way, you can find and continue to use the best suppliers, and avoid onboarding new vendors unnecessarily. 
  • General organization. Don’t dump all your invoices, approvals, and documentation into a filing cabinet. Don’t rely on keeping track of email chains. Use a digital platform to keep tabs on everything with a few clicks. Having a central location to manage everything ensures data consistency and reliability as your business continues to grow.

Software specialized in procurement automation for businesses is incredibly versatile. Find the options that give you the results you need.

How do I choose my automation service?

Are you having issues going through all the software options? As we’ve mentioned before, every procurement automation service has its own set of features and benefits, and it’s up to you to find the most suitable one. Some questions to ask are:

  • Can I demo the platform first? Many automation software suites allow your company to try out the product to see if it fits in with your workflow.
  • How complex should the platform be? Your choice must have enough features to cover your needs without being too complex that your staff might avoid using it. Think about the workflows you need automated specifically.
  • Is the service proven? Look for automation from companies with proven track records. See what other businesses use the service and find out what the reception is.
  • Does the platform support integrations? Your core finance tasks may not operate in the same environment. You may require a solution that connects with other recognized platforms to ensure the proper flow of data.

Keep in mind that the procurement team will need to familiarize themselves with the platform before using it to its fullest potential. While it may take some time to integrate the new software into your workflow, the results will be worth the effort.

Procurement automation is a long-term strategy

Companies procure the supplies they need from vendors in order to operate. Choosing the right suppliers and completing complicated business transactions is inefficient at best when done by hand. Growing businesses should look to automating their procurement process to achieve and maintain best results.

Automation not only speeds up the processes outlined above, but also assists in making teams more organized and secure. It’s becoming an industry trend to automate tasks like procurement, and making the transition will be an essential step in staying competitive.

Whether you need help with vendor management, purchase requisition, spend management or anything else, a service like Approve.com has all the tools you need to boost your team’s efficiency. 

Interested in implementing a spend management system that simplifies and streamlines your business’s existing process? Check out Approve.com and request a free demo today!

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