Biz Tips: Why Cloud-Based Procurement Can Be More Beneficial Than You Think

Biz Tips: Why Cloud-Based Procurement Can Be More Beneficial Than You Think

Biz Tip:

Why Cloud-Based Procurement Can Be More Beneficial Than You Think

It’s no secret that procuring is a complicated process to keep track of. As a result, visibility becomes increasingly clouded, leading to a more extensive loss of control, sometimes exacerbated by misunderstandings between purchasing organizations and the various suppliers involved.

Organizations are now drifting from traditional time-consuming procurement processes to a more flexible cloud-based procurement system that is cutting down organizational costs all around the world.

What Is Cloud-Based Procurement?

Cloud-based procurement solutions allow businesses to automate every part of the procurement process, from supplier management, purchase requisitions, and purchase orders to sourcing and invoicing. Thus, allowing the procurement department to keep track of everything with the help of cloud services.

As compared to on-premise alternatives, cloud-based procurement software offers many more benefits. These advantages apply to organizations in various industries, including the ones into Financial Services, Internet, Telecom, IT Services, and Healthcare.

Advantages of Cloud-Based Procurement

Let’s have a look at some of the most important cloud procurement benefits:

1. Digitization of Paper-Based Procurement

The procurement function of a business was usually managed manually, with a heavy reliance on paperwork, phone calls, and in-person conversations. However, manual procurement hampered a company’s operations and financial success by depending on time-consuming and tedious, repeated tasks that failed to provide significant cost savings or profit.

Storing thousands of documents – including important contracts, receipts, invoices and other important data – also has high costs that also includes other security risks such as tampering, theft and so on. With paper-based procurement, it is not only difficult to manage everything but also restricts organizations to access timely and needed information amid the decision making process.

Streamlining and speeding up all procurement activities by moving procurement processes to a unified, digital platform creates chances to generate more value and savings in the procurement process. It also saves time and labour costs that are involved in processing huge amounts of data manually

By automating the process, a cloud-based procure-to-pay solution minimizes friction. Clients and suppliers at faraway locations have access to documents in electronic format.

2. Accessibility and Ease of Collaboration

Cloud-based solutions, as opposed to on-premise software options, provide a more collaborative method of working and a fluid flow of information without any departmental boundaries.

With the help of cloud-based procurement software, you can make information easily accessible and available to approved individuals, irrespective of their location and time. You only need a web browser to access the program and an internet connection. It breaks down silos and encourages employees to do their part, keeping in mind the unified goal.

As it provides real-time information to the whole team, everyone works with the same data version, reducing the risk of mistakes and inaccuracies.

Expenses can be authorized while the approver is out of the office, resulting in fewer delays. Moreover, the approvals are forwarded automatically to the department concerned and prioritized by sending out reminders and emails.

3. Enhanced Visibility

Thousands of transactions are conducted every day by large corporations. It’s difficult for businesses to track and manage direct and indirect spending if they aren’t properly accounted for.

This software often provides dynamic dashboards that give management more visibility, enabling them to take timely and strategic decisions. Moreover, with the help of the audit trail, organizations can easily highlight discrepancies in the process.

Analytics can be used to cleanse, improve, classify, and analyse spend data by supplier and category. This improves item-level visibility across the organisation, which is crucial not only for discovering cost-cutting opportunities but also for maintaining supplier relationships.

Cloud-based procurement can help you monitor the whole purchasing cycle. It provides a clear view on who is initiating the purchase of which item, when and why. It also reduces the time taken to complete the procurement process by updating you regarding the status of the hierarchical approval process along with sending reminders and emails to the individual or department that is responsible for the delay. In addition to this, it also improves visibility into POs, invoicing, and spend, so you know where your money is going.

4. Power of E-invoicing

Once an E-invoice is received from the vendor, it makes it easier for the account payable department to match it against the goods receivable note (GRN) and purchase order (PO). Because of the efficient three way matching process, payments to the vendor are processed on time.

Account payable departments can use e-invoicing to automate invoice validations before sending them for approval. These verifications guarantee that all numbers, including VAT (GST) calculations, are accurate.

They also cross-reference invoices with other procurement documents like contracts and purchase orders. The pricing on the invoice, for example, must match those in the agreement. Likewise, the descriptions of the items must match those on the PO and the receipt of the goods.

Furthermore, it helps to determine which departments are purchasing specific items. E-invoicing also enables quicker processing and, as a result, shorter payment cycles.

5. Leverage Technology to Overcome the Policy-Related Challenges

When it comes to regulations, procurement entities must be cautious to avoid bureaucratic red tape.

Rule-breakers frequently hinder procurement strategies. Employees sometimes go rogue and make purchases outside of allowed processes because there is no technology in place to organise and manage spend.

Automation can help reduce tail spend by requiring staff to follow a process and stick to a budget. Apart from cataloged items, as a rule, it will not enable purchases without the approval from the concerned individual.

With the help of cloud-based technology, timelines, especially for approvals, are structured to move more quickly and efficiently. As a result, it reduces the time it takes to get hierarchical approval from days to minutes.

Not only this, modern cloud-based procurement software can adapt to unique purchasing standards and corporate rules. As a consequence, you don’t have to be concerned about compliance.

6. Spend Analysis

You may save time by using the built-in reporting tools, including modifying and automating reports when doing spend analysis. In addition, spend analysis allows companies to understand the prices of products and services better.

This aids with financial duties by making it simpler to understand where money is going, where savings can be made, and where value can be added to lower total expenses and influence the bottom line.

It is possible to prevent unauthorized purchases by requiring all users to approve purchase requests before raising a purchase order. You also have more control over your finances and can see precisely where your money is going.

7. Role of Supplier Relationship Management

Depending on your business, you may have a large number of suppliers across your supply chain. Therefore, it’s simpler to save catalogs and keep track of which vendors have the most significant influence on your organization when they’re all set up in your procurement system.

You may keep track of how many orders you’re placing with a vendor management software so that you can use that information when negotiating a new contract. You may also identify which suppliers cause issues for your business or which ones are costly.

It also helps identify suppliers that meet or do not meet your expectations. Knowing which supplier is more compliant with your requirement gives you an upper hand in deciding the right time to change them.

Closing Thoughts

When it comes to purchasing software, cloud-based solutions significantly outweigh traditional methods. That is because cloud services do not need significant upfront investments or ongoing maintenance expenses, for example.

Furthermore, these solutions are handy, affordable, and accessible from anywhere, anytime, and on any device.

As per Computer Economics research, 36 percent of organizations have some form of software as a service (SaaS) in place and plan to continue investing, and 44 percent of organizations are implementing or increasing their investment.

Furthermore, a cloud-based procurement system will be the most sought-after technology due to its extensive list of advantages. Therefore, adoption rates of cloud-based systems are expected to continue to rise in the near future.

Join The Rockstar Entrepreneur Community Now: Start Rockin Now

Similar Posts:

Leave a Reply

Your email address will not be published. Required fields are marked *