There are many terms which are trending in the present market and which are allied to software solutions related to cost management. Some of these terms are P2P, Procure to Pay, Cost management software and solutions and e-Procurement. Due to the crisis that the pandemic has created, these terms are searched more and more. These searches are trending in the search engines but they don’t represent the correct sentiments of the market. However, these terms indicate that there is more and more need of the advanced software and solutions which can help in the Cost Containment and Cost Control process.
There are businesses which are using legacy software as well as paper based solutions for Cost Control but most of them are unsatisfied with the performance of these systems and are looking for newer solutions which are more advanced and robust. With the present legacy software solutions they are not able to achieve good results and the reason for this is that these solutions were made a long time ago and they do not cater to the needs of the present times. The aim of this write-up is to provide you an in-depth understanding of cost management and how the cost management technology can help you in making huge cost savings. It will transform the way your business spend money as well as will help you in saving time and cost.
What is Spend management and Spend under management?
Spend management refers to all the tools and processes, which are used to control the money spending done by any business. This term not only covers the end to end procurement but also includes different aspects related to the cost of procurement. Purchase order creation, invoicing as well as data reporting are all included in this. All purchasing processes and vendor / supplier management is also involved. Spend management can be considered as an ongoing process which involves optimization of the ways the company or business is spending money.
• Collecting data related to the identification and classification of the different types of expenditure.
• This expends on, auditing and verifying, analysing, building and tracking the data within a single repository.
• Implement methods aimed at improving and achieving these activities
• The Spend management system aims to digitise these processes and integrate them into user-friendly processes.
• Ensuring the corporate practises and procedures are complied with efficient reports.
• An efficient approach for spending management includes acquisition, procurement and cost management.
• Automation of the reports and analyses of the expenditures on a single platform.
• Multiple systems need to be deployed in your company as the solution for spend management.
• Centralized feedback and platform for data collection
Spend under management refers to the condition that spends are not managed efficiently. All the processes which are used to manage the spending come in spend management but spend under management is a measurement or metric. It determines the portion of total expanses that is overseen by the business.
Spend management comparisons
Spend management v/s expense management
There are some key differences between the spend management and expanse management. Some of the key points are as follows:
1) A holistic picture of the payments is captured by the spend management, whereas the expanse management is related to managing the expanses on employees only.
2) The expanse management includes the payment made by the personnel for expanses to carry out the company’s business.
Spend management software V/S Paper-based systems
The purpose of spend management software is to digitise the management process on a single, centralised, cloud-based platform. However, many organisations may still have hybrid manual and traditional models or paper systems in place. Moving to a cloud-based software solution can seem daunting, but the advantages of this digital transformation and the risks that your processes will not migrate are important to consider.
Disadvantages of paper-based systems
The need to store physically
Paper-based systems collect a large number of documents to be stored somewhere. Older documents may need to be archived and stored while existing documents need to be kept in places in which procurement, accounting and finance teams can easily access them. For this physical storage necessity, larger office spaces are often required.
Vulnerabilities to security
If the facts are on paper, documentation is easy to forge or modify. It’s risky to rely on paper-based systems without further security measures.
Risk of loss or damage
Fires, floods or mishaps can damage paper documents. Documenting may also be misplaced — intentionally or by accident — and without the originals this data can be difficult to replace or recreate.
Issues of transport
It is not only when archived data files are moved to storehouses that transport comes into play.In general while creating a document it is important to take it to different part of the Bureau to have the document signed by different approvers and subsequently transfer it to the procuring division for submission.
Written or printed documents can only be effort-fully corrected or amended, and a person will normally need to re-create the content from scratch to make changes.
Paper systems are expensive not just for added salary of staff required to keep the data on paper but for actual materials – paper, printers, photocopying machines, storage cabinets, and other office supplies. Paper-based systems are costly.
Reduced opportunities for communication and collaboration
Version control in a paper-based system is very challenging, and there are cases when multiple employees work simultaneously on different versions that are not communicated for changes to mix. Moreover, these multiple copies which are distributed among several collaborative stakeholders may be forgotten while lying on someone’s desk in a stack of papers that defeat the purpose of collaboration.
We have come to the point where organisations must be held accountable for their carbon footprint, in depleting our planet’s natural resources. Many companies have “greened” and digitalized a lot of their data to make them greener. But if you still print documents and use hard copies in files, not only does your company increase deforestation, but also provides great distances to your physical locations with the carbon emissions is required to transport paper based office.
Risks and inconveniences of legacy systems
There are also five main risks a business is facing when operating legacy technology.
Higher operating costs and additional downtimes
Legacy systems are more cost-intensive in operating and maintaining and are known for crashing and inactivity. In fact, a 2011 survey carried out by senior IT managers in US federal agencies found 47 percent of Federal government IT applications based on legacy technology.
In addition to the maintenance of these legacy systems, almost half of the federal annual IT budget was allocated. When cloud-based spend management systems are used, the operating costs are much lower than the downtime of the hosting applications on site.
Outdated technology is vulnerable to attacks by cyber criminals as legacy systems are often not supported by their original versions. In 2019, the average cost of data violations was up to US$ 3.92 million per institution, according to IBM Security.
Inconsistency with newer systems
External heritage technology is generally incompatible with newer systems. This leads to numerous problems when trying to add modules to existing software or create APIs in our digital age.
Less support experts
Many developers and IT professionals who first developed and supported a certain legacy system may be retired. This decreasing skill pool may not allow certain types of legacy software to be supported by the new generation of software and infrastructure experts.
Cannot maintain competitor compliance
The digital transformation of our world is witnessed by all. We want to get information quickly and simply, at any given time, through a range of devices. Companies that understand this have adapted and supplied products and solutions for safe and remote access to apps and tools. Probably your competitors are moving to cloud services, which will leave you unfavourable when your company can not keep up with time.
More cyber-attacks are likely
The management software is designed to mitigate and even eradicate the disadvantages faced by legacy paper-based systems and quick investment returns. Any company migrating to a cloud-based expense management software system has several additional advantages.
Why you should go for a Cost / Spend Management Software like CCIS?
Accountability, decision-making responsibility and expenditure adjustments
A recent paper on the Chase banking news page said that, if the culture of a company is that of careful spending, it is a healthy company. One of its major benefits is that organisations that adopt it will see a substantial improvement in their spending behaviour and lead to confident decision-making and budget planning. The powerful trailing abilities and visibility of their spending habits are important.
The deployment of software for spending management ensures fast returns on investment by reducing your time to value by automating a number of processes. The initial investment cost of a spending management software solution is rapidly recovered due to the increase in responsibility and visibility over all expenditures, to money saved in the daily business process.
The Aberdeen Group determined that 75% of best-in – class organisations, in the form of a spending assessment system, have put in place technological solutions compared to 43% of laggard companies.
Moreover, 88% of the top-of-the-range companies employed procurement-to-pay technology, compared with only 54% in other categories.
Benefits of CCIS or Cost / spend management software
Mobility, remote work activation and central control
Mobile compatibility and remote work is provided with a cost management solution, especially a cloud based solution. The user can access the software at any time from any device and from all over the world, thanks to its centralised functionality through a web-based browser application. These attributes are more important than ever in today’s uncertain times.
Quick and remote use
In the same way that users have access to spending management software from anywhere, this software is also quick to deploy and can even be done remotely.
An implementing team is not necessary to visit your facility because spending management software can be deployed via the cloud on a remote basis. User training can also be conducted via robust self-study articles, as well as video conferencing tools for training the trainer.
The advantages of using software for spend management are digital technologies and capabilities, for instance advanced analytics, visualisation and cooperation nets, all of which are related to the visibility of procurement data.
A spending Management Solution provides visibility to enhance user visualisation of spending data to reach transparent agreements with suppliers, view and monitor transactions and optimise risk mitigation strategies.
The Aberdeen Group assessed companies and rated their performance as ‘best in the class,’ ‘average,’ or ‘laggard,’ in a competitive assessment. They found 71 per cent of the best class organisations, while only 33 per cent of laggard enterprises had the same visibility in every spending across categories.
Easy to use interface
Spend management technology allows users to easily navigate the actions they have at their disposal and enhance usability and successful adoption. V-Comply, the risk management and governance company, lists ten features that all technologies should have for user friendly use and should allow new technology to be adopted easily. All aspects of the software, from installation and updates to browsing, bug handling and IT support in a simple and easy way.
Concept, an application development, strategy and design firm, defines the ability to maintain performance without re-design or reconfiguration despite increased workload.
Continue to optimise your business processes by increasing your company, from a small team of ten users, to a global team of thousands of employees — without compromising the performance of the application.
Auditability and compliance
A spend management software solution provides trailers through transparent transaction history views, both ensuring compliance with the company’s policies and providing clarity for companies performing regular spending audits.
Management of risks
Deloitte pointed to the widespread opportunity both internal and external stakeholders have to commit fraud throughout the procurement life cycle, in their 2014 paper on how to prevent procurement fraud. Possible risks identified as red flags are insufficient record keeping, without the right authority for transactions and without the necessary consent.
The software for expenditure management can reduce the risk of fraud, collusion and misery or spending by preventing any such discrepancies. This applies in particular when the three-way matching is a technology feature that does not overpay or pay for goods not received.
Management of the Vendors
An integrated approach to vendor or provider management leads to better provider relationships and thus to better value for providers. The central management of suppliers through software for spending management allows companies to leverage supplier capacity to benefit from the fact that data is leveraged to negotiate more convenient terms. This results in longer-term profits.
Management of documents
A spend management solution provides a centralised place for input or uploading and downloading and viewing of data via different dashboards. Instead of printing documents which must be signed, approved and filed, the ability to manage documents electronically enables electrical signatures and approval and a streamlined, automated procurement to pay experience.
Document management and the management of knowledge in general has led to the use of expenditure management technology developing from the laborious and manual documenting and storage procedure to a dynamic business process that can create, analyse and act on a strategic basis.
Efficiency of the process because of less effort
Process efficiency is defined as the “consuming effort to achieve a business result” by Integrify, a company that supports organisations to be productive and efficient. Expenditure management software allows you to manage your expenses effectively with less effort, thus enhancing performance and achieving results.
Spending management software enables you without losing financial control to empower your staff. The Business Spend Management Benchmark Report for Coupa 2020 focused on three KPIs that assessed the maturity of an enterprise’s expenditure optimisation, especially with regard to savings and spending optimism. They found cost control particularly important in (i) contract spending by non-duty service providers (ii) accountable for 80% of invoices in an entire firm. In other words, reducing the management of long-term vendors’ tags), and (iii) structured spending (the proportion of spending that was responsible for 80% of the company’s total invoices).
Savings in time and costs
In 1748, the original version of the phrase “time is money” was coined by Benjamin Franklin. This adage can be overused today, but for most companies it is definitely true. The cost of order cycle cuts through expenditure management technology. If you decrease the cost of each purchase order — create and approve other activities like updates — your purchasing process is also simplified
Deloitte’s Globally Chief Procurement Officer (CPO) survey found last year, with 70% of the 481 CPOs from across 38 countries saying cost reductions were a “strong priority,” the top priority for CPO’s business strategy in2020 was cost reduction. If users can use an automated system to submit purchase requests, approvers are automatically notified, and are able to approve purchase orders from anywhere in the world, with minimum effort and no time or resources are required for end-to – end cost management. You can reduce your procurement and financial departments both in terms of staffing and office supply and your profits.
“60% of corporation strategists refer to sluggish strategy implementation as their main challenge for 2019”as was stated in the 2019 Gartner Strategy Agenda Poll. Spending management technology allows your company to be agile and implement strategy quickly, openly and quickly when adjustments are needed. In this way, corporate leaders can re-establish priorities, speed up decision making and reduce the cost of change in order to carry out key projects.
Any solution for spending management should offer most of the following features and features. The one-size approach for adopting spending management technology simply cannot be used by organisations. A good cost-management solution has an independent core platform with an end-to – end procure-to-pay solution that includes multiple modules, which can be added when needed — for example, paying for modules that are not used by you, such as an internal catalogue service, will not save costs. Instead, when your company develops and expands, you should be able to add modules.
Mobile and remote capabilities
We access information daily through several devices and several locations in this age of digital transformation. A solution for expenditure management should be mobile and allow users to access it remotely.
Roles and responsibilities in particular
There is a clear requirement for distinguishing between different roles. Spend management technology should ensure higher distinctions, for example in the CFO, Procurement and Accounting departments. Administrators, auditors, finance administrators or supply managers as well as process roles (e.g., Buyer, Cash Manager, Financial Assistant, Financial Administrator and receiver) should also assume administrative roles.
Key features of CCIS or Spend / Cost Management Software
Management of staff
Once an expenditure management solution has been initially implemented, the administrator of an organisation should be able, if needed, to additionally or remove its staff from the users list and adjust its roles and permissions as needed.
Classification of the expenditure classifications between different requests and claims
No expenditure can be lumped into ‘expenses’ in an organization. Actually, the differences between cost and expenditure are clear. A solution for spending management should clearly differentiate between different types of requests, claims and additional documents.
For example, purchase requests for office supply requests will be made and will lead to an order for the purchase. For example, travel requests may require an offer and lead to a route being sent to the provider of travel services. For capital costs under a register of assets, such as vehicles, property or furniture, Capex requests should be available. Costs for which out of pocket claims are made for corporate expenses by the employees should also be an additional category.
Moreover, each application type or document should make it possible to classify certain items within that category. Travel requests should, for example, be divided into lodging costs, flights, airport transfers and travel distances. For example, purchase requests should be subdivided into goods and services that may be received in quantities or costs.
A solution for spending management should be capable of boosting — buying from a spending management solution directly in real time from a supplier’s website. The items should be available immediately after checking from the online catalogue of the supplier in the purchase application.
Catalogue of products
Internal catalogues should be also part of expenditure technology to allow organisations to negotiate with a supplier prices and contracts and to add items often purchased in the spend management solution to the internal catalogue.
Notifications and alerts
Automated alerts and notifications should be provided by spending management technology.
The expenditure management solution should also have the alarm policies available for configuration, not only should approvers receive action alerts and emails notifying them of requests to approve it. These policies should allow you to set up different types of alerts, such as a budget alert when an invoice amount exceeds the current budget for the financial year or a variance alert if the quantity of the invoice is larger than the quantity bought.
Proxies, helpers and assignments
Sometimes a CFO is too busy creating the purchase demand and requires an assistant to do so. Sometimes the customer is not in charge. Dispensing management technology should have the functionality to assign a user to a proxy or an aid, so that the process can be completed immediately.
Clear processes for approval
In a spend management application the user should be able to choose a specific approval workflow or one should be configured automatically. Moreover, multiple approvers should have the option to increase approvals based on value thresholds.
Compliance Audit Trails
Relevant stakeholders should be able to see the full history of a transaction. These audit trails provide accountability and follow-up on all transactions within a company within a spending management solution.
Functionality of quotation
Many organisations, especially with expenses such as the various types of travel, require quoting requests. Spend management technology should enable the user to send a quote request (RFQ) before funds are allocated via a purchase or travel orders for a particular request.
Management of seller / supplier
The spending management technology should provide the centralised management function of the vendor or supplier. Companies can thus supply the best service and suppliers at the best prices. The ability to streamline vendor or provider management in this way leads to better vendor relations and greater trust, while eliminating wasteful expenditure.
Orders to buy
In order to become fully visible in procurement, expenditure management technology should not only serve as a tool for streamlining the submission of electronic procurement orders and attachments in digital form, it should also enable users to monitor the status of orders and their requests on the Internet using a dashboard.
Facts and invoices for proforma
The automation of the paying accounts is essential in a software solution for spending management, because it allows firms to process invoices and proforma invoices quickly and accurately.
Invoice matching refers to the possibility of connecting an invoice to a buying item. The goal is to minimise the risk of over-spending and ensure coherence throughout the workflow for expenditure management. A solution for expense management should be compulsory to match the invoice and should be capable of activating three-way matching for a specific purchased order, if an invoice item is matched to one particular receipt.
The technology of expenditure management should make workflow flexible. For example, if your company has a policy on an application that passes a quotation step prior to approval, this workflow configuration should be provided.
Tools to analyse and report
As part of its software for spend management, organisations need complete budget insight and risk analysis visibility. These business intelligence tools provide a thorough analysis of end-to – end transactions and allow access to real-time data and expenditure analysis on a granular basis.
Seamless ERP integration
Your spending management software should integrate with an existing accounting system or ERP seamlessly, enabling accurate data flows through imports and exports between both, always updating your organisation’s daily expenditure.
Training and assistance
Use of a number of aftercare facilities, including an ability to communicate with a specific spending management support team and the access to a comprehensive base of knowledge about reference material should be supported following initial implementation and user training.
This technology is only helpful for your company because of the impressive number of features and functions that a solution for spending management software can offer. You will be able to remain competitive, classify the costs of your organisation and maintain visibility and control over where costs are incurred by means of the ability to digitally transform your business. When you consider and weigh against your basic health, the disadvantages of maintaining a paper-based or legacy software solution show management technology as the ideal alternative for running a cost-conscious business that protects working capital and improves cash flow.
Expenditure management technology enables your organisation to efficiently manage spending and increase operations to strategic functions.
Do you want more efficient business processes? Do you want to cut the effort, time and high costs caused by your enterprise by a paper based or legacy system? Would you like to remain competitive and technologically advanced? CCIS can help you achieve these and more objectives. Suvarna Consultancy can offer a complete spending management solution with more than 20 years of experience in the space management sector, with solutions for both on-site and cloud spending management from scratch to meet the demands of various market sectors. The features of our solution include purchasing, strategic procurement, expenditure management, expenditure analysis and the whole array.
The CCIS or Construction Cost Information System is a truly cloud based solution with a modern, easy-to-use and intuitive interface. It is fully scalable to achieve cost efficiency while addressing complex challenges in procurement.
You can access our web application from any device, anywhere, anytime. The software of Suvarna Consultancy can be used as an independent spending management solution, or integrated fully with your ERP or accounting solution.
You can talk to us about your requirements for expenditure management.