The procure to pay cycle is made up of a series of processes and procedures all related to the procurement, and payment for goods and services. Companies and organizations of all sizes use procurement teams to secure the goods and services needed to build goods or provide services to the end-customer. As with any department within an organization, there are many areas that need to be tended to cautiously. Grasping the procure to pay cycle from top to bottom is vital to seeing actual procurement savings and improved efficiency.
Without a comprehensive understanding of the procure to pay cycle, and the common mistakes that procurement teams often make; there’s a good chance those same mistakes will riddle your own procurement team. Causing a reduction in efficiency, and even worse, a clunky, and costly procurement department.
Avoiding the common pitfalls associated with the procure to pay cycle goes hand-in-hand with understanding the various risks associated with procurement. Grasping both the risks and the common mistakes that hinder and bottleneck procurement teams helps companies and organizations make informed decisions in the procurement planning phases, and make crucial adjustments to optimize procurement departments.
Each and every organization is slightly different, and therefore has varying procurement needs. However, there are some common mistakes that procurement teams are making across almost every industry and marketplace.
Common Mistakes Found in The Procurement Cycle
Developing a strong procurement team means taking a detailed look at each of the procurement cycle aspects, and working to optimize the entire procedure. This greatly improves efficiency and empowers employees which yields an increase in procurement team savings. The savings seen from efficiency can be reallocated and benefit the business or entity greatly.
From simple updates in procedures to more detailed tracking of invoices and PO’s, there are many common mistakes procurement teams make that hinder efficiency, and bottleneck the procurement cycle.
Lack of Technology: This mistake manifests in two main ways. The first is a high-level of paper-invoices and PO’s. The era of paper and hard-copy invoices is long past. With procurement software that automates and electronically stores invoices and PO’s, there’s no lag-time with hardcopies. Plus, managers and upper level employees can swiftly sign-off electronic copies, improving the efficiency of the procure to pay cycle from it’s very start.
A lack of technology can also manifest in the form of procurement teams that haven’t yet integrated a procurement software. Procurement software, like that offered by ProcurePort is powerful, and with the right training – can elevate a procurement team’s efficiency by a significant margin.
Lack of Spend Visibility: Developing a strong culture of spend-visibility is one of the main goals of procurement teams. Gaining deep insight into buying habits, and spending trends can help companies and organizations make massive improvements organization-wide, saving both time, and money. Using a procurement software is the number one recognized way that companies are able to better track spending and expense data to paint a more vivid picture of their specific procurement cycle.
Invoice/PO Tracking: This relates to the two aforementioned common pitfalls of procurement teams. Invoice and PO tracking can be greatly improved with automation and procurement software. These issues don’t just affect the procurement team. Oftentimes, invoices are left unpaid, or PO’s are left unfulfilled which causes a whole slew of additional organizational problems.
Avoid Common Procure to Pay Mistakes
All-in-all, it’s up to the procurement team to turn the challenges of the procure to pay cycle into opportunities. Using software and automation, paired with trained and empowered staff, and a detailed spending-visibility. Procurement teams should be able to actively avoid procure to pay cycle mistakes. Ultimately, procurement teams should be efficient enough to contribute to company savings, and build additional revenue through efficiency.
Grasping the common mistakes that wreak havoc on procurement teams and ultimately reduce their efficiency is only part of the battle of building a comprehensive procurement team. Empowering employees to make the right decisions related to procurement activities is a crucial aspect to seeing the optimal level of savings achievable.
To learn all of the benefits associated with procurement software, visit ProcurePort and start your procurement software tour today.