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Mar 28
venture capital and procurement

Protecting Your Investment: The Role of Procure-to-Pay Solutions in Venture Capital Success

By Procurement No Comments

In speaking with countless VC and other investment groups, the same question comes up every time, “What can I do to protect the success of my investment?”. 

It’s a world rife with risk, no doubt – but also major returns.  To understand where one can find balance and a sense of security, let’s dig in.

 

The High-Risk Nature of Venture Capital Investments

Data from PitchBook revealed that approximately 3,200 venture-backed firms in the U.S. have closed their doors, with these startups having raised a staggering $27.2 billion.

This figure underscores the inherent risks associated with venture capital investments, where the failure rate is high, and the financial stakes are even higher.

While many investments fail, the success of a few can offset these losses and generate significant returns. This balance of risk and reward is a fundamental aspect of the venture capital model.

However, beyond the allure of potential high returns lies the critical issue of investment risk management.

Market, operational, technology, and financial risks pervade venture capital investments, with factors like market changes, product or service relevance, competition, and the startup team’s capabilities significantly influencing the success or failure of these investments.

The Importance of Operational Risk Management and Due Diligence

Operational risks, in particular, highlight the importance of effective spend management within the invested companies. An incomplete management team or a startup lacking in operational experience and focus can lead to poor financial management, including inefficient spend management. This inefficiency not only jeopardizes the startup’s success but also the VC’s investment.

To navigate these risks, venture capital firms employ comprehensive due diligence processes. These processes aim to evaluate the financial stability, market position, legal compliance, and operational capabilities of potential investments. The goal is to identify and mitigate risks, including those associated with poor spend management, before they can impact the return on investment.

The Challenge of Spend Management in Startups

Spend management is a critical operational component that often gets overlooked in the fast-paced environment of startups. However, the consequences of neglecting this area can be dire.

Ineffective spend management can lead to uncontrolled expenses, wasted resources, and ultimately, financial instability. This not only affects the startup’s growth potential but also exposes the venture capital firm to greater financial risk.

The Solution: Procure-to-Pay Systems

Enter procure-to-pay solutions like SAP Ariba™ Buying and Invoicing. These systems act as a safeguard for venture capital investments, ensuring that the funds are utilized efficiently and effectively. Procure-to-pay systems streamline the purchasing process, from procurement to payment, enhancing transparency and control over expenditures.

How SAP Ariba Can Protect VC Investments

1. Enhanced Spend Visibility: SAP Ariba provides a clear view of a company’s spending activities, enabling better financial planning and analysis. This visibility helps VCs ensure that their investments are being managed wisely, with funds allocated to strategic areas that drive growth and value.

2. Controlled Procurement Processes: By standardizing procurement processes, SAP Ariba reduces the risk of maverick spending and ensures compliance with financial policies. This control is crucial for startups, where every dollar spent needs to contribute to the company’s strategic objectives.

3. Efficient Workflow and Approval Processes: The automated workflow and approval processes in SAP Ariba reduce the time and effort required to manage purchases. This efficiency prevents bottlenecks and ensures that funds are deployed rapidly and effectively in areas where they are needed most.

4. Strategic Supplier Management: SAP Ariba’s Business Network consists of over 10M vendors, turning every purchase into an opportunity for savings and efficiency. This strategic vendor management helps in negotiating better terms, improving supply chain reliability, and reducing costs.

5. Risk Mitigation: This isn’t just about saving a few dollars; it’s about setting a standard for financial diligence that protects your investment at every turn.

 

By implementing a robust procure-to-pay solution like SAP Ariba, venture capital firms can significantly reduce the financial risks associated with their investments.

These systems ensure that the startups they invest in have the tools and processes needed to manage their finances effectively, thereby safeguarding the investment and maximizing the potential for a successful return.

 

 

To learn more about how SAP Ariba™ solutions can provide insurance on your investment, click here.

Jun 19

Unlocking Value through Procurement in Private Equity

By Private Equity No Comments

The era of Private Equity is upon us, and it is redefining traditional business paradigms.

In 2022, the private equity industry saw a record-breaking $1.5 trillion in dry powder, demonstrating the escalating growth of PE firms worldwide.

Today, these firms are not only focused on financial restructuring but are also keenly optimizing business processes to unleash untapped value – among these processes, Procurement stands out as an area ripe for reinvigoration and efficiency.

The Procurement Dilemma

The procurement process, fundamental to all businesses, is often riddled with inefficiencies and bottlenecks.

From long procurement cycles and lack of spending visibility to poor supplier management, these challenges translate into lost value and opportunities. Gartner reports that businesses, on average, can save up to 20% of their total spending by optimizing procurement.

Imagine the fiscal impact and competitive edge that such savings could bring!

Private Equity: The New Catalyst, Procurement

Given these potential savings, it’s no surprise PE firms have turned their gaze toward procurement. They are uniquely positioned to drive changes by leveraging their investment and operational expertise. However, this transformation isn’t without its hurdles. It requires deep knowledge of markets, suppliers, and commodity prices. Coupled with potential resistance to change within the portfolio companies and the need to manage compliance and risk, the road to procurement optimization can be winding.

Unleashing the Power of Procurement in Private Equity

Despite these challenges, the benefits of integrating Private Equity into Procurement are multi-fold:

Cost Savings

The most apparent benefit is cost savings.

By streamlining procurement processes and optimizing supplier relationships, PE firms can drive significant cost savings. These savings can directly impact the profitability of their portfolio companies.

For example, a study by The Hackett Group revealed that world-class procurement organizations operate at 22% lower labor costs than their peers.

Enhanced Efficiency

PE firms can streamline procurement processes, reduce procurement cycles, and enhance overall operational efficiency.

McKinsey & Company highlights that digitizing supply-chain operations can reduce errors by up to 50% and administrative costs by up to 80%.

Risk Mitigation

An optimized procurement process can better manage supplier risks. This mitigation ensures continuity of supply and reduces the potential impact of supply chain disruptions.

As reported by Deloitte, 85% of global supply chains experienced at least one disruption in the past 12 months, underlining the importance of effective risk management.

Value Creation

Ultimately, by addressing procurement-related challenges, PE firms create additional value in their portfolio companies.

Research by McKinsey suggests that top-quartile PE firms generate up to 30% more EBITDA growth in their portfolio companies compared to other PE firms.

A Future Powered by Procurement in PE

The integration of Procurement in Private Equity is a paradigm shift, but a change that is rife with value. As companies look to stay competitive in an increasingly digital and globalized world, the need for cost-efficient, streamlined, and risk-averse procurement processes is paramount.

In the ever-evolving landscape of global business, it is the enterprises that adapt, innovate, and invest in efficient processes that will lead the pack – and with Procurement in Private Equity, that lead might just become insurmountable.

“Investing in efficiency today is investing in success tomorrow.”

Click here to contact our team

Jun 14
procurement managed services for PE

The Undeniable Value of Procurement Managed Services for Portfolio Performance

By Private Equity No Comments

Operating partners always search for innovative strategies to optimize portfolio companies’ performance.

Procurement, an often-overlooked area, presents a remarkable opportunity for cost optimization and improved operational efficiency.

The key lies in procurement-managed services.

The Game-Changing Nature of Managed Services

Managed services bring a fresh, data-driven strategy to procurement, transforming this traditionally administrative function into a powerful value driver. Backed by cutting-edge analytics and deep industry expertise, these services rapidly become a game-changer in procurement.

The Power of Intelligent Buying and Smart Spending

By shifting to managed services, one can realize an immediate 8% to 12% reduction in purchase costs. This is enabled by sophisticated analytics and a network of experienced procurement professionals who provide comprehensive support.

The approach is all about intelligent buying and wise spending, delivering sustainable savings across all spending categories.

Leveraging Volume Aggregation and Expert Insight

Managed services offer the advantage of volume aggregation and expert insight.

By aggregating demands from multiple clients, they can negotiate better prices, particularly in low-spend areas. Moreover, their scale provides deep expertise and real-time market insights across various categories, allowing us to learn from industry leaders and enhance our capabilities.

The Significant Cost Savings of Strategic Procurement Activities

The potential cost savings from strategic procurement activities are significant.

Consider this: one company slashed its operating costs by 19% by outsourcing its entire purchasing function. Another firm captured average savings of almost a third in its first three significant categories tackled following establishing a new central purchasing function.

The Need for a Well-Informed Perspective in Transitioning

Yet, like any strategic decision, moving to procurement-managed services must be made with a well-informed perspective. While effective for transactional activities, labor arbitrage can limit savings in strategic buying activities that require close internal cooperation.

Capturing the benefits of demand and specification management, which can account for 40 to 50 percent of total savings, also requires close collaboration with other business functions, which can be challenging for an outsourced provider.

The Transformational Impact of Procurement Managed Services

Procurement-managed services represent a significant opportunity for operating partners.

Leveraging advanced analytics, expert knowledge, and industry best practices can transform the procurement function of your portfolio companies into a strategic asset.

As always, it’s essential to approach this with a clear understanding of your portfolio companies’ unique needs and capabilities to ensure a successful transition.

As an SAP Ariba™ Gold Partner, Premikati is a leading services provider for all facets of Ariba™ and procurement in general.  To contact our team, click here.

Jun 05

The Power of Automation: Unleashing Efficiency with SAP Ariba Commerce Automation

By Procurement No Comments

Businesses today are realizing the urgent need for procurement and spend management innovation. Key decision-makers, particularly those in finance and procurement, seek solutions to streamline processes, boost efficiency, and improve organizational visibility. This is where SAP Ariba Commerce Automation enters the scene. 

 What is SAP Ariba Commerce Automation? 

SAP Ariba Commerce Automation is a solution designed to supercharge your procurement processes through powerful automation. Its primary goal is to enhance operational efficiency and ensure a steady supply chain by improving spend visibility and fostering efficient collaboration with suppliers. 

It’s a solution recognized for its innovation and effectiveness, with SAP being recognized as a leader in the 2022 Gartner Magic Quadrant for Procure-to-Pay (P2P) suites for the seventh consecutive time. 

Key Features: A Deep Dive 

SAP Ariba Commerce Automation comes with a suite of features designed to optimize procurement operations: 

  • Regulatory and Business Process Compliance: The solution ensures digital matching of invoices to POs and contracts, thus enabling compliance with regulatory requirements through e-invoicing. Transactions are validated based on configured business rules, reducing manual intervention and exceptions. 
  • Automated Procurement Workflows: The solution automates manual processes, freeing up workforce capacity, decreasing operating costs, and increasing productivity. It also enables digital delivery of POs to suppliers across a business network. 
  • Supplier Portal: The portal allows suppliers to flip a received PO on the network into an invoice, eliminating data entry and other errors. It also gives suppliers a view into invoice status updates, reducing inquiries. 
  • Invoice Status Portal and Transaction Visibility: This feature provides visibility into orders and invoices with a holistic view of spend. It allows suppliers to configure notifications to receive emails when their invoice status changes, promoting adoption for long-tail suppliers through self-service updates and invoice visibility. 

Impressive Benefits 

The benefits of SAP Ariba Commerce Automation are as significant as its features. These benefits include: 

  • Improved Procurement Compliance: The solution supports business process compliance with highly configurable business rules on the network. 
  • Automation of Spend Management Processes: The solution enhances productivity, lowers operating costs, and frees up people’s capacity by automating paper-based and manual processes. 
  • Increased Transparency of Business Spending: The solution provides a holistic view of organizational spending with greater visibility into orders and invoices in one platform. 

Recent Innovations and Future Outlook 

SAP is not resting on its laurels. Recent innovations and planned updates include: 

  1. Guided Buying: The next evolution in guided buying is here. The new capabilities improve the buying experience and leverage AI, intelligent recommendations, and machine learning. This creates a holistic view of what the buyer is purchasing and how it aligns with their organization’s environmental, social, and governance (ESG) goals. 
  1. SAP Central Procurement: The latest release of SAP Central Procurement addresses the challenges associated with centralizing procurement. It delivers the benefits of a uniform, centralized procurement system across all direct and indirect categories — without reworking individual solutions spread across the organization. 
  1. SAP Category Management: A new category management solution, SAP Category Management, is set to roll out this year. It will provide actionable market intelligence and category insights, empowering category managers and procurement professionals to make strategic category decisions. 

 

Statistics Highlighting the Importance of Procurement Optimization 

To underscore the significance of these advancements, let’s consider some compelling statistics: 

  1. Companies that excel at procurement have 20% lower costs, less supply chain disruption, and up to 55% fewer supplier defects (Source: The Hackett Group).
  2. High-performing procurement organizations operate at up to 21% lower labor costs (Source: The Hackett Group).
  3. According to Gartner, by 2023, organizations that have adopted AI in their supply chain management strategy will reduce errors by up to 50%. 

 

From the rollout of SAP Category Management to the enhanced supplier management and the integration of AI and machine learning, SAP is poised to redefine procurement and supply chain management. 

As procurement professionals, we must stay abreast of these developments, leverage these innovative solutions, and drive strategic value and business outcomes in our organizations. 

Jun 01

Macro Finance and Procurement

By Procurement No Comments

Macro Financial Concerns and Procurement in 2023: Are You Ready? 

The year 2023 has presented itself as a period of financial restraint, as the International Monetary Fund (IMF) echoed. Global growth is forecasted to fall from 3.4 percent in 2022 to 2.8 percent in 2023, and a more pronounced slowdown in advanced economies demonstrates a tightening macro-financial landscape.  

Furthermore, the financial sector is experiencing turmoil due to high inflation and ongoing geopolitical tensions, increasing market instability. Despite central banks raising interest rates, underlying price pressures are still proving stubborn, suggesting a prolonged period of financial strain.

 

The Impact on Procurement 

These macro-financial changes are placing a new level of pressure on procurement departments. In this context, procurement’s role has evolved significantly.  

The Chartered Institute of Procurement and Supply (CIPS) outlined key procurement trends for 2023, emphasizing the need for sustainability, timely payment to suppliers, investment in technology, and talent management. 

Sustainability has become a primary concern, as customers are increasingly sensitive to ‘greenwashing’ and demand more transparency about the environmental impact of their purchases. This trend pushes organizations to ensure sustainable practices in their supply chains and avoid falling foul of regulations. 

The challenging financial environment has led to 36% of businesses extending payment terms for suppliers in the last 12 months. This contributes to a vicious cycle that impacts cash flow and liquidity, emphasizing the need for improved supplier relationships and strategic payment practices. 

Investment in procurement technology solutions is also growing. Companies are seeking more consumer-like, intuitively designed, and agile solutions to improve efficiencies and work with leaner staff. 

Finally, with the predicted economic environment, there’s a new urgency to fostering a company culture and strategic problem-solving to attract and retain talent​3​ 

 

Navigating Economic Uncertainty with SAP Ariba 

As predicted by the IMF, the global economic outlook for 2023 presents a complex landscape characterized by financial sector turmoil, high inflation, geopolitical uncertainties, and the lingering effects of the COVID-19 pandemic. In such an environment, businesses need robust, flexible, and intelligent tools to navigate the choppy waters of global commerce. 

With its comprehensive suite of solutions, SAP Ariba is perfectly positioned to help businesses adapt and thrive in these uncertain times. Its intelligent sourcing tool, for instance, allows companies to identify savings opportunities and assess market dynamics, giving them a competitive edge even in challenging conditions.  

As inflation remains high, the ability to efficiently source and manage direct and indirect goods or services within a single platform becomes a crucial advantage, allowing businesses to reduce their time, effort, and risk associated with sourcing events. 

 

Aligning with Sustainability Trends 

Sustainability is no longer a niche concern; it’s a core business priority. Businesses are increasingly under pressure to demonstrate that their operations and supply chains are sustainable to meet regulatory requirements and appeal to increasingly eco-conscious consumers. 

SAP Ariba’s Supplier Management tool can be a crucial asset. It provides comprehensive tools to help buyers onboard, qualify, segment, and manage supplier performance according to parameters that matter to them. This means businesses can drive spending towards preferred, sustainable suppliers, reduce overall risk, and ensure compliance across their entire supply base. In doing so, companies can turn sustainability from a challenge into an opportunity, bolstering their reputation and gaining a competitive advantage. 

 

Embracing Technology for Greater Efficiency 

SAP Ariba is at the forefront of the trend toward increased investment in procurement technology. Its suite of solutions embodies a consumer-like, intuitively designed, and agile approach that can significantly improve business efficiencies. For example, the SAP Ariba Supply Chain Collaboration tool automates the direct procurement lifecycle, reducing reliance on emails and spreadsheets, shortening cycle times, and increasing productivity. 

SAP Ariba Buying and Invoicing further streamlines the indirect goods and services procurement process. Automating and regulating the management of the entire procurement process helps business leaders eliminate errors and exceptions, manage more spending with less effort, maximize savings and profit margins, and respond flexibly and swiftly to changing demands. 

 

Winning the Talent War 

In the predicted economic environment, fostering a strong company culture and attracting the right talent will become even more essential. SAP Ariba’s user-friendly, intuitive design is crucial in this regard. It makes procurement tasks more engaging and less cumbersome, improving employee satisfaction and retention. 

Furthermore, the Guided Buying feature of SAP Ariba makes the procurement process more intuitive and compliant, making it easier for employees to adhere to procurement policies and procedures. This enhances the effectiveness of procurement teams, freeing them to focus on strategic problem-solving and relationship management, which are crucial skills in the modern, complex business environment. 

In conclusion, SAP Ariba is a powerful tool that can help businesses navigate the challenging economic conditions predicted for 2023, align their operations with key procurement trends, and drive significant efficiency and cost savings. By leveraging its comprehensive suite of solutions, businesses can position themselves to survive and thrive in the uncertain times ahead. 

 

In a time of financial restraint and uncertainty, organizations must leverage tools and strategies to help them navigate these challenges. Armed with solutions like SAP Ariba, procurement departments can play a pivotal role in driving cost savings and efficiencies. The time for organizations to act is now – to survive in the current financial climate and thrive in the years to come. 

 

May 25

Navigating the Supplier Landscape

By Procurement No Comments

Unleashing the Power of SAP Ariba Solutions for Optimized Procurement and Risk Management

 

Supplier management has become a critical aspect of business operations for procurement and supply chain executives in interdependent businesses and complex supply chains.

In fact, according to a report by Ponemon Institute, 53% of organizations have experienced at least one data breach caused by a third party in the past two years. This statistic alone underscores the urgent need for robust supplier lifecycle and risk management.

Fortunately, innovative solutions are available to help professionals navigate this challenging landscape. For instance, SAP Ariba’s Supplier Lifecycle and Performance solution offers various benefits that help streamline supplier management and optimize procurement processes.

Enhancing Supplier Relationships

A strategic procurement process starts with strong supplier relationships. SAP Ariba solutions provide a unified and comprehensive view of supplier information, which helps businesses work effectively with suppliers and withstand disruptions. This increased visibility can drive spend to preferred suppliers, allowing businesses to manage suppliers based on specific parameters and integrate this information with other SAP Ariba solutions.

Maximizing Savings

SAP Ariba’s solutions can also help eliminate savings leakage. With enhanced visibility and control, businesses can ensure employees buy the right products at the right price, allowing negotiated savings to reach the bottom line.

Simplifying Risk Management

Understanding supplier risk is essential in today’s complex business landscape. 2021 data breaches increased by 17% from the previous year, and it’s predicted that supply chain attacks would quadruple in 2021 over the number of 2020 attacks. SAP Ariba’s Supplier Risk solution simplifies supplier risk management by providing actionable insight into high-risk suppliers and focused risk alerts.

Gaining Deeper Insight

With SAP Ariba Supplier Risk, businesses can act fast with insight into the location of at-risk suppliers, the problems they may face, and the orders and shipments impacted by risk. This solution also allows for intelligent control assessments based on suppliers’ inherent risk, enabling businesses to identify suppliers of greatest concern.

Driving Compliance with Embedded Risk Management

Embedding risk management in the procurement process can significantly improve compliance. SAP Ariba Supplier Risk helps reduce the assessment cycle time from months to weeks, improving compliance through third-party risk assessments for each supplier engagement.

Delivering Business, Environmental, and Social Impact

Businesses today are increasingly held accountable for their operations’ social and environmental impact. With SAP Ariba Supplier Risk, companies can find the causes of risk to enable compliance controls that make a difference and provide responsible plans for supplier selection, onboarding, and contracting.

Proactively Mitigating Risks

SAP Ariba Supplier Risk enables businesses to generate and execute issue management and action plans to mitigate risks proactively. This solution also connects to the source-to-pay process to improve compliance.

Receiving Personalized Risk Alerts

The SAP Ariba Supplier Risk solution automatically tracks more than 200 risk incidents, helping businesses proactively monitor financial, operational, environmental, social, regulatory, and legal risks.

In an era where 65% of businesses find it hard to manage cybersecurity risks associated with third parties and 74% believe that third-party vendor selection overlooks potential key risks, SAP Ariba Supplier Risk removes the challenge from supplier risk management. It empowers businesses to work with suppliers that can keep business moving with less risk, monitoring aspects of supplier lifecycle management that may not have been considered before.

The Future of Supplier Management

As businesses continue to evolve, so does the complexity of their supplier networks. An estimated 60% of organizations work with over 1,000 third parties, which is growing as business systems become more complex. Additionally, 71% of businesses expect to become more reliant on third parties in the next two years.

Given these trends, it’s clear that effective supplier lifecycle and risk management are more critical than ever. Advanced solutions like SAP Ariba’s Supplier Lifecycle and Performance and Supplier Risk solutions can help businesses navigate this increasingly complex landscape, enabling them to make better buying decisions, maximize savings, scale compliance, simplify risk management, and more.

With robust supplier management solutions, businesses can turn procurement and supplier management from a challenging task into a strategic advantage. By harnessing the power of SAP Ariba solutions, businesses can mitigate risks and unlock opportunities for growth and innovation. It’s time to reshape the procurement landscape and transform how we manage supplier relationships.

 

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May 16

Unleashing the Power of AP Automation: A Strategic Move Towards Efficiency and Profitability

By Procurement No Comments

In an era where digital transformation drives sustainable business growth, one area that remains ripe for disruption is Accounts Payable (AP). AP automation is no longer just an option – it’s a business necessity that yields considerable strategic advantages, particularly for mid-market companies. This post aims to provide an in-depth understanding of the myriad benefits of AP automation to executives committed to fostering operational excellence, reducing costs, and enhancing cash flow management.

 

The AP Challenge: A Time and Resource Intensive Process

AP processes often contain manual data entry, paper invoices, and lengthy approval cycles. These processes are time-consuming and prone to human error, resulting in late payments, missed discounts, and increased operational costs. The lack of real-time visibility into AP data often leads to suboptimal decision-making, hampering growth and profitability.

The AP Automation Advantage: Transforming the AP Landscape

AP automation technology disrupts this status quo, offering a more innovative, efficient, and cost-effective way to manage AP processes.

Let’s delve into the specific benefits:

  • Time Savings: AP automation drastically reduces the time to process an invoice, leading to faster approvals and payments. This increased efficiency frees up valuable staff time that can be better utilized for strategic tasks, such as analyzing spending data or improving supplier relationships.
  • Reduced Operational Costs: Automating AP processes reduces the need for manual intervention, thereby minimizing the scope for human errors and the costs associated with rectifying them. Moreover, it can also decrease storage and postage costs associated with paper invoices. Calculate your potential savings here using SAP’s Buying and Invoicing Value Calculator.
  • Enhanced Cash Flow Management: With real-time visibility into outstanding invoices and payment dates, AP automation allows companies to optimize their cash flow. Companies can take advantage of early payment discounts and avoid late payment penalties, thereby improving their bottom line.
  • Decreased Rogue Spend: AP automation controls maverick spending by enforcing corporate policies and approval workflows. It also improves spend visibility, enabling companies to identify and mitigate rogue expenditures more effectively.
  • Improved Supplier Relationships: Timely payments and transparent communication foster healthier supplier relationships. This enhances supply chain efficiency and opens up opportunities for negotiation and collaboration.

The Powerhouse Duo: SAP Ariba Buying and Invoicing and Premikati

While the benefits of AP automation are clear, the choice of software and its implementation process is crucial.

SAP Ariba Buying and Invoicing is a robust solution offering comprehensive AP automation capabilities. It streamlines end-to-end procure-to-pay processes, enhances visibility into company-wide spending, and drives compliance and control across the invoice management process.

Yet, the success of any AP automation initiative is about more than just the software. It’s about how effectively the software is implemented and integrated with your existing systems and processes. This is where Premikati offers rapid implementation and deployment services that ensure a smooth and efficient transition to automated AP processes.

Premikati’s expertise in SAP Ariba implementation reduces the time-to-value, allowing companies to experience the benefits of AP automation sooner rather than later. Their robust training and support ensure that your team is equipped to leverage the software’s full potential.

AP automation is a transformative strategy that can significantly improve your business’s operational efficiency, financial health, and competitive edge. With SAP Ariba Buying and Invoicing and Premikati’s deployment services, your business is well-positioned to navigate the AP automation journey successfully.

Connect with us today to talk to our team.

Apr 03

Contract Trends in 2023

By Procurement No Comments

Contract management is a critical aspect of any organization’s operations, and it’s especially important for executives who are responsible for managing the financial health of their organizations. Effective contract management can help you mitigate risk, increase revenue, and reduce costs, but it can also be a complex and time-consuming process. In this post, we’ll explore the top five pain points that businesses like yours face with regard to contract management, and we’ll provide some best-in-class solutions to help address these challenges. 

 

Lack of visibility into contract terms and obligations 

 

One of the biggest challenges with regard to contract management is the lack of visibility into contract terms and obligations. This can result in missed opportunities to save money, increase revenue, or mitigate risk.

Best-in-class solutions for this challenge include contract lifecycle management (CLM) software that centralizes all contracts in a single repository and provides advanced search and reporting capabilities. With CLM software, you and your team can easily access all contract data, including key terms, obligations, and milestones, and they can quickly generate reports to help them make informed decisions. 

According to a report by the International Association for Contract and Commercial Management (IACCM), companies implementing CLM software can reduce contract cycle times by 50% and increase compliance by 80%. 

 

Inefficient contract creation and negotiation processes 

 

Creating and negotiating contracts can be a time-consuming and inefficient process, especially when done manually.

Best-in-class solutions for this challenge include contract authoring software that streamlines the contract creation process and automates workflows – which can easily help you create contracts using pre-approved templates and standardized language, and automate workflows to ensure that contracts are reviewed and approved in a timely manner. 

 A study by Aberdeen Group found that companies that use contract authoring software can reduce contract cycle times by 50% and increase contract accuracy by 90%. 

 

Poor contract management workflow and process 

 

Inefficient workflows and processes for managing contracts can lead to delays, missed deadlines, and increased risk. CLM software can easily manage contract workflows and approvals, as well as receive automated alerts for key contract milestones and renewal dates. 

According to a report by the IACCM, companies that implement CLM software can reduce cycle times by up to 50%, increase compliance by up to 80%, and reduce legal costs by up to 30%. 

 

Poor contract compliance and governance

 

According to a study by Forrester, companies that use CLM software can reduce legal costs by up to 30% and increase compliance by up to 70%. 

While contract compliance and governance can be a complex and time-consuming process. Best-in-class solutions for this challenge include CLM software that provides automated compliance and governance workflows, as well as real-time alerts for non-compliant activities. 

 

Limited scalability and flexibility 

 

Scalability is a concern for any growing business.  Solutions like SAP Ariba CLM or ICertis CLM software provide scalability and flexibility, as well as customizable workflows and integrations with other business systems. These will ensure your contract management processes can adapt to changing needs, reducing risk and increasing efficiency. 

 

To learn more about:

Contract management and its impact on procurement click here. 

Complex contract management solutions click here.

 

Mar 27

Best Practices to Master Buying and Invoicing

By Procurement No Comments

CFOs and CPOs face numerous challenges when managing to buy and invoicing processes within their organizations. Efficient financial management is crucial to maintain a healthy cash flow, reducing risk, and making data-driven decisions. In this blog post, we’ll explore the top ten pain points related to buying and invoicing from a financial perspective, along with best-in-class solutions and supporting statistics.

 

Manual Invoice Processing

One of the most time-consuming and error-prone aspects of financial management is manual invoice processing. Automating this process with AI-based tools can significantly reduce the time spent on processing invoices and improve accuracy. According to the Institute of Finance and Management (IOFM), organizations that have automated invoice processing report a 60-80% reduction in invoice processing time.

 

Inaccurate Financial Data and Reporting

Access to accurate, real-time financial data is essential for making informed decisions. Implementing real-time data analytics and reporting tools can help CFOs and CPOs to achieve greater insights and improve decision-making. Companies that use real-time analytics experience a 54% improvement in decision-making speed, according to the Aberdeen Group.

 

Fraud and Compliance Risks

Fraud and compliance risks can have severe financial and reputational consequences for organizations. Enhancing internal controls with fraud detection and compliance management systems can help mitigate these risks. The Association of Certified Fraud Examiners (ACFE) reports that companies with strong anti-fraud controls can reduce fraud losses by up to 50%.

 

Decentralized Procurement and Purchasing Processes

A decentralized procurement process can lead to inefficiencies, lack of visibility, and increased costs. Centralizing procurement with a comprehensive, cloud-based procurement platform can streamline operations and reduce expenses. The Hackett Group found that centralized procurement can reduce procurement costs by up to 20%.

 

Inefficient Vendor Management

Managing vendors effectively is crucial for maintaining strong relationships and ensuring optimal performance. Implementing a vendor management system with automated vendor onboarding and performance tracking can improve the efficiency of this process. Deloitte reports that companies with efficient vendor management experience 26% faster vendor onboarding times.

 

Lack of Spend Visibility

Gaining granular, real-time insights into spending is essential for cost control and strategic decision-making. Utilizing spend analytics tools can provide CFOs and CPOs with the visibility they need to make informed decisions. Gartner states that organizations that leverage spending analytics can achieve up to 15% cost savings.

 

High Invoice Error Rates

Invoice errors can lead to payment delays, strained relationships with suppliers, and increased costs. Adopting a smart invoicing system with built-in error detection and prevention can reduce invoice error rates significantly. Ardent Partners found that companies using smart invoicing systems can reduce invoice error rates by up to 37%.

 

Slow Approval Workflows

Lengthy approval workflows can delay payments and hinder cash flow management. Streamlining approval workflows with automated routing and escalation features can expedite the process. PayStream Advisors report that organizations that automate their approval workflows experience a 45% reduction in approval cycle times.

 

Difficulty Managing Cash Flow and Working Capital

Effective cash flow management and forecasting are vital for maintaining financial stability. Implementing cash flow management and forecasting tools with real-time visibility can improve accuracy and decision-making. PwC found that companies that use cash flow management tools can improve cash flow forecasting accuracy by up to 36%.

 

Ineffective Budgeting and Cost Control

Budgeting and cost control are integral to financial success. Adopting an integrated budget management system with real-time tracking and reporting can streamline these processes and provide better insights. The Financial Executives Research Foundation (FERF) reports that organizations that implement integrated budget management systems experience a 33% reduction in budgeting cycle times.

 

By addressing these pain points with best-in-class solutions, CFOs and CPOs can significantly improve their organizations’ financial performance, reduce risk, and enhance decision-making capabilities. These improvements will ultimately lead to a more efficient and effective buying and invoicing process, allowing organizations to thrive in a competitive business environment.

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Feb 16

Five Ways to Ensure your Sourcing Strategy Never Disrupts the Supply Chain

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Because sourcing is at the heart of any procurement strategy, it is critical to the success of your supply chain.

Poor sourcing strategies have a negative impact on the supply chain such as  downtime, low inventory, and a lack of supply chain transparency.

Here are five things you can do to protect your supply chain from disruptions:

1. Assemble the Right Team

It goes without saying that your supply chain requires people to function. More importantly, it requires the right people.

Consider the following when assembling your sourcing team; such as the ability to quickly learn, analyze large amounts of data, build long-term relationships, communicate, and negotiate.

2. Provide the Right Tools

In today’s supply chain climate, your productivity depends on the tools you make available to your team and the tools and solutions they have at hand can make all the difference.

With emerging technologies across the globe, the supply chain has never had the potential to be more efficient. 

A great example of a sourcing solution is SAP Ariba’s Sourcing tool.

3. Have a Solid Sourcing Strategy

Your sourcing strategy is used to find the most effective, efficient, and reasonably priced solution to your supply chain needs.

So, how do you identify the right product or supplier?

Here are some tips:

  • Understand the market trends. 
  • Always pick quality and time over price. 
  • Build relationships with several vendors in the market. 
  • Have clear expectations or targets. 

4. Have Multiple Vendors for Each Product Supplied

Building long-term relationships with your vendors or suppliers is extremely beneficial to the supply chain. However, if the pandemic taught us anything, it’s the importance of having backup plans.

Supply chains are more flexible, visible, and resilient than ever before. Despite this, there is still an element of uncertainty surrounding supply chains.

To be better protected, it is critical to work with more than one supplier. A great place to start is the Ariba network where over you can connect with over 40 million suppliers and growing!

5. Constantly Review Suppliers

A supplier review provides insight into the supplier’s performance.

Constantly reviewing a supplier ensures that potential disruptors are identified as soon as possible; giving you the opportunity to prevent them from causing harm to the supply chain.

To get the most out of your supplier’s performance, make a list of performance indicators. Quality, service, delivery rate, damages, compliance, innovative ideas, and cost are some examples.

Summary

Disruptions in the supply chain are undesirable. It’s not just that they cost the company time and resources, though those are significant. The unfavorability stems from the impact on the company’s customers.

What are some common disruptions in your supply chain?

One of your primary responsibilities as a supply chain or sourcing manager is to prevent disruptions. Particularly artificial disruptions. One of the most effective approaches is to develop an effective sourcing strategy.

For your procurement solutions and services, click here at www.premikati.com

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