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Dematerializing the Procurement-invoices Process: Automate Your Commitment Management

It is time for the procurement and finance departments to change their outlook on issues of internal gain and focus on innovative solutions that directly impact performance. Why automate the procurement-finance process?
Large companies, particularly in manufacturing or distribution, are facing new issues affecting growth. The crisis is not making things any easier. Increasing revenue requires a colossal effort: one gain point for a rise in revenue of 15 to 20 points. This is pushing finance departments to look to internal sources of gain. One cost cutting point represents one gain point. The principle may seem simple, but a look at automating the orders-invoices process reveals that an efficient information system (IS) is a strategic ally for company growth. For Franck Le Tendre, Managing Director of SynerTrade France, it is time for the procurement and finance departments to change their outlook on issues of internal gain and focus on innovative solutions that directly impact performance. Why automate the procurement-finance process?

Streamlining invoice processing to reduce costs

The main purpose of a Procurement-Finance IS is to gather supplier contract data and make it available to everyone in the company that needs to deal with suppliers. This sets the procurement-order-invoice process on the path towards supplier invoices that are 100% conform, representing significant internal gains. Franck Le Tendre explains:
“Finance and accounting departments face the issue of supplier invoice compliance, often linked to invoices with no corresponding order. This results in more work and complexity, and the solution is often to add more staff to the accounting team. The cost of processing an invoice manually is somewhere around 100€, if not more. Simplifying and streamlining is key, with costs generally reduced at least fivefold after integration of a tailored dematerialisation solution”.
Digital solutions now go far beyond just managing supplier contracts or digitalising invoices. They allow end-to-end P2P (Procure-to-Pay) management and reconcile procurement and finance around shared tools, for greater transparency and efficiency.

Giving the finance department visibility on budgets and commitment monitoring

Finance departments need visibility on the company’s commitments to manage budgets accurately and respect the strict principle of “only paying what was agreed”. So they need to use tools that make it possible to monitor commitments accurately.
The buyers’ main task is to negotiate contracts. The Procurement-Finance IS will make it possible to save and transfer contract information so negotiated conditions are respected. Franck Le Tendre says:
“If we take the example of a renegotiation, an agency or subsidiary might not apply new conditions due to not having the information. This agency will not procure on as favourable conditions as agreed. This kind of non-application of a contract can result in not meeting performance expectations. Without a system to channel the process and ensure procurement conditions are respected, cost management can be put at risk too”.

Managing payment deadlines and optimizing the finance supply-chain

Companies are often accused of not respecting payment deadlines on purpose to optimise cash flow. In truth this practice remains rare. The complexity of the payment cycle is the real culprit. The legal payment deadline of 45 to 60 days from when a supplier issues a non-compliant invoice is quickly exceeded. The company is then exposing itself to financial sanctions as provided for by the legislature. For Franck Le Tendre:
“Honouring your commitments in time has a positive impact on the company’s reputation. Beyond paying when due, Finance Directors would also like to get the 2 or 3% discount negotiable on advance payments, a substantial gain in large procurement offices. Certifying an invoice compliant five days after issue leaves 40 days to make a decision on cash flow management. Likewise, for the factor. The company has every incentive to submit invoices that are perfectly compliant and even to create competition between different factors, for whom these invoices are very interesting! We enter an intelligent system of optimising cash flow through invoice compliance”.

Rethinking the impact of the information system on performance

The procurement-invoice process is very difficult to monitor in a complex structure. There are still many monolithic ERPs unable to secure the process end-to-end. Tools like this were first created to guarantee procurement security directly tied to manufacture. They do not make it possible to secure the procurement-invoice system in the same way for other orders. A few years ago these sectors were not seen as strategic, but in a context of slowing growth companies must increasingly work on internal factors. Source-to-pay solutions offer the guarantee of totally respecting procurement conditions, with costs managed from end to end. It is a matter of equipping the business with an extremely virtuous system whose positive impact on business performance will be measured fast.

About the author

Kristina Pousseur

Kristina Pousseur – Marketing and Communication Director at Synertrade

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