[Editor’s Note: Today’s article is a guest post from Teampay, a fast-growth provider of a distributed spend management solutions that enable the procure-to-pay (“P2P”) process by guiding business end-users through the requisition-to-order process and enabling those businesses to pay suppliers for their purchases by virtual or physical card. If you or someone you know would like to become a guest contributor, please contact us at editor at cporising dot com. Thanks!]
The way companies spend money has fundamentally changed. In order to stay afloat and even thrive in the modern business landscape, companies must understand the impact of these changes and figure out how to adapt.
Below are a few key trends that are shaping the future of company purchasing:
The explosion of SaaS subscriptions and online purchases
In the past decade, the market has become saturated with innovative software solutions and on-demand services built to help you manage your business and all of its challenges. As a result, businesses are consuming at an exponentially higher rate than ever before. However, this SaaS explosion has not only resulted in an uptick in the sheer number of business purchases, but also the number of people within the business who are making these purchase decisions.
The power shift to the end user
Spend has shifted from top-down to bottom up, meaning purchasing power is now distributed across a whole organization rather than in the hands of just a few. In other words, your modern purchasing department is no longer a centralized procurement team; it’s all of your employees. It’s someone on the marketing team who needs to buy giveaways for an event, or someone on the customer success team who needs project management software, or someone in HR who needs to buy a team lunch. And this power shift has only accelerated during the pandemic, as remote work has become a new norm and almost every employee has had to purchase work-from-home equipment.
The increased reliance on gig workers
As businesses become increasingly flexible and agile, companies have been outsourcing the necessary skills to facilitate timely projects by hiring more and more part-time or freelance workers. While these people are not technically full-time employees, they still are often required to make purchases on behalf of the company to get the job done. This phenomenon has further complicated the way in which businesses spend money.
Modern companies have outgrown the age-old procurement processes
Simply put, the current purchasing systems that many companies rely on no longer support these emerging business trends. Many of these age-old procurement systems have an outdated approach to approving and executing payments, and therefore make it a struggle to keep up with the demands of a modern, fast-paced business. Procure-to-Pay solutions were built long before the explosion of SaaS subscriptions, remote work, and freelance culture. They give control to only a few people and do not support the needs of the agile, distributed teams that define the new way of working.
Let’s breakdown the main issues distributed teams experience with the Procure-to-Pay model:
Limited access
To manage spend in a distributed work environment, all employees, including freelancers, need the ability to submit purchase requests—not just the procurement department. Outdated procurement software charges by the seat, so only specific employees can make purchasing decisions, preventing employees across the organization from working quickly and efficiently. Moreover, purchases that are out-of-catalog have an entirely separate process, adding even more complexity.
Slow time-to-value
More traditional procurement systems take months to implement, and even more time to properly train employees to start using. That’s why getting this process up and running typically requires a full-time employee dedicated solely to the cause. This doesn’t work for fast-paced, modern businesses, where people across the organization are making purchase decisions every day.
Lack of visibility
With the Procure-to-Pay model, managers have little visibility into their employees’ day-to-day spending. They rely on the procurement team to provide actuals and must wait weeks for important spend data. Without real-time visibility, teams cannot see the full picture of who spent what until after the month ends, preventing them from being agile and making crucial changes quickly.
Here’s what modern procurement teams need to thrive
Procurement has evolved, and your procurement system needs to catch up. The time has come for businesses to give all employees policy-driven access to company funds.
Here are some must-haves to modernize your procurement process:
Proactive controls
Prevent employees from accidentally spending out of policy by embedding your policy directly into your purchasing process through upfront coding. You just set the rules, and then technology will automatically approve or deny requests based on your company’s policy. This ensures that employees spend within policy on all purchases, even those that do not go through the procure-to-pay process.
Real-time visibility
Managers need to be able to get a full breakdown of every facet of company spend at the click of a button. They need data that provides an organized, full picture of insight into company spend without having to wait for month-end close. And your procurement team needs to spend less time frantically tracking down receipts at the end of the month or depending on best-guess accounting to make sense of the numbers, and more time focusing on short and long-term strategy.
Empowered employees
Employees need to feel empowered to make wiser, quicker decisions to drive forward your business without inefficient processes slowing them down. In order to simplify and improve the employee spend experience, you must eliminate these frustrating processes and back-and-forth conversations that hinder them from making timely purchases. In the modern business world, it’s more important than ever before for purchasing processes to be as intuitive and human-centric as possible.
Fast time-to-value
Your purchasing experience should be so intuitive that any new employee who starts at your company should be able to start spending right away. It shouldn’t take dedicated employees and thorough training to teach your employees how to make purchases within policy.
Spend management software is on the rise as the all-in-one solution to implement those needs
Distributed spend management platforms, like Teampay, can help tackle the setbacks of your traditional procurement solutions head-on by integrating seamlessly into your current systems and processes without the help of IT or consultants. Spend management software guides employees through the entire buying process from start to finish, ensuring they comply with company policy without training them or expecting them to remember intricate and mundane purchasing policies.
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