Cloud based software solutions are growing in popularity because of the benefits they offer to organizations. According to MarketsandMarkets Forecast the SaaS market is currently growing by 18% each year, and about 80% of companies are planning IT operational budget increases, so we can expect adoption rates to grow for the foreseeable future. Part of this implementation includes purchase-to-pay (P2P) software.
Benefits of a Cloud-Based Procure-To-Pay Solution
Always Up to Date
When you have an ERP system that handles all of your cloud-based software, you don’t have to worry about manually running updates. This saves you time and money in terms of needing a dedicated IT team to handle it for you. When your programs are always up to date, there’s no need to update software, upgrade hardware, applying patches, and troubleshooting errors.
For small businesses on a budget, the expense of maintaining any on-premise equipment and paying an IT team to maintain it is often cost-prohibitive. Cloud-based solutions provide more affordable options and allow for businesses to operate as usual.
Easy Collaboration Across Departments
Cloud-based P2P software enables the accounts payable (AP) department to work with procurement, regardless of where the departments are physically located. Because the software is accessible from a web browser, all that’s required is an internet connection. Expenses can be approved while the approver is working from somewhere other than the office, so there are fewer delays and more opportunities to take advantage of early payment discounts. Because the cloud-based software gives the entire team real-time information, everyone operates from the same version of the data, removing the potential for errors and inaccuracies.
When you opt to switch to your procurement software to the cloud, you’re transferring operations and maintenance to an outsourced team. Though it may seem a little risky to leave that to someone else, the security benefits it offers are worth it. Updates and patches are automatically applied. A lot of the high-profile data breaches we’ve seen in recent years are a result of delayed patch deployment. Many Purchase-to-Pay software and other SaaS solutions are hosted on platforms such as Microsoft Azure, which guarantees world-class security.
SaaS solutions offer flexibility for small businesses looking to scale their growth. If your business needs change, you can adjust your transaction volumes and database usage according to your new requirements. In addition, it’s possible to integrate your SaaS software with other business applications to streamline your workflow.
Planergy, for instance, allows you to add user licenses on an as-needed basis so you can bring new staff in as your company grows. Plus, the platform integrates with QuickBooks accounting system, one of the most common programs used in finance and accounts payable. If you need any other integrations, custom integrations are possible as well.
Cloud-based P2P solutions do not require investing in hardware and are often provided with a free trial so you can try the software to make sure it’s what you expect it to be before you pay for licensing. Because this approach allows for easy scalability, businesses can modify the solution to meet their budget and their needs.
How Cloud-Based P2P Solutions Help Your Organization
Clear Approval Workflow
With a digital system that’s accessible from anywhere an internet connection is available, it’s easy to set up a clear approval workflow. You can give certain users basic permissions to request things, while only department heads and executives can approve the purchase requisitions and convert them to purchase orders. You can set up automation rules, so the requisitions automatically route to the appropriate people for approval. You can set spending thresholds, and multi-person approval for larger purchases, and allow users to approve their own orders for things such as office supplies.
AP automation reduces error, ensures timely payment, and ensures correct payment. Purchase orders are matched to their corresponding invoices, and that’s matched to the receipt of goods in a process known as three-way match. This ensures you only pay for what you ordered and received. It also reduces the amount of time your AP staff has to spend on invoice processing to improve overall productivity.
Better Spend Management
By requiring all users to start with a purchase requisition and send it for approval before it becomes a purchase order, you ensure no one is purchasing from unapproved vendors. You also have better control over budgets and can see exactly where the money you’re spending is going.
Easier Spend Analysis
With the built-in reporting features, the ability to customize and automate reporting, you can save time when conducting spend analysis. This helps with finance related tasks, making it easier to see where the money is going, where there are opportunities for savings, and where there are opportunities to add value to reduce overall costs and impact the bottom line.
Opting for a SaaS procure to pay system also helps with contract management. Planergy allows you to attach a contract or other important documents to each vendor, so anyone who needs to review it can do so quickly. This helps ensure you and the vendor are both in compliance with all of the contract terms.
Often, when the contact is stored away in some physical file, it’s easy to forget the specifics after a while. Many companies have been about to find savings in an audit after realizing the vendor never applied the contractually negotiated discounts to the invoices.
Greater Supplier Management
Depending on your industry, it’s possible you could have a long list of suppliers to manage across your entire supply chain. Having all the suppliers set up in your procurement system makes it easier to store catalogs and keep track of which suppliers are making the biggest impact on your business.
You can keep track of how many orders you’re placing with vendors, so you can leverage the information when it comes time to negotiate a new contract. You can also see which suppliers you don’t use, or the ones that present problems for your company, so you know when it’s time to find a replacement.
Improved Supplier Relationships
It’s important to your business operations to build and maintain strong relationships throughout your entire supply chain. When everything is maintained with the cloud-based solution, purchase orders are easily created and approved, and invoice processing occurs in a fraction of the time. Because of this, suppliers can more easily fulfill the orders and receive payment faster, which makes them happier. Often times, making the change to an electronic system enables you to capture early payment discounts.
Better Inventory Management
Keeping a close eye on your inventory levels is crucial to maintaining the budget and cash flow, customer satisfaction, and more. If you have too much inventory in the warehouse, you’ve got capital tied up, and it could easily go bad before it’s sold. If you don’t have enough inventory, you may need to slow down or halt production, which creates issues on the customer side of things. With the audit trail, you can see who’s taken what action on each order and invoice. This prevents duplicate orders to avoid having too much of one thing and not enough of another.
Making the switch to a cloud-based procurement solution isn’t an easy undertaking, because you must ensure the business can continue to operate as usual throughout the transition. When comparing software solutions, it’s important to find an option that meets your business needs, is user-friendly with an intuitive interface, and helps simplify your Procure-to-Pay process.