Today, software drives every facet of business success. The same goes for procurement. Automating procurement with next-generation software boosts financial strength by saving money and scaling. We’ll explore the role of procurement software and how it helps firms succeed by answering:
- What’s procurement software?
- What distinguishes procurement software from old methods?
- Benefits of procurement software?
- What should you consider when choosing procurement software?
What’s procurement software?
The strategic sourcing of goods and services by a company is called procurement. Companies use procurement to source, organise, and buy products from diverse vendors for the best financial results. Improved processes and data enable expansion while offering visibility into company expenditure to reduce cost inefficiencies and risk.
Procurement software helps achieve these results while relieving accounting and finance staff of tedious work. You can buy products, authorise orders, and automate vendor payments in one spot, simplifying operations. It centralises data, makes spending visible, and optimises cash for capital efficiency.
How does procurement software differ from older systems?
Traditional procurement requires the accounting department to manually complete purchase-related tasks, such as:
- Purchase requests routing
- Checking approvals
- Entering tracking data
- Manage vendors
- Managing invoices
- Payments (typically paper checks)
If at all, spreadsheets monitor these laborious processes. The organisation loses visibility and leverage while negotiating for growth supplies.
A procurement system automates several manual tasks:
- Integrating vendor and invoice data
- Converting paper bills with OCR
- Automating approval and order workflows
- Digitising purchase orders, processing, and payment
Why does the finance team need procurement software?
A single procurement source is essential for a sustainable and scalable organisation in any industry. NetSuite found that procurement software automates 75% of accounting operations.
Software automates contract administration, improves AP operations, and prepares and tracks purchase orders. It helps you analyse product and budget spend, assuring financial stability and growth. To simplify employee and vendor life, procurement software improves visibility, controls, and standardises the purchasing process.
An automated procurement tool lets companies track costs. Functions of procurement software include:
- Centralised vendor lifecycle data (contracts, reports) for analysis
- Automatic spending, trend, and contract compliance visibility
- Simplified procurement approval and intake
- Strategically sourcing the greatest products at fair prices
- Automating routine operations frees up time for higher-impact duties and projects for the accounts payable team.
Procurement software benefits your firm in three ways:
- Operational efficiency: By centralising purchases and vendors into a company-wide platform, your staff can make rapid, systematic purchases with one click and without errors. Automation frees up time for your team to improve operations with procurement software.
- Transparency: Centralising buy requisitions, expediting approvals, and offering real-time and purchase history information using procurement software gives comprehensive purchasing management. Knowing your figures helps inventory management and procurement teams cut waste.
- Cost saving: Procurement software shows what products your organisation buys, how many, and how much they cost, revealing cost-effective alternatives. Procurement software shows vendors’ best prices and where bulk buying can save money.
Companies without procurement software lack visibility and organisation. Procurement software lets staff buy what they need with budget and expense transparency in one place.
What to look for in procurement software
When you use modern procurement management software, the benefits are even greater. Find these procurement software characteristics that set the best apart:
Accounting automation: The best purchasing software helps accounts payable route, reconcile, and pay for goods and services after front-end approvals. Purchasing software automates accounts payable, freeing up resources for more important tasks.
Curation options: Simplifying decision-making is easier with a list of preferred vendors. Opt for a tool that includes curated vendor catalogs and supports preferred vendors. Strategically sourcing through apps can strengthen supply chain resilience.
Flexible workflows: Each company has unique needs for vendor onboarding, approval, and reporting. Select a procurement management system that offers flexible processes to meet your specific requirements. To expedite approvals, choose a platform with automatic routing and alert features.
User-friendly design: Tools that are easy to learn and use will see more frequent use. A good user interface ensures users can quickly find what they need.
Seamless integrations: Procurement software should work well with other financial management systems. Look for a solution that integrates smoothly with essential accounting and finance tools.
A tool that fits all the above requirements simplifies procurement and optimises spending and savings.
