Today’s increasingly digital world has transformed how businesses operate, buy and sell goods, and pay for services. The rise of the Internet of Things (IoT), artificial intelligence (AI), and other digital innovations have changed the way businesses process invoices, purchase orders, contracts and more. This also impacts the entire procurement and payment cycle; after all, a company must first identify what they need before they can purchase it. And while business processes have been streamlined in nearly every department over the years, many are still unnecessarily complex—and in some cases even redundant. The acquisition and payment cycle is one such area that could benefit from greater simplicity. It involves every step from procuring a supplier to finalizing a payment once services or goods are received—a lengthy process that involves multiple people, departments and external agencies. In this blog post we’ll explore five ways companies can simplify their acquisition and payments cycle to reduce friction points and save time, money, stress—and most importantly —make happier customers with faster turnaround times.
Organizational Change and Culture
When shifting to an automated approach, companies will also likely need to undergo some organizational changes and culture shifts. While some companies might be perfectly content with the way they operate today, others will undoubtedly find a way to simplify their acquisition and payment processes by adopting or introducing new technologies. This will be especially important for organizations that operate in a highly regulated field or deal with sensitive customer data. These kinds of businesses will have to be extra careful when it comes to security, so any new systems must be compliant with data protection laws. For example, if you’re planning to use blockchain technology, you first need to make certain your IT infrastructure is blockchain-ready.
Establish a Single Point of Contact
An important step in optimizing your sales and procurement processes is to streamline your procurement department. This can be done with a single point of contact (SPOC), sometimes referred to as a central procurement contact. A SPOC ensures all stakeholders know who to go to when they need to buy something. This reduces the number of people involved in the purchasing process, so it’s simpler to initiate an acquisition. The SPOC should be able to access all relevant data, including procurement policies and procedures, price lists and supplier information. Ideally, this data is also available in real time and accessible via a web-based interface.
Automate Invoice Matching Processes
Once you’ve acquired products or services, the next step is to pay your supplier. But many organizations still rely on manual invoice matching processes, which can be an unnecessary deterrent to progress. Automated systems can help expedite the process by matching your organization’s internal data with a supplier’s data. This can be done through data APIs, which are increasingly common. In most cases, suppliers will upload their data onto a shared platform, while your organization enters its information into a similar system. The two platforms then sync and allow each party to access the other’s data.
Change the Way You Manage Contracts
When it comes to managing critical contracts, businesses often find a middle ground between too little and too much paperwork. This often results in a lot of redundant tasks (such as completing the same documents multiple times in different places.) With AI, you can create contracts that adapt to each specific business scenario, reducing the amount of time you spend on redundant tasks. Managed service providers (MSPs) offer another way to simplify the contract management process. These managed services offer a streamlined way to outsource many administrative processes, including procurement. Contract management software that integrates with other business systems can also help streamline contract management.
Proactive Tracking and Real-time Transparency
Once you’ve initiated an acquisition, you can track its progress with real-time visibility into items such as shipping information, service levels, and even payments. This will help you identify potential issues (or opportunities) with your suppliers, enabling you to make necessary adjustments. It’s also a great way to add transparency to your organization, especially with customers. A customer who receives updates and has access to the same information as internal stakeholders can feel empowered to make decisions.
Help Employees & Customers Find the Right Goods and Services
As your organization grows, it will acquire more and more items. You’ll need to periodically review your inventory and determine which items you need to replenish, what you don’t need, and which you can do without. This can be a time-consuming process, especially if you’re managing the inventory on an Excel spreadsheet. A solution like a centralized inventory management system can help you automate this process and make it easier to manage. You can also use this system to make it easier for customers to find the right goods and services. For example, you can add a search function that shows customers all the items you have in stock. This will help your customers quickly find what they need, which will help you turn orders around faster.
Standardized Contract Processes
Contract management is a significant part of every organization’s day-to-day operations, but many companies don’t have standardized processes for managing them. This can cause inefficiencies and make it difficult for stakeholders to understand when and how contracts should be used. For example, if you’re implementing a new SaaS platform across your organization, you might need to sign a contract with the provider and include certain terms and conditions in your agreement with the company. To address this issue, create a standardized contract process that outlines when contracts should be used, how they’re managed, and how they should be executed. This will help your organization operate more efficiently and will make it easier for stakeholders to understand when contracts are necessary and when they aren’t.
Utilize smart contracts
Contracts are an essential part of doing business, but they can also be lengthy and complicated. They can also be difficult to enforce, especially when the contract is with a third party. But blockchain-based smart contracts provide an opportunity to streamline this process. With smart contracts, parties are able to agree on a set of conditions and a level of trust that allows for automatic fulfillment of the contract once those conditions are met. This means you can implement certain terms and conditions that will automatically be fulfilled once certain events occur, such as payment being received or goods being delivered. This will help make your contracts simpler, more accurate, and easier to enforce.
The acquisition and payment cycle is the lifeline of your business. The quicker you can process orders, the more money you’ll make and the happier your customers will be. But it’s also an often overlooked aspect of business that can be improved with a few simple adjustments. Organizational change and culture are important considerations, as is the need to automate invoice matching processes and change the way you manage contracts. Proactive tracking and real-time transparency, help employees and customers find the right goods and services, and assistance with standardized contract processes are also essential to improving this process. With all these changes, businesses can expect shorter order turnaround times, better supplier relations, and more satisfied customers.
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