Lack Of Source-To-Pay Software – Risks To Category Spend
Category Spend Management
Finance executives have immense pressure from the board to keep expenditures within budget and to plan for any future risks associated with their category spend. In order to accomplish this task in clean, effective, and automated fashion, source-to-pay system is invaluable. Failure to use such system can have dire consequences for companies and their bottom lines.
The risks associated with lack of source-to-pay system span various facets of companies spend from cost control to compliance. Without the use of source-to-pay system, cost control can be severely impacted due to lack of transparency into how funds are being allocated and how products are being purchased. This can lead to unnecessary and excessive costs which can quickly erode portion of the companies savings. Additionally, companies may struggle to implement cost saving strategies such as bulk orders or budget-based ordering since the process is manual and lacks automation.
From compliance standpoint, not utilising source-to-pay system can expose company to significant financial and audit risk. Without the necessary data to report and audit transactions, companies may fall short of the expectations set by regulatory requirements. Worse, companies may be potentially unable to address any financial fraud which may have occurred as result of manual processes or lack of data tracking.
Sourcing and procurement processes also suffer detriment from lack of source-to-pay software. Companies may have to use variety of manual tools, such as Excel spreadsheets or archaic ERP systems, in order to track supplier performance and negotiate deals. Without streamlined system to evaluate supplier data and crease contracts, significant time and energy is wasted that may have been used for more productive initiatives.
From increased costs to allegations of financial misconduct, the risks associated with not using source-to-pay software can be numerous and costly. Finance executives tasked with maintaining companies budget and checking compliance should familiarise themselves with the available software options and assess whether it best meets their needs. Through proper implementation and usage of source-to-pay system, more control and oversight can be achieved while minimising the risks of not using such system.
