How many purchase requests are made outside the purchasing policy? Or outside any process? This is despite well-known situations that we see every day:

  • No prior verification on the expense in relation to the budget,
  • No line management validation,
  • Orders placed with non-referenced suppliers,
  • The accounts department will receive an invoice without knowing its origin
  • An invoice paid without being passed for payment

What are non-production/indirect purchases?

Indirect purchases, also called non-production or non-strategic purchases, concern products or services that are necessary for the company to run smoothly but are not directly linked to its core business. So within this type of purchase, you find investment expenditure (CAPEX), intellectual services, overheads, automobile fleets, transportation, etc.

This type of purchase represents on average 30% of the total purchase volume, and yet 80% of companies acknowledge they do not have an overall view of indirect purchases.

In a good many companies a spreadsheet is used as a solution, but we all know the limits of such an approach!

In addition, there are many issues at stake in indirect purchases

For strategic or core business purchases, the question is no longer asked. Structured management of these purchases was introduced a long time ago using well-established processes and integrated software or solutions. This is not the case for indirect purchases, which are not managed properly in 80% of companies.

Yet management of indirect purchases ought to be optimized, since if these occasional or infrequent purchases are managed properly, they can generate considerable savings.

Why digitalize the purchasing process – Procure To Pay

Digitalization of the entire purchase / payment process is one of the key steps enabling you to control your indirect purchasing. It reduces processing costs and therefore saves time and money, enabling you to monitor your budget and decrease operational risks, especially the risk of fraud.
When you digitalize the purchasing process you bring an end to uncontrolled purchasing and secure the purchasing process so that you can control it effectively and have an overall view of all your company’s purchases.

Each user will make their purchase requests using an electronic form, obtain validation via a workflow depending on their expenditure commitment level and hierarchical position, and track their budget.

The purchasing department is able to reference suppliers, produce a purchase order, and monitor purchases by department, cost center or by supplier.

Receipt of the order is carried out directly by the orderer.

Orders and invoices are reconciled automatically, thanks to an intelligent invoice reading system, reducing the burden on the accounts department. In order to be passed for payment, the invoice is sent directly to the initial orderer. This means no time is lost, the right information goes to the right person at the right time. It’s a fluid process that reduces time-consuming tasks.

If you want to:

  • Stop uncontrolled purchasing
  • Control and secure the entire process: from purchase to payment
  • Reconcile purchasing and finance
  • Rationalize the number of suppliers