Risks Of Limiting Purchase-To-Pay Process To Manual Mechanisms
E PROCUREMENT EXAMPLES
In the era of digital transformation, automated purchase-to-pay processes can offer immense cost savings, greater security, improved data accuracy and visibility, faster payments, and more comprehensive compliance and auditability. Limiting the purchase-to-pay process to manual mechanisms can expose an organization to significant risks, both financial and legal.
Cost Overruns
Organizations looking to optimize procurement costs require visibility into purchase activity and supplier performance. An e-procurement system offers these benefits, with or without implementing enterprise-wide source-to-pay software. Without an automated system to provide visibility into purchase activity, an organization has limited ability to track or anticipate potential expenditures. This may result in inefficient use of funds on unexpected purchases or pricing discrepancies that lead to cost overruns.
Lack of Compliance
Organizations that limit their processes to manual mechanisms also limit their ability to meet corporate compliance and audit istandards. E-procurement systems provide level of compliance that is often hard to replicate with manual processes. Implementing source-to-pay system allows an organization to track, execute, and monitor supplier transactions and performance against purchasing policies and contractual obligations. Further, an e-procurement system can ensure organizations are aware of changing supplier regulations and remain compliant with local, state, federal, and international regulations.
Security Concerns
Automated source-to-pay systems provide heightened data security. E-procurement systems can store vendor data, purchase policies, and other confidential information in secure online repository. Additionally, errors and omissions are automatically flagged and corrected, reducing the risk of accidental data entry errors or malicious action. Companies that rely solely on manual processes lack the same data security assurance, putting sensitive organizational data at risk of malicious exploitation.
Inaccurate Financial Forecasts
Organizations that lack real-time access to purchase information and flow cannot accurately forecast budgets or secure appropriate working capital. This is exacerbated when manual processes are used, as data accuracy and speed of delivery are greatly impaired. Automated source-to-pay systems can offer visibility into cash flow, helping organizations better anticipate and plan for upcoming costs.
Manual processes have their places within many organizations, but when it comes to the purchase-to-pay process, automated systems offer more secure, accurate, and cost-effective options. Adopting an e-procurement mechanism and source-to-pay software poses some upfront costs, but in the long run, these systems can save time and money, while providing the reliable organizational compliance and security needed in todays competitive digital landscape.
