Blog | January 8, 2015 | by Bill McCouch

How to Choose the Right Indirect Procurement Solution for Your Business – Part 1

Procurement professionals within mid-sized companies may be aware that they are devoting a disproportionate amount of resources to the procurement of non-strategic supplies and services – but are unsure of how to tackle the problem.  This blog – first in a series that analyzes a new approach to the indirect procurement process – provides a checklist of features to look for when identifying the right solution for each company.

What products are covered under the indirect spend umbrella? They can include any number of products and services that are part of running a business; for example, professional services such as travel, as well as consumables like office supplies, janitorial supplies, safety supplies, and furniture.

According to the report, “Indirect Procurement Outsourcing: A Platform BPO Solution for Mid-Sized Companies,”1 for most mid-sized companies, these expenditures are among the least-managed aspects of a company’s procurement process. An indirect procurement solution can help bring these expenditures under control by delivering benefits such as consistent and competitive pricing, an expanded supplier base, and advanced analytics. When searching for the right solution for your company, it’s essential that the solution possesses certain features. A key feature to look for is a platform with source-to-pay automation technologies, including electronic invoicing (also called e-invoicing), making the entire process more efficient by significantly increasing accuracy, cutting down on labor, and speeding the source-to-pay process.

E-invoicing employs a fully paperless process through an electronic data interchange network between supplier and customer. E-invoicing can have a tremendous impact on a company’s productivity. These include:

  • Reducing Accounts Payable costs by minimizing paper conversion and labor needs
  • Receiving electronic line item invoice data for more accurate matching and reporting
  • Reducing inbound calls related to invoice status
  • Eliminating misplaced or lost paper invoices
  • Increasing consistency in the invoicing process
  • Being assured that incoming data is 100% correct

Administrative burden is further relieved as customers receive a single, consolidated e-invoice from the indirect spend provider that includes every purchase made from approved suppliers within the indirect spend network. The process should speed up every step on the source-to-pay cycle.

According to an Aberdeen Group report, “Companies using paper take almost four times longer to process an invoice”2 versus those utilizing e-invoicing. Once a paperless exchange has been created between suppliers, procurement, and Accounts Payable, companies can immediately manage their indirect spend invoices electronically. The results: significant savings in both time and costs, as well as an increase in visibility and overall control.

1 Enrich IT. Indirect Procurement Outsourcing: A Platform BPO Solution for Mid-Sized Companies. February 2009. 2 Aberdeen Group. From the Shadows to the Forefront: AP Automation and the Strategic Vision. October 2013.