Risk Of Not Procuring Materials Through Software
DIRECT MATERIALS PROCUREMENT
Direct materials procurement presents an array of consequences for companies that choose to overlook the benefits of software solutions. If business undertaking source-to-pay procedures with the intention of simplifying the process, then foregoing software-driven process could be risky decision. finance executive seeking viable procurement software ought to have knowledge of potential problems that can arise from skipping such crucial element, and the effects it can have on the bottom line of their business.
The most obvious issue that can come from neglecting software based procurement system relates to the security of the companies financial data. At its core, any procurement instance carries with it potential dangers of sensitive information falling into the wrong hands. By utilizing software for this purpose it helps protect any such information as access to the system is then tightly regulated and hacker threats largely mitigated.
Not using software can also lead to lack of visibility into the processes taking place. Without oversight of the proceedings, discrepancies are likely to occur. Such circumstances can lead to wasteful spending which could damage the companies profit margin. Failing to detect duplications is likely, along with erroneous orders, missing invoices, and inappropriately acquired materials.
Procuring materials without software may also create lose-lose situation as it can cause problems with supplier relations. For instance, if invoices are received late then debtors will be put in an uncompromising state as settlements become overdue. Failing to fulfill orders within promised timeframes is also possibility and this will reflect poorly on the business.
This risk can be compounded further when multiple departments within an organization are independently working with the same suppliers. In this case, software can provide the necessary protection against rogue purchases from within the company, as it is easy to catch cross-departmental misuses.
Moreover, companies tax liabilities increase considerably if purchases are not monitored and tracked through software. Where strict tax regulations akin to those found in the USA are in force, it is essential for business to have its documents in appropriate order and avoid potentially costly implications.
The risks associated with not using procurement software are wide ranging and varied. In modern business it is essential for decision makers to be aware of these implications and the possible financial strains associated with overlooking the advantages of software-driven processes. Depending on the level of financial security and automation desired, software solution can provide tailored approach to managing procurement procedures, indemnifying companies financial data and allowing it to pursue pathway of growth and sustainability.
