“Spend Under Management” or “Under-Managed Spend”
November 10th, 2009How do you know if you’re getting enough value from your P2P system?
One of the Best Practice KPI’s that helps answer this question is the amount of Spend going through your system. Using a KPI Dashboard, companies can easily track the dollars being managed by spend category. Best Practice companies typically run over 90% of their “P.O. Spend” through their system.
Unfortunately, many companies have a weak or non-existent P.O. process. As a result they typically have difficulty gaining contract compliance, and are unable to successfully automate the invoice matching process.
Other companies have a decent P.O. process but have difficulty getting receipts processed on a timely basis (if at all). Eventually people stop using the system in this environment. This results in “Under-Managed Spend.”
Good P2P systems can combat these problems by providing automated email reminders to people to process receipts, by enabling two-way matching (vs. three-way matching), or by comparing Non-PO Invoices to existing contracts. These three techniques help increase the usage of P2P systems.
Of course there is no substitute for good management and documented processes. At the end of the day, this is how Best Practice companies increase “Spend Under Management.”