The financial health of a business is paramount to its survival…
And spend control provides the foundation for this. However, despite the importance of keeping spending under control, it’s surprising how many CFOs still don’t prioritise this. Often it takes a major issue to arise before spend control is fully implemented with many CFOs simply relying on budget holders instead. However, that doesn’t have to be the case, as with the right support spend control can be simplified. These three interesting stats help to show why spend control is so crucial for CFOs, as well as how you can improve the situation within your own company.
90+% of invoices are still processed manually
It’s a surprising statistic given the wealth of technology available to better manage invoice processing but many organisations have simply become used to manually processing invoices. With this comes the idea that the issues and problems that regularly arise from manual processing are just par for the course. However, this isn’t the case. Manual invoice processing is often the cause of mistakes and errors, and may result in a skewed view of the financial health of the business that incorrectly influences outlook and projections. It’s incredibly important to have the right information in front of you if you’re aiming to increase spend control – and making the move away from manual invoice processing to an automated system will be a key first step.
A quarter of SMEs are affected by purchasing fraud every year
Fraud is often an outcome of a lack of spend control because it’s much easier for fraudsters to get away with what they’re doing then there is little or no spend control in place. Automating processes by using software, such as purchase to pay software, helps to prevent fraud and makes it easier to improve spend control. This is because processes are centralised, making them simpler to monitor and analyse, and ensuring that each purchase approval goes through the right workflows and channels. With this transparency it’s much more difficult for a fraud to be carried out and spend control is made easier thanks to a more accurate overall perspective.
Only 40% of spending is captured where there is indirect spending
It’s almost impossible to implement really effective spend control if you don’t have an accurate picture of spending as a whole. Indirect spending is those small and apparently insignificant purchases that don’t usually make it through the official purchasing channels. Because amounts are low there is often an assumption that it doesn’t really matter if a pack of paper or a couple of pencils isn’t properly processed. However, the reality is that these items really add up. And when combined, this indirect spending can mean that only 40% of total spending is actually captured, making spend control very tough. The easiest way to overcome this is via a purchase to pay system for all purchases to ensure complete oversight over all aspects of spending.
Increasing spend control often means making changes to software and systems to provide more transparency and insight. Contact FinanSys today to find out how our SunSystems accounting software could help you achieve this within your own organisation.