Even with all of the useful and wonderful technology we have in the world today, there are still threats to businesses and consumers happening almost daily. In fact, many consumers are affected each year by fraudulent activity, cybersecurity issues, and breaches. Businesses are tasked with watching out for similar issues within the confines of their own organizations. That’s where guarding yourself against rogue spending, fraud, and unauthorized expenditures becomes a significant part of day-to-day operations. Spending analysis requires a high level of attention to detail and several tools that can make the job easier. To get a handle on the spending at your organization, here are five useful paths to improve your spending procedures.
From online shopping to getting car insurance quotes, everyone needs to be able to control approvals on their spending. This is especially prevalent in the business world! A key component of spend analysis is controlling approvals of invoices and spending. Working in conjunction with the AP department, organizations should be able to ensure invoices are paid out promptly with a minimal amount of risk. Controlling approvals is an integral component of this process and leads to fewer problems in the long run. Maintaining strict control over these processes means that you can enhance your spend analysis procedures tenfold over any period of time.
Using spending analysis software can help you streamline your workflow to the point where it’s easy to collect, gather, analyze, and assess your data without much additional effort on the part of your team. Who doesn’t want increased workflow and productivity? With everything in front of you and ready to go, it’s easier to glean important insights from available data. When you want to achieve your spending goals, having a streamlined workflow is essential. Streamlining your workflow comes down to a couple of important points. First, you want to identify and gather all of the pertinent data to your analysis. Get it all together in one place so that it’s easy to access. Software is a great way to do this as it can automatically compile or pull from procedurally generated reports. Then, it’s a matter of categorizing and assessing the spend data. With a streamlined workflow, it’s easier to assess what’s appropriate spend, what constitutes mavericks spend, and identify key areas for implementing new procedures. After that, it’s a matter of implementing your procedures and meeting your goals.
Key performance indicators are the best method for determining how things are going in any business endeavor. Some KPIs to think about during spend analysis procedures are:
- Freight bill accuracy
- Outstanding days since the sale
- Turnover rates for inventory
- Error margins
- Inventory velocity
- How long you can sustain your inventory without restocking
- Order fill rates
- Cycle time for orders
- Cash to cycle time
This last KPI is especially vital because that’s most of the business you’re going to be doing with your suppliers. Ensuring deliveries are on time, accurate, and with undamaged goods is critical to assessing your spending (not to mention the efficiency of your operation). KPIs are essential for learning and adapting as you do business. Thus, they are an integral part of spending analysis and spend under management.
Implement Software Solution
A comprehensive spend analysis method is only as good as the software you have supporting it. If you wish to stay on top of your spending analysis, you need a dedicated, well-trained team and the tools necessary to ensure an accurate, up-to-date analysis. Want to find out what your return on investment is? How about gaining insight from your peers in the industry and how they’re performing? Staying on top of trends? What about identifying savings opportunities and cutting costs across the organization? Implementing a spend analysis software solution and training your team on its use is the most direct route to accomplishing these goals. Eventually, by leveraging the software to your advantage you’ll be able to not only identify risks and mitigate them, but also identify opportunities for addressing pain points, optimizing spending, and running a more robust operation.
Use AI For Fraud Detection
Artificial intelligence as we know it today is quite different from what Isaac Asimov and Star Trek depicted in their famous stories. Artificial intelligence is useful for detecting fraud in a spend analysis scenario. It does this by identifying suspicious activity and alerting you to it in real-time. With such a powerful tool at your disposal, it’s easier to spot fraud before it occurs. Artificial intelligence can gather important information and develop strategies for guarding you against spending risk without much input on your end. AI systems will essentially take on the role of an auditor and audit for any suspicious activity. Since there’s no human element, it reduces the amount of error inherent and such procedures. Furthermore, AI can spot otherwise overlooked fraud that may be occurring at the organizational or supplier level. For the best way to guard against fraud and risk, artificial intelligence provides ample protection while giving you the agency to run your operation efficiently.