One way to get a better handle on spend visibility and improve the ability to provide accurate forecasts, is understanding and controlling non-PO spend, such as recurring spend. Through the introduction of the “Spend Plans” functionality into Basware’s Procure-to-Pay solution, this control can be streamlined & automated.
PO, non-PO & recurring spend challenges
Today, many global organizations are working towards acquiring a purchase order (PO) for every invoice received. If you have a PO for every invoice received, the Accounts Payable process would be smooth and meet the organization’s procurement team needs as POs raised in advance from already approved vendors means complete compliance with best practices such as contract compliance, SLAs, etc. This tempting promise even has many organizations following a “no-PO, no-pay” policy. However, in reality, not all spend can be linked to a PO, which creates challenges for many AP teams looking to uphold compliance policies and to ensure there’s no ‘savings leakage’.
A large share of an organization’s non-PO spend is recurring spend, for either a defined or unlimited time-period. As a matter of fact, in a typical organization around 30% of overall spend is repeated on a monthly, bi-monthly, or bi-weekly basis – and much of it (if not most!) is not linked to a PO of any kind.
This kind of spend can come in many forms:
Service-fees (e.g. office maintenance)
Recurring payments (e.g. mobile phone subscriptions, real estate, car leases)
Other recurring spend that does not go through a typical procurement process (e.g. government spend, such as taxes)
Manual handling of recurring spend hampers efficient AP processes, spend visibility & financial forecasting
Since about 30% of a typical organization’s spend is of recurring nature, this presents a great opportunity to introduce automation. With the right solution, automation can yield significant processing efficiencies – quickly! Many organizations handle recurring spend manually, requiring them to find creative ways to make non-PO spend compliant with a ”no-PO, no-pay” policy (does creating a PO after the invoice has been received sound familiar?).
Not only is the manual handling of recurring spend and issuing POs after being invoiced impractical, it also unnecessarily requires resources. By tying up resources, organizations miss out on the chance to automatically account for a third of their spend in their financial forecasts. Incorporating already committed spend into your spend management initiatives, helps to better understand your organization’s in and outflow of cash and provides complete visibility into individual supplier spend for future reference (i.e. contract negotiations, price renewals, etc). Without attaining a holistic picture of your recurring spend, your organization can never achieve the gold standard of 100% spend visibility.
Basware Spend Plans: fully integrated with improved usability
As a global leader in Accounts Payable & Procure-to-Pay solutions, Basware’s Spend Plans was specifically designed to provide complete visibility of your organization’s recurring spend. It is the answer to the manual handling of recurring spend, while incorporating spend analysis into your financial models & forecasts. Spend Plans captures recurring service fees, payments or other repetitive spend that does not go through a typical procurement process. With two easy steps, you can set up Spend Plans within Basware AP Pro:
Identify the recurring spend account.
Set up the payment amount, tolerances, recurrence & the beneficiary.
This feature includes follow-up reminders for Spend Plans that are about to expire, tolerances that need to be edited, or occurrences that are due to change. Spend Plans is fully embedded into Basware’s market-leading P2P solution, so the user experience is smooth and comprehensive.
Basware’s Spend Plans delivers improved usability and performance for managing recurring and non-PO spend across the organization, to efficiently bring more spend under control – in an automated fashion. Benefits include:
Easy-to-use solution, fully integrated into Basware’s Accounts Payable & Procure-to-Pay solutions
AP process efficiencies through automated management of recurring spend
Better spend visibility by committing to long-term spend
Improved financial forecasting
Ready to learn more?
Staying on top of best-practices and developments in accounts payable and procurement is not an easy task. Our job at Basware is to take the complexity out of the AP and procurement process – so you can concentrate on the growth of your business. Are you interested in learning how Basware can take your AP processes to the next level? Click here to book a demo with our AP experts.