Why do mid-sized fast-growing companies need a Purchase to Pay solution?
For a long time, Purchase to Pay software providers have been focused on responding to the challenges that large enterprises were facing with their procurement operations. At the same time, for a long time mid-sized, fast-growing companies thought that Purchase to Pay solutions were not suitable for their needs – and indeed, for the most part, they were not. However, more recently we can see a shift in the industry.
All companies need to buy goods and services, but not in the same way. While large enterprises have complex, global purchasing needs, and the budget and software infrastructure to support those needs, mid-sized organisations need a lower volume of goods, therefore do not enjoy the same budget, strategy and tools, or might not even have a procurement department to begin with, with procurement being managed by the finance team.
It is quite obvious that their needs and challenges will be somewhat different than those of a large enterprise.
One of the main differences between these 2 categories is the stage of their journey to digitising their procurement processes. Many mid-sized businesses are only just beginning their journey. As these companies migrate to the cloud and upgrade their back-offices, their needs for more complex procurement systems also increase. We are noticing an increasing trend in the mid-market sector as more and more companies are moving away from using ERP systems and or other legacy tools to manage their purchasing needs and adopting Purchase to Pay systems.
The demand in the market hasn’t gone unnoticed by Purchase to Pay (P2P) software providers and more and more of these providers have adapted to cater to the needs of mid-sized organisations.
Procurement challenges for mid-sized fast-growing businesses
Let’s take a look at the challenges mid-sized businesses are typically looking to solve through the implementation of a Purchase to Pay solution. We found these to be the most pressing ones:
- Lack of visibility over spend up until the point the invoice arrives for payment
- Maverick buying with limited or no up-front approvals process
- No knowledge of whether organisation has actually received the goods/service when invoice arrives
- Limited or no PO coverage on spend
- Limited or no pre-approved buying channels
Looking at most of these points we can agree that manual processes, lack of automation and well-established processes, are some of the main concerns in this market and the root of most challenges mid-sized organisations are facing.
As we mentioned above, more and more software provides are now tailoring their Purchase to Pay systems to the needs of mid-market companies, with financial control, AP automation and control over spend at the top of their minds.
Benefits of implementing a Purchase to Pay system for mid-sized companies
There are quite a few articles talking about the benefits of implementing a P2P software solution. We can all agree that, if the implementation is done properly, a P2P solution transforms and simplifies how an organisation buys and manages its suppliers.The advantages always outweigh the challenges. However, most of these articles refer to general benefits, without referring to companies with specific challenges, or from certain market sectors, such as the mid-market. Referring to this particular sector, these are some of the most frequent benefits our mid-market clients were wishing and were also able to achieve after digitising and automating their Procure to Pay cycle:
- Management and control of spend
- Speed increase for requisition/PO approval
- Reduction of invoice processing time
- Reduction of expense approval and payment times
- A set of best practices for procurement processes
- Clearly defined spend categories
- A procurement software infrastructure that is designed to scale as the business grows
- Easy, digital and free onboarding of new suppliers
- Good financial governance & compliance
Talk to a Xoomworks Procurement expert and find out how you can start your journey to digitising your procurement processes.
Learn about the challenges CFOs from mid-sized fast-growing companies are facing, and how a Purchase to Pay/Source to Pay solution can help. Read our eBook in collaboration with Coupa: Solving your Source to Pay challenges: 5 considerations for the CFO.