The various inefficiencies within a paper-based model of expense management can result in errors such as lost invoices or a misphrasing on documents. For these reasons and many more, multiple businesses have begun to shift their spend management operations to the cloud.
When businesses have multiple locations throughout the U.S. and they’re using a traditional, paper-based process when it comes to expense management, the process can quickly become inefficient and inaccurate. The various inefficiencies within this model of expense management can result in errors such as lost invoices or a misphrasing on documents. For these reasons and many more, multiple businesses have begun to shift their spend management operationsOpens a new window to the cloud.
In fact, 73 percent of businesses have at least one applicationOpens a new window in the cloud, according to a 2018 IDG Cloud Computing Study. When it comes to spend management, though, this is typically not the case â€” as many organizations still use paper-based or on-premise processes for various operations including invoicing and spend analysis.
However, for a spend management and procure-to-pay process to run at maximum efficiency, a business must be operating in the cloud. Here are four benefits that your business will experience when migrating spend management to the cloud:
Oversight into cash flow and budgeting
Lack of visibility into what a business is spending day-to-day can add up to 40 percent of the total spend. If businesses miss a discretion such as overestimated funds, or unapproved spend, the loss can be detrimental. However, when spend management systems operate in the cloud, they provide businesses with greater control over cash flow due to automatic authorization of suppliers, recommendations of approval processes before any costs are incurred and strict budget enforcement. With this model and system in place, a more efficient and regulated spend management process is formed through an extensive audit trail and detailed view of the entire spend process. Having this level of control is vital to business success, especially since companies lose 20 to 30 percent of their revenue each year due to errors and inefficiencies.
Not only that, but organizations running on manual processes have little to no view of the budgetary impact that requisions could have. As operations are handled manually, the impact on the budget is typically only viewable in a budget variance report that gets generated a few weeks after a month end. However, cloud can still intervene at this point and correct the deficiencies. If organizations aren’t able to â€œoperationalizeâ€ the budget insight into the approval process, all efforts are wasted.
Enhanced productivity and efficiency
Many businesses still handle spend management through a paper-based process, sometimes creating millions of invoices on standard notebook paper like the image included below. This traditional model often leads to costly misfilings and various inefficiencies. So, how costly could this be for a business? A small misfiling rate of 0.5 percent in a four-drawer cabinet can lead to 1,000 misfiled documents. And, according to the Tungsten Network, businesses waste an average 6,500 man hours annually because of inefficient, paper-based payment processes.
Moving spend management to the cloud combats all of these issues by driving efficiency and removing the need for paperwork. For example, when requisition requests are handled in the cloud, an automated form submits requests and notifies all appropriate approvers. When information is hosted in the cloud, stakeholders have remote access through mobile applications, and errors can be handled immediately creating a substantial competitive advantage. In fact, 74 percent of organizations reported that cloud services have given them a competitive advantage because of the ease and speed.
Improved reporting and analytics
By now, everyone knows that analytics and helpful insights are imperative for the success of a cloud system and CIOs are also on board as 66 percent plan to invest more time into cloud analytics throughout 2019. Leveraging analytics from a cloud system helps businesses shift from spend â€œmanagementâ€ to spend â€œenablementâ€ due to smarter spend forecasting and improved visibility into costs, needs and budget. The important insights gathered with each requisition help identify trends and effectively forecast, creating long-term bottom-line savings.
Security is often a hot topic when it comes to cloud migration. Cybersecurity failures have been at the forefront of media coverage in recent years, leading many businesses to assume the worst â€” that once their data is in the cloud, it is no longer secure. However, this assumption could not be more false. On-premise users experience 61.4 attacks, while cloud systems only experience 27.8. This is because with paper-based or on-premise systems there is no visible trail of spend in place, leading to slower response times and greater risk of security failure. Once in the cloud, data is safe from any physical damage or loss and also uses comprehensive backups on an automatic cadence, ensuring recovery during an emergency.
Spend management should be taken seriously regardless of the industry or size of a business and is vital to long-term success. Shifting spend management to the cloud can result in increased control over policies and procedures, improved productivity, accurate forecasting, better data security and greater visibility into spend. These improvements combined, create maximum operational efficiency and propel spend management processes into the future.