The possibility of a recession and rising inflation are driving many businesses to look more carefully at their bottom line. The Deloitte Global Chief Procurement Officer Survey 2021 found that more than 90% of “high performing” procurement teams regularly and systematically measure their ability to achieve cost savings — more so than any other KPI.
Cost savings are a top priority for procurement teams of all sizes, and spend visibility is the first step toward optimizing your budget. Spend visibility is the practice of creating a holistic, detailed, and (often) centralized system for tracking how money moves through your company.
Spend visibility is easily accomplished through platforms like Glean AI. Glean’s intelligent bill payments solution uses machine learning to analyze deal terms, line-item purchases, redundancies, and opportunities for negotiating better vendor terms. In our experience, spend visibility creates opportunities to reduce vendor spend by 10%, a critical advantage during uncertain economic times.
Here’s how spend visibility can help your business, and some spend visibility best practices.
Spend visibility is an important first step in the overarching spend management process. It requires creating a detailed spend analysis report that answers questions such as:
Spend visibility can be complex. It requires aggregating data from many different sources within your company. Consolidating and standardizing data from different teams is crucial to get a baseline of your organization’s past and present spending patterns. From there, the organization has a clear roadmap to identify where you can improve.
Spend visibility leads into spend analysis, the process of identifying areas in which spending can be optimized. Consolidating vendor agreements, negotiating better payment terms, eliminating duplicate payments, and detecting overcharges are all the next logical steps to spend visibility. Industry benchmarking also provides a way to leverage data and identify where you can improve.
Companies that increase spend visibility benefit from these capabilities, and more. For instance, Glean empowers users to shine a spotlight on specific line items. The company can drill down into its data to compare spend from month to month, see which line items have changed, and even understand if other customers are paying less for a certain item.
This increased transparency offers the opportunity to negotiate better supplier agreements, cut down on waste, and keep compliant financial records. The increase in spend visibility highlights things like overage costs, instances where extra fees were charged on a specific invoice for something like late payment. This kind of visibility can help identify workflow issues in the organization so these future costs can be avoided.
Despite the numerous advantages that spend visibility offers, many companies still struggle to get it right.
When companies have a hard time increasing spend visibility, it’s most often because they don’t have the right tools in place. Spend visibility requires gathering information, standardizing it into one usable format, and creating a way to manipulate the data for accurate insights. Without technology, bringing together spending across different departments — and even different geographies — is time-consuming, error-prone, and resource-intensive.
When companies do implement the steps needed to improve spend visibility, they then face the challenge of using the data correctly. Errors in data analysis can cause finance teams to allocate money based on inaccurate information, compounding the problem they are trying to solve.
Lastly, spend visibility is just one part of the overall spend management puzzle. Spend visibility is the first step. Often, the next step involves some kind of institutional change. Departments may need to crack down on rogue spending, or switch to a different supplier if procurement has been able to negotiate a better contract. Training your employees to use the spend visibility tools can also take time.
Today’s spend accountability tools are easier to integrate into your existing systems than ever before. The barrier to getting started with spend visibility management is lower than ever, thanks to tools like Glean AI. Nevertheless, there are still some best practices for improving spend visibility at your organization.
First, find a spend visibility tool that can automate and centralize your information for you. Glean easily syncs with QuickBooks and Xero, as well as your business bank account, allowing you to connect departments and users in minutes. From there, you can map your vendors to default GL accounts and begin to gain visibility into your spending patterns.
Automation can also take on the process of analyzing your data to prevent the risk of human error. Glean AI breaks invoices down by what was purchased and how much it cost (rather than just the total amount spent). This information then gets fed into algorithms to proactively identify areas where money is being misspent (such as excess licenses or incorrect pricing), as well as opportunities to help negotiate better deals with vendors based on our aggregated benchmarking data.
The last piece? Create easy-to-follow policies and procedures to help internal teams contribute to spend optimization. Armed with insights from Glean, leadership teams can make better financial decisions and help course correct wasteful or off-book spending. And, because the process of setting up Glean is so seamless, there’s no “training fatigue” to contend with. The behavioral or spending changes that need to take place can occur with the data to back them up.
To learn more about the spend visibility and Glean AI, request a demo, today.