Enterprises across the world are quickly adopting spend optimization platforms to automatically analyze 100% of their transactions. Spend optimization is how finance teams use the analytical power of AI to uncover hidden spend risk in everything from payables to T&E. When you can see it all, you can flag necessary actions to prevent cash leakage, spot patterns, and identify root causes and trends that can steer the future of your enterprise.
As more CFO’s understand that the future of financial analytics is spend optimization, the next step is knowing what to look for in a platform before you buy. Recently, Oversight’s CFO Geoff Brannon spoke with CFO Daily News and shared his Five Things to Know Before you Buy a Spend Optimization Platform.
- There are underlying risks that need to be mitigated in every step of the payables process
Risk lives at every step of your processes, and the odds are, you don’t even realize how much cash leakage your organization really has. According to a recent report from the Association of Certified Fraud Examiners, 5% of revenue is lost to fraud each year.
- To find risk, you must look across systems
From procurement card programs to payables, travel and expense reports, electronic payments and paper invoices – you have to look at each system individually and compare the data from each system with data across systems to get a full picture of risk in the organization.
- To work across systems, build tools that work together
If you’re considering moving your organizational spend into a single view, you need systems that integrate easily with one another. So, if you are using a system for travel and entertainment expense management, you’ll want a spend optimization tool that enables an easy data transfer between systems. Same thing for payables; you will want to ensure that the spend optimization tools integrate easily with your ERP system. Look for open APIs, or better yet, pre-established connections between your primary financial platform and the spend optimization tool for plug and play setup.
- To affect change, study trends
One of the most effective uses of spend optimization tools is the ability to look across systems over time to identify trends that sample-based audits miss. Pull any one expense report, and you may find reasons to accept it. Pull 12 months of out of policy spend in a row for the same employee, or department or manager, and suddenly a performance argument is armed with data over time. Spend optimization platforms that attack trends average a 70% reduction in out-of-compliance spend within the first year.
- Measure the intangibles
You can get spend performance data trending in the right direction by implementing a spend optimization tool. Indeed, the whole idea is to reduce non-compliant spend and get duplicates trending towards zero.
Interested in learning more about what to look for in a spend optimization platform? Check out Geoff Brannon’s full article in CFO Daily News.