Spend visibility is a core priority for CFOs and finance teams. Understanding the flows of capital through and beyond the company is crucial for expense management, compliance, and effective reporting. You cannot manage what you cannot measure: improving spend visibility is a critical first step for CFOs in improving the capital efficiency of their organizations.
To help CFOs and finance teams at biotech companies, we created this spend visibility guide with seven best practices.
Instead of blind batch processing, regularly comb through each invoice to ensure that each is legitimate and that they correspond exactly to what was ordered and received and in what condition.
Was the proper process followed by all employees involved? Were the rules and systems around spend limits followed exactly? Communicate with employees who may have violated guidelines and ensure they go through proper training to avoid future mistakes.
With a multitude of different departments following their own, even if just slightly different, procurement procedures, it is difficult to fully grasp the vendor relationships you have. Block out time regularly to review your vendor list, identify duplicate ordering, and understand data like what share of your ordering comes from the top 5 vendors.
With this information, you can better understand which vendors to prioritize when systematizing their invoices and which vendors you can reach out to for volume based discount requests. You can also determine which departments have made duplicate purchases and make proper clarifications with these teams.
When an invoice arrives, immediately match it with its corresponding order. With this type of integrated, centralized, transparent system doing real time tracking, your invoices never pile up and you can always ensure that your invoices match against inventory. Any discrepancies are surfaced immediately and can be dealt with before they become substantial or otherwise escalate.
Spend management failure frequently stems from human error in not following processes exactly or following inefficient processes. When processes become too manual and laborious, employees are more likely to shirk or cut corners. Leverage software and integrations to optimize for efficiency and accuracy. Solicit, listen to, and incorporate employee feedback around bottlenecks and areas for improvement.
Too often, overly general goals like “reduce unnecessary spend” are set. Without a tangible number to work toward, employees feel they have little direction, and leaders can feel aimless as well. Articulate specific KPIs at the start of each month or quarter and break these tasks down into weekly and daily metrics to aim for.