3. Cash Management
In our view, the specific metrics here aren’t quite as important as having a thorough understanding of the process. In practice, cash management is a lagging benefit. To take advantage of cash management opportunities (extending terms, accepting discounts - static or on a sliding scale, P-Card or Supply Chain Finance) the P2P process
must be optimised. Until you have processed transactions so they are ready to pay within days of receipt, benefits in this area are hard to come by.
When you get there though, the benefits are compelling. Unlike savings realised on a contract, which only occur once, benefits achieved through cash management are compounded on each transaction. We’ve helped companies recover millions of dollars via discounts, rebates, and treasury-based cash management.
- Purchase order compliance – the process starts here…the commitment, the cost assignment, the approval and (importantly) the tracking. Without purchase order (PO) compliance everything that follows unravels. Many companies are starting to follow this simple phrase, “No PO = No Payment”. Read how Proactis helped City of Wolverhampton Council with its transformation to ‘No PO, No Pay.’
- Contract compliance – there are two distinct metrics related to contract compliance: supplier compliance and price compliance. In total, we have observed benchmarks range from 1.4 to 2.8% for each dollar that is transacted through a P2P tool. This benchmark includes and allows for compliant spend that may already exist. Right supplier, right price = contract compliance.
While there is rarely a one-size-fits-all metric, these are valuable practices that can help you and the leadership team tune out the “noise” and focus on what matters. If you would like to find out more, speak to one of our experts today.