Much of business’s success is tied to efficiency and cost reduction. The most successful businesses are complementing gains in efficiency with initiatives that add tangible value.
You’ve heard the saying, “Work smarter, not harder.” This is true in managing business expenses. Whilst top listed companies work hard, the techniques they’re using have allowed them to most efficiently use their staff resources, and in turn, are having a consistent, positive impact on their companies’ bottom lines
Intrigued? Think it’s out of your reach? Or this success is only for the largest of companies? Consider the techniques below, which have worked financial marvels for many top companies. Whether implementing one or all, your bottom line will be positioned to grow
Systematically Solicit Discounts for Early Payment
Today, most established companies are sitting on a cash reserve large enough to put it into action to make them even more money. Bank returns are pitiful, so other options are increasingly being used.
Top businesses put an emphasis on dynamically soliciting discounts from suppliers in exchange for early payments and this reaps massive rewards over extended periods of times. Some top companies have realised up to R500 000 in discounts.
Dynamic discounting software makes results like this possible, allowing companies to data mine, searching through entire supplier databases regularly to discover new opportunities to offer early payment for discounts. The predictive analytics take into account clues such as how often suppliers are checking their payment status, credit rating changes and the proximity to the supplier’s fiscal quarter- or year-end. These top businesses are able to market their discounts at the exact time when suppliers are most open to the offer.
Continuously Control For Erroneous Payments or Overpayments
Though a duplicate payment on occasion may not sink your company, those that put continuous controls into place to prevent it are putting that “savings leakage” back into the company’s bottom line where it should be. Truth is, one duplicate payment isn’t earth shattering, but when you tally up all the duplicate payments and pricing errors that occur in the average company, it adds up to a significant drain of capital.
Enterprise resource planning (ERP) software such as ERPNext provides an important measure of protection, but best performing companies know it’s not nearly enough. No ERP softwarecan overcome human error, and multiple ERPs compound problems due to systems not integrating and communicating with another.
Today, continuous monitoring – from data extraction to reporting – can take place entirely in the cloud. ERP software analyses consolidated data and provides reports that can be reviewed on a daily basis to quickly investigate and take steps to protect disbursements and reverse transactions before payments are made to suppliers.
Don’t Leave Money Lying On The Table
With ERP software in place, it’s all too easy to be lulled into a false sense of security that erroneous payments have been eliminated. Statistics suggest otherwise. Even in the best run companies, there’s always opportunity for additional recovery.
You can spend your days reaching out to person after person at organizations that have due or overdue payments to your company. Or, you can use predictive analytics to make the path to payment smoother and faster. Best practices suggest that businesses conduct annual recovery audits that gather information to create valuable data points that can later be mined.
Let’s say, during your audit 5 years ago, you learned that the controller at Company X would respond to a text much quicker than an email. If that is the preferred means of communication, wouldn’t it save a great deal of time this year to immediately choose that instead of emailing day after day? By implementing an audit program that allows you to start every audit with a predictive analytics model that provides understandings about how to get results earlier, those overdue payments will be cushioning your company’s bottom line faster.
Make Sure You Have a Clean Supplier Master – and Keep It Clean
Maintaining a clean supplier master can be a real challenge, but the business imperative for doing so is clear – it is a fundamental practice for businesses and serves as a critical prerequisite to implementing a portal. Auditors have found that almost 30% of all duplicate payments are the result of duplicate suppliers or coding issues in a company’s supplier’s master database.
Conducting an independent review that scrubs and appends your supplier master will reduce your duplicate payment exposure, improve the accuracy of your spend analytics, improve supplier compliance and reduce fraud and other risks. A robust supplier registration process can then take over to vet suppliers as part of the on boarding process and help keep the supplier master complete and accurate
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