With the COVID-19 global pandemic’s initial shock in the rear view, businesses are now reevaluating their priorities and charting a new course for 2021. As a global leader in recovery audit and spend analytics services, below is our perspective on source-to-pay (S2P), procurement and finance trends to watch.
Despite significant interest, automating the S2P process has not seen the investment needed to deliver a fully digital process – one that requires minimal human input. Several emerging technologies, however, including robotic process automation (RPA), machine learning, and advanced artificial intelligence programs, or “cognitive agents,” have the potential to overcome traditional automation challenges.
While achieving zero profit leakage is a lofty goal, the amount of lost profit or mistakes companies can avoid is significant thanks to these new technologies. The key will be in how they are implemented and their interoperability with existing systems and platforms. Companies must avoid additional complexity, while ensuring their S2P process is optimized for efficiency.
The Shift to Preventive
With the right tools, processes and data in place, nearly 60 percent of issues leading to spend errors can be identified before payment and in many cases can be prevented altogether, as reported in our Uncovering the Hidden Benefits of a Profit Recovery Audit white paper. The problem is many companies lack the staff, systems and strategies to flag and address systemic errors before they occur.
Capturing profit leakage closer to the transaction makes it easier for companies to recover lost profit and prevent profit leakage from occurring in the first place. Preventive and real-time audit processes allow vendors to account for discrepancies in their current budget cycle or avoid them altogether. This approach also enables companies to correct root cause issues or processes that may have caused the leakage.
Self-Funding Audit Programs
More recently, companies have implemented self-funding contract compliance programs. An initial budget is established for these audit programs but is then reimbursed whole or in-part using the cash recouped from recovery claims. For example, recoveries can be accumulated in a central audit reserve which can then be used to fund the ongoing program.
Spend Analytics and Root Cause Analysis
Spend analytics is a rapidly emerging practice that complements recovery audit and contract compliance processes by leveraging deep, detailed S2P data as the all-encompassing single source of truth for each discipline. This allows companies to broaden their view and see the bigger picture, reel in profit leakage and recoup funds.
Once companies have full visibility and access into all their products’ sales, cost, promotions and margin performance, they can accurately measure and compare the impact of each individual promotional program. This allows companies to also forecast promotion or program results based on past consumer behaviors and performance.
PRGX helps companies spot value in their source-to-pay processes that other sophisticated solutions didn’t get to before. Having identified more than 300 common points of leakage, we help companies reach wider, dig deeper, and act faster to get more value out of their source-to-pay data. Want to learn more? Contact us today to See What You’ve Been Missing™.