CEOs are looking into the financial crystal ball … and to them, the near future looks a little bleak.
There’s been a major decrease in CEOs’ confidence in their revenue prospects, found most recent PWC’s annual survey.
What’s more, about a third (30%) expect economic growth to take a dip in 2019. That’s a huge jump from last year, when just 5% of CEOs predicted a decline in economic growth.
In light of this somewhat pessimistic outlook, companies plan to look inward for ways to improve profit margins. And that’s where Finance and Purchasing come into play.
We’ve got you covered on both fronts. Check out three areas you can streamline and specific metrics to aim for, per Coupa’s 2019 Benchmark Report:
1. Purchase order processing
Along with speeding up the routing process in general, an e-paper trail of purchase orders (P.O.s) can eliminate frustration for Purchasing, Finance and the companies you do business with. If less time is spent chasing down paperwork, more time can be allotted to strategic work, like analytics and reporting. Your team can gain more visibility into company standings and find new opportunities to save money or negotiate with trading partners.
Action: P.O.s are more Purchasing’s territory – but everyone loves a good challenge. Next time you meet with purchasers, find out what percentage of P.O.s are processed electronically. Then, see if you can set a goal to increase that number by a certain date.
Benchmark: The KPI best-in-class companies boast in 2019, and you want to strive for, is about 88% of P.O.s processed electronically.
2. Invoice approval cycle time
How many hours does it take to get invoices from submission to final approval? Probably a lot longer than your team would like sometimes. And you know how payment delays can result in money lost – everything from project delays, late fees and missed discounts to the loss of strategic trading partners.
Action: Ask A/P to look at each step in your cycle to see where the holdups happen frequently (or in some cases who the holdups are). Then you can come up with a plan to approach them on a more granular level. And if your company hasn’t done so yet, look into setting concrete financial consequences for invoice approvers who repeatedly miss deadlines.
Benchmark: This year, the goal KPI for invoice approval cycle times is about 31 hours.
3. Manual expense audits
Action: Generally, your team knows who they have to watch the closest for noncompliance. So, remind them to dedicate their auditing time accordingly. That may mean spending more time on expenses for employees who’ve ignored policies before, or new travelers still learning the ropes.
Benchmark: Right now, industry leaders are manually auditing only about 6% of expense reports.