Janet Martin • October 1, 2021
Q2 2017 | Featuring insights on:
As today’s business environments become more complex, competitive, and regulated, organizations face many processing challenges in their back-office departments. In procurement processes, companies must carefully monitor and fully control all aspects of indirect spend in order to maintain low costs—and ensure profitability. Without the proper controls in place to monitor employee purchasing, organizations leave themselves open to the risks of inefficient spend management, exceeding budgets, and non-compliance with legal requirements.
Indirect spend issues are especially vital to control for organizations in the non-profit sector. For non-profit organizations to stay financially and legally compliant with the regulations of their industry, all purchases and payments must be carefully tracked, and reported with complete accuracy and full disclosure. It is also important to keep processes efficient, cycle times short, and costs low, as non-profits depend on strict budgeting to stay afloat. Unfortunately, PayStream’s research has found that many non-profit companies still rely upon manual procurement processes, which perpetuates some of these difficulties.
One of the best ways for any organization to improve inefficient procurement processes is by adopting an advanced, automated eProcurement solution. eProcurement technology can help bring process improvements vital to non-profits’ spend management operations—control, transparency, and greater data accuracy. This whitepaper explores some trends in procurement management among today’s non-profit organizations, and highlights the features of eProcurement technology well-suited for non-profit organizations.
In order to identify procurement trends among North American organizations, Levvel Research surveyed over 400 organizations across a variety of industries and market segments. Survey results show that non-profit organizations are typically less automated and less efficient than the nationwide average. Compared to most U.S. companies, non-profit organizations are less likely to have adopted eProcurement software, see Figure 1.
Figure 1: Non-Profits Use Less Procurement Automation Than in Many Other Industries
“Does your organization utilize an eProcurement solution?”
Most non-profits use manual-based methods, such as spreadsheets or email, to keep track of purchasing information and communicate regarding orders. For example, when it comes to placing orders, survey results show that the majority of non-profit organizations send POs via email, see Figure 2.
Figure 2: Most Non-Profits Send POs Via Email
“How do you send the majority of your POs to suppliers?”
Heavy dependence on manual methods contributes to processing challenges for non-profits, especially when approving requisitions and completing order lifecycles. When organizations were asked how long it takes for their department to approve a requisition, non-profit respondents reported longer requisition approval cycles than many other industries, see Figure 3.
Figure 3: Non-Profit Organizations Have Longer Approval Times Than in Many Other Industries
“What is the average time it takes for a requisition to be approved?”
In addition to lengthy approval cycles, non-profits experience issues controlling and gaining visibility into spend, processes, and information—all issues that are particularly important. When asked about their top procurement goals, most non-profit organizations reported that they want to improve processes around data accuracy, visibility into spend, and contract control, see Figure 4.
Figure 4: Non-Profits Want Improvements in Accuracy, Visibility, and Compliance in Procurement
“In what area would you like to see the greatest improvement to your procurement process?”
Fortunately, eProcurement software helps non-profit organizations accomplish these exact goals. Among non-profits that have automated procurement, most report improvements in transparency, cycle times, and control, see Figure 5.
Figure 5: Organizations that Have Adopted eProcurement Achieve Improvements in Visibility, Cycle Times, and Control
“Which of the following improvements have you seen in your procurement process since implementing a solution? (Select up to three)”
In order to help non-profit professionals find a solution that helps them improve processes and meet their goals, the following section highlights the features and functionality of eProcurement specifically tailored to the non-profit industry.
Standard features in leading eProcurement technology include requisition creation and workflow tools, access to supplier product catalogs, purchase order creation tools, order lifecycle management, and integration with accounting and ERP systems. These functions streamline the full Procure-to-Pay lifecycle, helping companies maintain visibility into and control over employee spend, as well as optimizing their purchasing processes. The solutions are also simple to adopt, with many offering extensive API capabilities for integrating with existing accounting and other financial systems.
Different solutions and providers offer different features, and it is important that a company selects a solution designed to accommodate their unique business needs. Non-profit organizations should look for a provider with experience working in the industry, and offers a solution tailored to its specific requirements. Non-profit-tailored solutions include the following features and characteristics:
– In order to stay compliant with industry and legal parameters for non-profit operations, organizations need to maintain tight control over spend. Today’s eProcurement software offers extensive controls in many areas of P2P including workflow. This control allows administrators to create detailed routing and approval structures to send documents quickly while maintaining security over sensitive financial data. Organizations can also configure roles based access to the system or restrict certain purchases by employee role or spend category.
– Although many organizations in the non-profit industry share the same pains and goals, they often also have nuanced business and legal requirements depending on the type of non-profit service they are offering. Leading eProcurement solutions offer a solution that can adhere to any specific requirement. This includes workflow customization, allowing the organization to configure requisition approval routes according to their complex business hierarchy and approval needs. This provides the appropriate staff members with full insight into all spend decisions.
– In addition to providing control over spend, eProcurement solutions offer full transparency into all activity conducted on the platform. Audit trails are logged throughout requisition and PO lifecycles, and administrators and approvers can gain real-time insight into the status of approvals and orders at any time. This eliminates the blind spots in the P2P lifecycle that often arise from manual processes, and aids in compliance during any future audits.
– In response to the challenges that arise from manual procurement, some organizations turn to their ERP or a spreadsheet tool to try to streamline processes and manage business data. However, these systems are clunky and unintuitive, and do little to simplify a procurement team’s tasks. Advanced eProcurement software provides a simple and straightforward user experience, with catalogs, accessible supplier and product information, and easy-to-use PO creation tools. These features make the process simple and straightforward without sacrificing control over sensitive information. To aid users in collaborating on orders, some solutions allow users to add comments or attachments at the header and line-item levels.
– Another useful eProcurement feature for nonprofits is the tight integration between the solution and ERPs. Most solutions offer connectivity with ERPs and existing financial systems so that as users create requisitions, they can leverage information that is already in the ERP, such as department, GL account, and vendor data. Organizations can also control which account codes can be used, which reduces data errors from the beginning of the order lifecycle.
– Non-profit companies are heavily reliant upon budgets and project-based purchasing restrictions to help them stay financially and legally responsible. These organizations must be able to clearly show where their money is being spent, as they often receive their funding from donations and grants. An eProcurement solution tailored to non-profits’ needs allows the organization to see the impact on a budget as spend occurs, and offers additional controls that can be configured for different budgets. When budget limits are exceeded, the solution can also send warnings or send the purchase request through special approval workflows.
Levvel Research, formerly PayStream Advisors, is a research and advisory firm that operates within the IT consulting company, Levvel. Levvel Research is focused on many areas of innovative technology, including business process automation, DevOps, emerging payment technologies, full-stack software development, mobile application development, cloud infrastructure, and content publishing automation. Levvel Research’s team of experts provide targeted research content to address the changing technology and business process needs of competitive organizations across a range of verticals. In short, Levvel Research is dedicated to maximizing returns and minimizing risks associated with technology investment. Levvel Research’s reports, white papers, webinars, and tools are available free of charge at www.levvel.io
PairSoft develops, sells, and supports advanced web-based and native mobile requisitioning, procurement, accounts payable, and expense solutions for mid-market organizations across a range of industries, worldwide. The user interface offers flexible Procure-To-Pay automation and robust expense reporting that is easy for employees, effective for management, and powerful for accounting.
Janet joined the PairSoft team upon its merger with Paramount Workplace, where she was also an integral part of the sales team for years. Janet resides in Michigan with her family.
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