Table of Contents
What is Procurement Software?
Procurement software automates the processes for buying the goods and services you need to run your business. Key components include the ability to quickly identify preferred suppliers, establish electronic connections with them, and eliminate paper with electronic document exchange. Electronic workflow and document matching speed the review and approval of essential transaction documents to streamline the procure-to-pay process and maintain a reliable audit trail of all transactions.
How Does Procurement Software Work
Procurement software automates the tasks associated with finding suppliers, making purchases, and tracking-analyzing business spending. By automating the purchasing cycle, you simplify and expedite the processing of the day-to-day transactions that are vital to business operations.
Here are some benefits that procurement software can offer you:
- Provide a self-service portal for suppliers
- Create digital purchase orders and route for approval
- Capture PO acknowledgements, advance ship notices, goods receipt, and related digital transaction documents
- Enable suppliers to “flip” purchase orders for goods into invoices for automatic approval
- Enable suppliers to “flip” service entry sheets for planned and unplanned services into invoices for automatic approval
- Flag transaction document match errors and automatically route for prompt resolution
- Simplify the creation of credit-debit memos as needed for accurate transaction processing and account reconciliation
- Generate secure electronic payments in multiple currencies and support for multiple payment channels
- Ensure compliance with country-specific e-invoicing requirements and tax legislation
- Track spending against budgets, contracts and supplier performance
Today’s procurement software delivers these capabilities via the cloud. Any user can access the software through a web browser, from anywhere in the world; using a desktop computer, laptop, mobile phone or other digital device.
Why Should You Use Procurement Software?
In a digital economy, moving from paper to electronic processing is no longer optional. It’s a requirement for competing in a global economy.
Procurement software is the foundation for making this digital transformation. It can expedite delivery of compliant purchase orders (POs), help eliminate invoice errors, speed invoice approvals, and improve on-time payment performance. Top performers are extending e-commerce capabilities to enforce compliance for all spending, increase cash earnings, and optimize their working capital.
Types of Procurement Software
Procurement software automates a broad range of activities relating to business purchasing. An umbrella term often used to address the scope of coverage is spend management.
Core applications of procurement software include:
|Sourcing||A first step toward automating procurement, where a sourcing team identifies suppliers and formalizes agreements in contracts.|
|Supplier Discovery||Allows you to search for suppliers based upon many factors such as industry, location, product category, supply chain sustainability rating and more.|
|Supplier Management||Also known as supplier onboarding. Refers to the tasks associated with collecting and maintaining supplier information for record-keeping such as contact information, certification status and more.|
|Supplier Information Management||For managing supplier information after onboarding. Monitors essential data such as supplier lifecycle, performance and risk, and often features a scorecard-style rating for each supplier.|
|Contract management||Automates the creation, execution and management of a contractual agreement to enforce compliance. Contracts can be used to generate electronic catalogs or invoices for services.|
|Catalog management||Often referred to as e-procurement. Allows buyers to search catalogs of pre-approved products and services from suppliers under contract, and create purchase requisitions. Requisition approval triggers a purchase order that is sent to the supplier for fulfillment.|
|Procure-to-Pay||Automates the transactional processes that can start with a purchase order, then move to invoice and payment processing. The most robust procure-to-pay software solutions allow suppliers to generate invoices from contracts and service entry sheets (for complex services, planned or unplanned).|
|Source-to-pay||Expands procure-to-pay functionality with sourcing capabilities. (See Sourcing.)|
|Invoice Automation Electronic Invoicing||A subset of procure-to-pay automation that focuses on the processing of invoices.|
|Accounts Payable Automation||Focuses on the payables aspect of procurement automation: generating electronic payments, dynamic discounting, supply chain finance, and global tax compliance.|
|Spend analysis||Classifies and enriches spend data to deliver real-time information relating to your suppliers, buyers, and spend categories. Valuable for identifying purchasing patterns and opportunities for cost savings, performance improvements and overall efficiencies. Typically part of a procure-to-pay or source-to-pay solution suite.|
Common Features of Procurement Software
Here are capabilities of two popular procurement software suites.
Source-to-pay encompasses everything from finding, negotiating with, and contracting suppliers of goods and services to the processing of purchase orders, invoices, payments and related transaction documents.
Rather than treat procurement as a series of separate tasks with its own software application, a source-to-pay application suite integrates all the tasks associated with placing an order and making a purchase. Organizations can then aggregate purchases across business units if desired to dramatically improve business performance.
Potential results from a source-to-pay platform include:
- Consolidate a supply chain and ensure contract compliance
- Dramatically reduce cost of goods and service
- Eliminate delays in order, invoice and payment processing
- Evaluate supplier performance more effectively against key benchmarks (e.g., price, order responsiveness, on-time delivery, reliable invoicing)
- Improve accuracy of spend forecasts
- Support efforts to expand into new markets
As a subset of source-to-pay automation, procure-to-pay software integrates the activities from ordering to invoicing and payment. Electronic catalogs and contracts often serve as foundational documents for placing orders for goods (catalogs) and services (contracts), and also expedite the matching of orders to invoices and, ultimately, payment.
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Top Procurement Software in 2022
Here is a list of procurement software vendors to consider for automating your procurement operations.
|Process coverage||Purchase requests, purchase orders, approval workflow, reporting, budget management, supplier management, inventory- 3-way match, expense management|
|Integrations||NetSuite, QuickBooks Online, Xero, SSO (single sign-on) with key identity providers, APIs for automated data exchange with popular accounting/business tools (including Amazon Business PunchOut)|
|Pricing||20 users or less: $35/user. Contact Precoro on pricing for >20 users.|
Bright Peak Therapeutics: Startup with no procurement workflow streamlined procurement operations, eliminated costly errors from invoice duplication and delayed payments
TESTEX: Began processing orders three times faster and accelerated approval workflow by 100% after one month.
PassportCard: Built an automated procurement process with a flexible approval workflow for multiple companies and locations in less than a year.
Cheerz: Employed direct connection to Sage to automate largely manual process. Broad acceptance from a simple, intuitive user interface.
|Process coverage||Customizable approvals, purchasing workflow, real-time customizable budgets, expense management, physical-virtual spending cards, vendor and catalog management, mobile app, in-platform communication, recurring spend management, audit logs, analytics, and reporting.|
|Integrations||NetSuite, QuickBooks Online, Amazon PunchOut, Slack, API Connection, Staples PunchOut, Import-export CSV-Excel files|
|Pricing||Three tiers (Pioneer-Voyager-Enterprise) with custom pricing. Call for details.|
Cabify: Enabled a more efficient procurement process, with expanded capabilities that was cloud-based, easy to use, and integrated with its accounting program, NetSuite.
Wren Therapeutics: Simplified core procurement processes for generating POs and approving orders more quickly.
Chai Lifeline: Moved from paper forms to digital requests and records to streamline procurement and eliminate errors. Adopted Procurify’s integrations to QuickBooks and Amazon PunchOut.
St. Anthony High School: Eliminated paper purchase orders and enabled proactive budget management.
Kissflow Procurement Cloud
|Process coverage||e-Procurement/assisted buying, hosted-punchout catalogs, AP automation and compliance, supplier portal, supplier management, store management, cloud deployment, customizable platform, mobile support, reports-analytics, Webhooks-API support, contract approvals and repository.|
|Add-ons||Inventory management, comprehensive sourcing, expense management, group companies, subsidiaries, public forms|
|Integrations||QuickBooks, Xero, Enterprise Connectors, Custom integrations|
|Pricing||Starts at $1,990/month based on features, transaction volume, and number of users|
Landmark Properties: Manage approval processes for 74 properties; handles workflow management for platform-marketing requests; improved reporting.
Softbank Telecom America: Drag-and-drop design of workflows; flexible app creation; responsive chat support. User friendly and handy mobile app.
Olympus: Transitioned from Lotus Notes to improve purchasing processes relating to return merchandise authorizations (RMAs), demo requests, and offering discounts.
Vonage: Streamlines and automates complex procurement processes, including customer onboarding, internal team communications, order workflows, and more.
|Process coverage||Enterprise-level solutions for larger companies. Source-to-pay and procure-to-pay solution suites. Sourcing, supplier management (including risk management and supplier information management), contract lifecycle management, financial supply chain solutions (for payables automation).|
|Integrations||As part of SAP, tight integration with SAP S/4 HANA.|
Connects to Ariba Network, a digital marketplace for buyers and suppliers to collaborate, transact, and discover new business opportunities, with application extensions and interoperability partners.
|Pricing||Call SAP Ariba for pricing.|
Henkel: Increases resiliency of supply chain through a platform that connects purchasing, supply chain, manufacturing, delivery and sales.
Vestas Wind Systems: Provides full traceability of components and stock visibility for suppliers to improve planning, optimize spend, and ensure availability of materials as needed.
Woolworths Group Limited: Centralized platform to manage procurement activity and standardize non-trade purchasing processes for more than 1,050 stores across Australia.
Kennametal: Fewer staff required to process procurement transactions so they can be redeployed for more strategic functions. Supplier collaboration across digital channels for faster customer fulfillment.
|Process coverage||Supplier management, purchase order management, invoice management, payment remittance-reconciliation, tax compliance, accounts payable automation.|
|Integrations||NetSuite, Sage Accounting, Sage Intacct, QuickBooks, Microsoft Dynamics, SAP Business One/BusinessByDesign, Xero Accounting, Performance Marketing, custom integrations|
|Pricing||Call Tipalti for pricing.|
Zola: Automated bill processing and payments for 600,000+ invoices annually. Reduced AP headcount from 10 to two and allows financial close on second day of the month.
Zipline: Automates payable operations to dramatically reduce time-costs for finance team.
Noom: Eliminated need for outsourced accounting help with end-to-end accounts payable automation.
Art of Problem Solving (AoPS): Eliminated five days from the manual contractor payment process and 20 days from the monthly close process
How to Choose the Best Procurement Software for Your Business
To begin, assess the scope of procurement automation: what you need immediately, how your needs will grow, and the budget you will have for the transformation.
A comprehensive source-to-pay suite would be overkill for a small company seeking to automate largely manual processes. Smaller organizations might start by automating payments or invoicing, then gradually expand to other capabilities as budgets and the resources to deploy and support them becomes available.
Ease of use
Some solutions may have robust capabilities but require additional training and costs. Assess how quickly you can roll out the solution across your organization, and the related costs for doing that.
Integration with core accounting or ERP system
The ability to easily integrate with your core financial systems will expedite rollout.
Match to your requirements and inquire about coverage. (Weekdays only? Restricted to business hours? 7 X 24 coverage? Other?)
Assessing software vendor partners is valuable for organizations looking to expand capabilities or for assistance with deployment and training.
Make sure the references you receive have a similar scope and deployment requirements for procurement automation. Even better if they run the same core accounting, financial or ERP systems.
Benefits of Procurement Software
The payback from procurement software relates to the scope of deployment. Here is a sample list of benefits you can expect from automating your procurement operations.
- Accelerate delivery of compliant orders and the processing of valid, tax-compliant invoices
- Increase spending off POs and achieve close to 100% touchless invoice processing
- Support complex transactions involving evaluated receipt settlement (ERS) invoicing, contract invoicing, and invoicing off services entry sheets
- Prevent contract leakage
- Better management of cash and working capital for you and your suppliers
- Improved supplier relationships