3 Ways for Cost-Cutting from Inside Out
The phenomenon of cutting down internal expenses and extras for the preparation of funds during low earns or economic dips explained. Can it really be the solution for saving the company from economic threats?
FREMONT, CA: Almost 30 percent of the CFOs collective have predicted that the economic dip would take place in 2019. That being said, in 2018, the number of the business heads who suggested this was 9 percent. The massive gap in the figure has created the need to design plans for saving the company from loss, and procure-to-pay is the solution. The three areas where streamlining and metrics to aim for are:
1. Purchase Order Processing methods:
The larger picture of finding new opportunities and saving money among the trading partners are achieved by taking small steps like speeding up the process of routing. An e-paper trail of Purchase Orders (P.O.s) can not only extinguish tedious interactions in purchasing and finance, but also the companies that are associated with it. Greater visibility into the company standings can be gained for the employees involved. Even though P.O.s are tilted more toward purchasing territory, it should be considered a challenge to figure out how much of the P.O.s are processed electronically among the purchasers. A goal can be set internally to increase that number.
2. Invoice Approval Cycle Duration:
The invoice approval cycle determines a lot about the financial health of the company. By calculating how many hours it takes to get invoices from submission to final approval stage, the efficiency of the team can be recognized. The cycle is usually longer than expected as it involves a whole group of people, but with every delay in payment, money is lost. Project delays and loss of strategic trading partners can be avoided by critically analyzing the holdups occurring frequently. It is an ideal solution, to formulate a granular level plan to deal with the holdup, if not already speculated by the company. If the firm has investigated already, it is vital to dig into the setting of concrete financial consequences for approvers who have repeatedly missed deadlines.
3. Auditing Manual Expenses:
As an industry leader, the regular checking of the employees’ expenses leads to solid internal controls, but it usually invites an expensive staff output with minimal returns for the finance team. It can be solved by a delicate reminder among employees to watch out for non-compliances and give extra time when auditing as the employees would have known already.