Top 6 Procurement Software Solutions for Modern Businesses
The traditional procurement process is time-consuming, prone to errors, complex, and challenging to implement efficiently. From raising a purchase request to making vendor payments, multiple stakeholders are involved. In addition, securing approvals through various channels of an organization leads to chaos. Hence, 77% of companies are shifting to procure-to-pay solutions, also known as procurement software.
What is Procurement Software?
Procurement software are tools that automate the procurement process.
Instead of relying on multiple platforms and different channels to procure goods and services, the process is automated and brought together on a centralized platform.
A powerful procurement solution helps you in:
- streamlining the request and approval process for purchases
- generating, tracking, and managing purchase orders
- creating, negotiating, and tracking supplier contracts
- managing and maintaining supplier relationships
- automating invoice validation, approval, and payment workflows
- integrating with other systems for seamless data flow and coordination.
What Are the Benefits of Procurement Software?
By automating your procurement process with a procurement management software, you can improve it in the following ways:
- Once you enter data, it is auto-populated throughout the procurement cycle. This minimizes the risk of errors due to manual data entry in purchase orders, invoices, and other documents.
- You get real-time visibility into the procurement process. You can also track the status of purchase requests, orders, deliveries, and payments.
- With built-in reporting and analytics tools, you can generate detailed reports on spending, supplier performance, and other key metrics. This data-driven insight enables better inventory planning and strategic decision-making.
- You can standardize workflows for purchase requisitions and approvals. Route the requests to the appropriate individuals for approval and reduce any delays. Notifications and reminders are automated, ensuring timely responses.
- Invoice processing and payment workflows are automated. This ensures that invoices are paid on time. This helps in taking advantage of early payment discounts and strengthens vendor relationships.
Top 6 Procurement Software
To help you select the procurement management software best suited for the needs of your organization, we have listed the top 6 procurement solutions:
Pluto is an all-in-one procurement software designed to transform your accounts payable (AP) processes. It reduces your finance team's workload and makes procurement easy. From automating purchase requests to setting multi-layer approval workflows and managing vendors, it is the ultimate procurement solution to transform a chaotic procurement process into a faster and more efficient one.
- Features fully customizable and automated workflows for raising purchase requests and purchase orders, requiring no technical expertise
- Offers flexible approval engine capable of managing intricate hierarchies
- Enables multi-layer invoice approvals with policies to align with your company's structure
- Ability to upload invoices easily via WhatsApp images, eliminating the need to search for invoice details. Also, facilitates invoice capture via emails directly to speed up the receipt capture process.
- A centralized dashboard to gather bills in one place and track the status to avoid double payments
- Vendor-specific corporate cards to control budgets and detect irrelevant expenses
- Supports local and international wire transfers to make payments
- OCR technology minimizes manual data entry by creating and populating bills from invoices
- Supports ERP integration to synchronize your vendors, POs, and bills and integrates with accounting software, such as Oracle, NetSuite, Zoho, Quickbooks, Wafeq, Xero, etc.
- Raises alerts for upcoming payments and enables scheduling payments in advance and automate invoices
- Provides a complete audit trail of the process to ensure visibility at each step
- Shows real-time analytics to facilitate deep insights for supporting budget control
- More financial control with vendor-specific corporate cards
- Better Forex rates than most local banks
- Multiple integration options
- Slightly longer on-boarding due to corporate card offering
- Integrates with all other major ERPs except Tally
Yooz optimizes the AP process, specifically focusing on invoice management. It is a cloud based software that uses artificial intelligence (AI) and machine learning technologies to enhance security and control in AP automation. It is suitable for mid-size companies of all sectors wanting to automate procurement with a cloud-based procurement solution.
- Enables online, real-time management of supplier relationships, improving communication and collaboration
- Provides mobile access for invoice approval and communication
- Maintains regulation-compliant traceability, ensuring adherence to relevant laws and standards
- Automates real-time GL coding and purchase order matching
- Captures all types of documents through various channels, such as email, drag-and-drop, mobile, scan, and sFTP, supporting multiple formats, including PDF, Factur-X, UBL, CII, and EDIFACT
- Integrates with accounting software and and ERPs
- Allows users to approve and pay invoices in batches, offering multiple payment options, such as Virtual Credit Card, ACH, eCheck, and Paper Check
- Offers a range of services, including consulting, configuration, training, and user support
Free trial for up to 15 days followed by a "pay-as-you-use" model.
- Integration with Sage Intacct
- Ability to tag people in the comments and email them directly from the invoice
- Numerous criteria available for setting up the approval workflows
- Doesn’t offer payment services in UAE, so you need to carry out payments on a different platform
- Doesn't have integrations with major suppliers as a form of punchout
- Time-consuming to download and export files
- Hard for vendors to send the invoices through Yooz
Procurify speeds up the procurement process, enhances internal communication, and reduces financial risks. It is an easy-to-implement tool that saves time for finance and operations teams. From catalog management to custom user controls, it helps to track the procurement process in real-time.
- Tailors purchase orders to match your internal processes and vendor expectations
- Creates, tracks, and maintains an audit trail of all procurement transactions for transparency and compliance.
- Enhances financial controls by enabling purchase order-based purchasing
- Ensures that requested items are approved against budgets before procurement.
- Sync purchase orders with your accounting system or ERP, whether via API, CSV, flat file, or direct integration
- Integrates with trusted suppliers through PunchOut catalogs to streamline the ordering process.
- Enables blanket purchase orders, which involve making multiple purchases against a single purchase order, even when details of future purchases may be unknown.
- Purchase order workflows to save on shipping costs, unlock vendor discounts, and reduce paperwork
Starts at $2000/month with a custom pricing tier
- Easy to make amendments in the original purchase order
- Enables ordering from multiple websites for resources, including Amazon
- Makes it easy to upload documents to support expense and order reports
- Doesn’t offer payment services in UAE, so you will need to carry out payments on a different platform
- Isn’t catered to the UAE market, and does not support UAE specific workflows such as VAT management
- Cannot edit orders once they are approved
- Cannot see the order history for a catalog item without running a report
- Physical inventory has to be tracked outside Procurify
Precoro is a cloud-based solution designed to streamline operations, automate tasks, and centralize purchasing procedures. It enables tracking discounts, monitoring corporate expenses, and enhancing cash flow transparency. It also provides analytics and reports for strategic procurement planning.
- Simplifies the approval by allowing users to approve from any device via email or Slack notifications.
- Supports customizable approval workflows with multi-step and role assignment
- Facilitates creating, approving, and tracking purchase orders and transfer orders from Amazon Business via Punch-in
- Connects with various ERPs and business tools like NetSuite, QuickBooks, and Xero, or its API
- Ensures data security through Single Sign-On (SSO) and 2-factor authentication
- Offers an intuitive interface and guidance from a dedicated customer success manager whenever needed
- Gives a risk-free 14-day free trial with access to all features
Starts at $35 per user per month billed annually for teams with under 20 members and offers custom pricing for enterprises
- Provides flexibility for enterprise needs
- Works well for budgeting procurement
- Allows tracking invoices in a centralized environment
- Requires training to customize complex workflows
- Invoice processing is slow
- Isn’t suitable for manufacturing industries
- Difficult to collaborate on invoice drafting
Kissflow simplifies and enhances procurement processes while ensuring transparency and compliance. It helps to automate the entire process without requiring technical expertise or coding experience. It comes with 50+ ready-to-use applications, enabling unlimited automation applications.
- Offers fluid forms to enable easy capturing, approval, and tracking of purchase requests
- Allows to register and maintain vendors effortlessly with access to multilingual catalogs
- Integration with accounting systems, ERP, and finance systems like Quickbooks, SAP, and Microsoft Dynamics
- Accelerates the invoice approval process with timely alerts and automated checks. Connect invoices to contracts, purchase orders, and service entry sheets in a single dashboard
- Customizable reports to visualize data using charts, filters, and heatmaps
- Ability to define and manage budget restrictions with dynamic rules throughout the entire procure-to-pay lifecycle
- Customized approval workflows to ensure transparency with rule-based approval processes
- Smart alerts that provide real-time updates on the status of purchase orders and invoices to keep stakeholders informed
Starts at $2499/month (billed annually). Pricing varies based on transaction volume and number of users.
- Intuitive interface with a relatively short learning curve
- Allows automated workflows to be created with limited technical expertise
- Not built specifically for procurement teams
- Does not support payment flows in UAE
- Cost of its license is high (particularly for SMBs)
- Can not handle intricate processes that require a high degree of customization or involve multiple conditional branches
- Customization options are limited, including specific integrations, advanced business rules, or more sophisticated automation capabilities
Vendr is a practical solution for streamlining SaaS procurement. It simplifies the entire process, from intake requests to contract management. It provides essential SaaS insights, negotiates expert advice, and integrates with core business tools for procurement and vendor management.
- Buyer guides to provide negotiation insights and gain the upper hand in software purchases
- Negotiation advisory to provide personalized guidance on negotiating like a pro and enter negotiations with confidence
- Simplified intake forms to ensure company-wide compliance and visibility
- Integration with different accounting and finance tools, such as Oracle, NetSuite, Intuit, Quickbooks.
- Integrates with platforms like Rippling Workday to include correct stakeholders. Additional integration with SSO providers such as onelogin.
- Comprehensive renewal dashboard to receive early alerts and streamline the renewal preparation process to maximize savings.
- Vendr Slack integration for quick answers and timely notifications to collaborate in real time with your team, minimizing approval cycle times
There are 2 packages—the basic one starts at $15,000/year and the pro package starts at $20,000/year.
- Offers assisted buying with a team who negotiates on your behalf
- Comprehensive database of vendors in one place
- Helps standardize procurement workflow
- Provides insights about fair market value
- Restricted to SaaS procurement only
- Multilingual services are limited
- Navigating multiple workflows is not as fluid as desired
- Doesn't support multiple currencies
Find the Right Procurement Software
When choosing procurement software, focus on user-friendliness, scalability, and integration capabilities. Make sure the software aligns with your specific needs.
Finding the right software for accounts payable automation will be crucial for your business. For instance, if you frequently deal with multiple suppliers and have a complex approval process, ensure the software can accommodate these intricacies. Similarly, if you're in the healthcare industry, look for procurement software that complies with industry regulations like UAE Healthcare Law and the Dubai Health Authority (DHA) regulations. This ensures the privacy and security of patient data and adheres to local data protection standards. Moreover, check if the vendor offers active support and training. In case of a technical issue, having an unresponsive support team can disrupt the process and create bottlenecks.
Don't rush the decision. Thoroughly evaluate multiple options. Investing in an appropriate solution will save you money and headaches in the long run.
Want a tool that is safe, fast, and transforms your chaotic procurement process into an automated solution? Book a demo today and see how Pluto can simplify procurement for your team.
Disclaimer: The comparisons and rankings of procurement software competitors in this article are based primarily on reviews found online. While we strive to provide accurate and up-to-date information, these reviews are subjective and reflect the opinions of the users who posted them. The information presented is intended for general informational purposes and should not be considered as a definitive guide for choosing a software provider. We encourage readers to conduct their own research and consider their specific needs before making a decision.
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What is Account Reconciliation? Basics for UAE-Based Companies
Last day of the fiscal year, and you are closing the books. One of the employees writes a check for 50000 AED to a vendor. The internal records show a payment of 50000 AED, but your balance will not match your bank statement due to the time difference in check clearing.
Account reconciliation addresses these differences and mismatches of records. It helps you identify any gaps in your accounting statement to make adjustments and ensure accuracy.
In this post, we will discuss account reconciliation and how you can ensure compliance with proper reporting.
What is Account Reconciliation?
Account reconciliation involves comparing your internal financial statements to external and third-party sources, such as bank statements, to ensure the accuracy of financial records.
The frequency of account reconciliation will depend upon your company's internal policies and industry practices. Generally, companies conduct account reconciliations every month or quarter.
You can also automate this process and reconcile accounts in real time. The software integrates with your accounting systems and ERPs and facilitates record-keeping. Employees directly upload receipts on the software, and all the transactions are visible on a centralized platform for real-time tracking. Then, the tool automatically categorizes the expenses into different general ledger (GL) accounts and tax codes, making reconciliation simple.
Why Invest in Account Reconciliation?
Account reconciliation is a standard accounting process. While it seems reasonable to continue using traditional manual systems for record-keeping and reconciling, having a unified accounting platform enables you to close books 10X faster.
Imagine a single tool to manage reimbursement, petty cash, corporate cards, and end-to-end procurement. You eliminate the chances of errors and fraud with more visibility over your money. As a result, you get accurate financial statements, creating a transparent environment for stakeholders.
How is Account Reconciliation Done?
Account reconciliation involves comparing GL account balances to supporting external sources and records. Here is a complete breakdown of the process:
1. Identify Accounts for Reconciliation
Identify the accounts that need reconciliation. This depends on the nature of the business, industry regulations, and the company's internal processes. Common accounts include:
- Bank accounts
- Accounts payables and receivables
- Intercompany transactions
2. Gather Relevant Documents
Collect supporting documents for the identified accounts, such as bank statements, invoices, receipts, and other relevant financial records.
3. Verify Opening Balances
Compare the opening balances in the company's records with the corresponding balances in external statements or supporting documentation. This ensures that the starting point for reconciliation is accurate.
4. Adjust Differences
Identify discrepancies and make adjustments as needed. Based on the types of accounts chosen, you are likely to have the following discrepancies:
- Bank: Outstanding checks, deposits in transit, or bank fees
- Accounts payable and receivable: For accounts payable, mismatch between the company's records and vendor invoices. On the accounts receivable side, payments not being accurately reflected in the company's records.
- Value Added Tax (VAT): Errors in calculating input and output VAT, misclassification of transactions, or discrepancies between recorded and actual tax amounts
- Inventory: Errors in recording stock levels, theft, obsolescence, or misclassification of inventory items
- Intercompany: Errors in eliminating intercompany transactions, misallocating expenses, or differences in intercompany balances
- Revenue: Unrecorded sales, errors in invoicing, or misapplication of revenue recognition principles
- Expenses: Unrecorded expenses, duplicate payments, or errors in expense categorization
5. Review and Finalize
Review the reconciled accounts for accuracy and completeness. Obtain necessary approvals from management or relevant stakeholders before making adjustments and finalizing financial decisions.
Finalize the reconciliation process and document the adjustments made. Retain all relevant records for auditing purposes and future reference.
Top 5 Account Reconciliation Errors
Here are the top 5 most common errors that lead to discrepancies in account reconciliation:
Omission includes missing certain transactions from the accounting records due to oversight. For instance, forgetting to record a payment received results in understating cash and accounts receivable.
Solution: Review transaction documentation, bank statements, and other supporting records to identify and record any omitted transactions.
Duplication involves recording the same transaction more than once, leading to an overstatement of figures. For instance, recording a sales invoice twice causes excessive revenue figures.
Solution: Review transactions and eliminate any duplicate entries.
3. Timing Difference
Timing differences refer to situations where a transaction is recorded in the books at a different time than when it clears the bank or is recognized for accounting purposes. For instance, writing a check at the end of the month that doesn't clear the bank until the beginning of the following month.
Solution: Regularly compare bank statements with the company's records, adjusting for timing differences.
Fraudulent activities involve intentionally manipulating financial records to deceive stakeholders and make personal gains. For instance, employees falsify expense receipts to inflate reimbursement claims.
Solution: Implement strong internal controls, conduct regular audits, and promote a culture of ethical behavior.
Misclassification occurs when transactions are recorded in the wrong accounts. For instance, adding a purchase of office supplies to the wrong expense account or labeling an incorrect GL code.
Solution: Review transactions to ensure proper coding and provide training to prevent misclassification errors.
Risk of Overlooking Account Reconciliation
While account reconciliation seems a redundant task of matching accounts’ balances, small defaults can lead to operational, financial, and legal challenges.
You can face hefty fines or penalties imposed by regulatory authorities. You may also encounter disruptions due to legal investigations, audits, or even suspension of business activities. Moreover, failure to adhere to regulations can harm a company's reputation.
In some cases, it leads to the revocation of licenses or permits, jeopardizing the company's ability to operate within the UAE.
Here are some challenges you face when you do not pay due attention to account reconciliation:
1. Manual Errors
The chances of errors are high if you rely on manual processes for account reconciliation. It can distort financial records, impacting decision-making and financial analysis.
Example: An employee records a sales transaction twice, leading to an inaccurate representation of the company's revenue.
Detecting fraud becomes difficult when you lack real-time visibility or the accounts are not being cross-verified. As a result, fraudulent activities go undetected, causing financial losses and damaging trust.
Example: An employee manipulates expense reports to divert company funds for personal use.
You lose sight of the funds available, leading to bounced checks or potential bank charges. This harms the company's financial stability and relationships with vendors.
Example: The employee wrote a check with insufficient funds, resulting in a bounced check and delayed vendor payment.
4. Inaccurate Reporting
You increase the chances of discrepancies in financial reports, providing stakeholders with misleading information. This undermines the confidence in the company's financial health and performance.
Example: An employee overlooking the balance between revenue and expenses leads to inaccurate profitability figures in financial statements.
5. Tax Issues
You can encounter inaccurate tax calculations or omissions, leading to tax filing errors. This leads to penalties, fines, and increased scrutiny from tax authorities.
Example: An employee's oversight of business expenses, like travel and meals, results in underreported deductions, leading to tax filing inaccuracies.
6. Affect Credit Score
You increase the chances of missed payments or errors that negatively impact the company's credit score. This further affects the ability to secure loans or favorable credit terms.
Example: An employee's oversight in paying a critical supplier invoice on time leads to late fees, strains supplier relations, and affects the company's credit score.
7. Audit Challenges
With incomplete or inaccurate reconciliations, you risk challenges during audits, demanding additional time and resources. This results in increased audit costs and potential legal implications.
Example: An employee fails to reconcile monthly bank statements, leading to missing documentation. The subsequent need for extensive audit adjustments increases audit costs and poses legal risks.
Automate For Ease
Managing 1000s of expenses and individually categorizing and coding them is a big headache for finance teams. Leaving this to your accounting software will further require oversight during audit season, adding to the workload. Moreover, these software don’t help with record-keeping or real-time visibility, causing you to spend more on account reconciliation.
Pluto makes this easier by bringing it all to a centralized platform. By shifting to the Pluto ecosystem, you close books 10x faster and simplify spend management. It is as simple as integrating your accounting software and ERPs and getting visibility over your money from Day one.
Streamline your financial management with our all-in-one platform, integrating accounts payable software for comprehensive control. Manage categorization, reimbursements, corporate cards, and all aspects of accounts payable seamlessly from a unified dashboard.
The best part is that you can bulk export and import logs and even lock the transactions to avoid changes once approved. Further, with view-only access to external bookkeepers, you ensure transparency and security with no chaos during audit season.
Reconciliation in Accounting Made Simple
Meeting compliance standards should not be an afterthought during the audit season.
You must adopt the right processes, standards, and tools to get complete control over your accounts. This will ensure accurate records and build trust amongst stakeholders. Moreover, the teams will have a proper systems to reconcile without rushing at the end time.
With automation, you make the process easier and more efficient. Pluto assists you with a centralized platform to automate your accounts payables and simplify account reconciliation without having to juggle multiple accounting software
Step-By-Step Guide for an Effective Procurement Audit (With Checklist)
Some common procurement challenges are inadequate documentation, ambiguous contracts, insufficient internal controls, risk management, and non-compliance with industry standards.
There are only two ways to identify such issues: wait for repercussions to disrupt the supply chain or conduct a procurement audit.
This post will cover how to conduct a comprehensive procurement audit with a step-by-step process and checklist.
What is a Procurement Audit?
A procurement audit is a systematic review of the procurement process to ensure compliance, efficiency, and effectiveness.
The auditing team carefully reviews documents like contracts and purchasing records in a procurement audit. It examines each phase of the procurement process, from bid assessments to contract management, to identify discrepancies and optimize efficiency. The main goal is ensuring adherence to regulations, minimizing risks, and refining procurement practices for optimal organizational outcomes.
How To Prepare for a Procurement Audit
For an effective procurement audit, consolidate all the documents with proper access for relevant stakeholders. Employ procurement software to create a single source of truth and avoid unnecessary friction.
Implement access controls to restrict permissions to view-only access for sensitive procurement data. This step ensures that only authorized individuals, such as the audit team, can access critical information, minimizing the risk of unauthorized alterations or data breaches.
Here is an exhaustive list of documents you will need for the procurement audit:
- Procurement policies and procedures, including the updates or revisions to these documents
- Contracts and agreements with vendors — amendments, renewals, or modifications to existing contracts
- Purchase orders issued during the audit period and supporting documentation for each purchase order
- Invoices related to procurement and payment records, including dates and amounts paid
- Goods received notes and delivery records, including dates, quantities, and item condition
- Vendor profiles, including contact information and details of vendor qualifications and any evaluation or performance assessment reports of vendors
- Bid and proposal documents, the evaluation criteria, and scoring records for vendor selection
- Records of communication that are related to procurement decisions and processes — correspondence with vendors, internal departments, and other stakeholders
- Documentation outlining internal controls within the procurement process — evidence of segregation of duties and authorization processes
- Previous internal and external audit reports and any actions taken or improvements made based on earlier audit recommendations
- Procurement budgets and any adjustments or variances with the original budget
Five Steps for Conducting a Procurement Audit
With all the documents ready, begin the procurement audit process. Here is an end-to-end five-step audit process with checklists for a successful audit:
1. Gather Stakeholder Input
Conduct interviews with key stakeholders to gather insights. This adds a layer of understanding regarding the human aspects of the procurement process, helping identify challenges and opportunities for improvement.
Additionally, collaborate with relevant stakeholders, such as department heads and key project managers, to decide the scope and create an audit plan. This inclusive approach ensures an understanding of organizational needs and contributes to developing an effective and targeted audit strategy.
2. Assign Roles
Create a clear roadmap for team members. First, designate a lead auditor to oversee the entire process. This person ensures coordination and consistency.
Then, distribute specific responsibilities among team members, such as document analysis, interviews, and data assessment. This division of labor maximizes efficiency, expertise, and accountability, contributing to a well-executed procurement audit.
Here are the top four best practices when assigning roles to an audit team:
- Clearly define team tasks to prevent confusion and streamline workflow
- Implement segregation of duties for an unbiased audit process
- Rotate roles periodically to encourage collaboration and shared expertise
- Foster collaboration among diverse team members for a comprehensive assessment
3. Identify Problem Areas
Examine the procurement process to identify weaknesses and assess the overall efficiency of the procurement process. Here are the top four steps to keep in mind:
Assess Purchase Orders, Purchase Requests, and Invoices
Examine the purchase orders, requests, and invoices for accuracy, completeness, and adherence to established protocols. Ensure that the documentation is easily accessible. Any discrepancies or missing information indicates inefficiencies or errors in the procurement process.
- Misplaced signatures, unclear specifications, or missing supporting details
- Discrepancies in recorded quantities, prices, or delivery dates
- Mismatched product codes, incorrect quantities, or inaccurate pricing
- Implement a standardized checklist for purchase orders and requests, ensuring all necessary information is included
- Conduct regular training for procurement staff on accurate and comprehensive documentation practices
- Employ procure-to-pay software for storing and retrieving documents, enhancing accessibility and reducing errors
Review Vendor Relations
Evaluate the strength and effectiveness of relationships with vendors. Examine vendor agreements and contracts to ensure they are clear, comprehensive, and aligned with organizational needs. Also, verify the effectiveness of vendor vetting processes.
- Contracts lacking specificity in payment schedules, service levels, or delivery terms
- Failure to verify vendor credentials, financial stability, or past performances
- Conduct periodic vendor performance reviews to ensure ongoing reliability
- Develop transparent and standardized contract templates specifying payment schedules, service levels, and delivery terms
- Diversify vendor partnerships to diminish dependency and enhance resilience
Analyze Procurement Practices
Assess the entire procurement process to check if it adheres to industry standards and complies with organizational policies and legal requirements. This involves comprehensively examining sourcing, contracting, and purchasing practices to identify deviations or shortcomings.
- Failure to adhere to industry standards or legal requirements, showcasing a disregard for regulatory protocols
- Continued reliance on outdated or non-competitive suppliers, hindering cost-effectiveness
- Lack of systematic identification and mitigation of potential risks, exposing the organization to unforeseen challenges
- Provide training sessions on industry standards and legal requirements to ensure ongoing compliance
- Organize quarterly workshops focusing on proactive risk identification and mitigation strategies, fostering an aggressive risk-aware culture
Examine Internal Controls
Evaluate the segregation of duties, authorization procedures, and overall internal controls. Make sure that checks and balances are in place, preventing fraud, errors, or unauthorized activities that compromise the integrity of the procurement process.
- Allocation of responsibilities for both approval and execution to a single individual increases the risk of errors or fraudulent activities
- Insufficient checks and balances in the approval process, allowing unauthorized transactions
- Absence of mechanisms to detect irregularities, fostering an environment conducive to fraudulent activities
- Provide employee training on fraud prevention and promote a culture of ethical behavior
- Implement proper approval workflows to enhance control mechanisms
4. Spot Out-Of-Process Spending
Investigate expenditures to ensure they align with approved procedures. Any out-of-process spending indicates a lack of adherence to procurement guidelines, necessitating corrective measures.
- Missing or inaccurately recorded receipts, making it challenging to validate and track expenses
- Insufficient supervision that enables unsanctioned spending to go undetected
- Implement strict spending approval processes with explicit guidelines
- Conduct periodic spending reviews to identify and rectify discrepancies
- Use spend management software for real-time monitoring to detect and address unauthorized spending promptly
Here is a list of elements to assess for the internal procurement audit:
Procurement Audit Checklist
Check the following items to get a comprehensive overview of your procurement process.
- Standard operating procedures (SOPs)
- Clear audit trail for procurement transactions, documenting each step in the process
- Delegation of authority matrix
- Roles and responsibilities as per the matrix
- Training manuals to help users
- Logical access rights to respective users
- Segregation of duty (SOD) rules in the software
- The purchase order dump — pick samples to check
- If each purchase is supported by at least three vendors
- Cost-benefit sample for vendors
- Terms for purchase orders
- Agreements of major purchases
- Terms of sample agreements
- Annual procurement budget aligned with annual operations planning
- Goods received notes (GRN) report
- Open purchase requests and purchase orders
- Exceptions to the process being approved
- The aging of material available in the warehouse
- If the same material was purchased by multiple vendors
- Vendors approval process
- Duplicate vendors in the system (identified via PAN)
- Dummy vendors
- Minimum order quantity (if created)
- If the company maintains any risk register related to the procurement function
- Sample vendor payouts (as per purchase order terms)
- Internal control over financial reporting related to procurement
- Measures to secure procurement data and ensure confidentiality
- Ethical vendor selection practices, ensuring fairness, transparency, and avoiding conflicts of interest
5. Prepare Audit Report
Compile all audit findings related to internal procurement processes. Then, based on the following inspection, create an audit report:
- Ensure procurement aligns with policies, standards, and legal requirements, identifying non-compliance and assessing organizational risk and reputation impact
- Analyze the workflow, pinpointing bottlenecks and assessing control effectiveness for optimal procurement efficiency
- Evaluate resource utilization in personnel, technology, and budget to optimize productivity without compromising quality
- Assess risk identification, assessment, and mitigation in procurement, recommending improvements for enhanced resilience and threat minimization
Once the assessment is complete, document recommendations to address identified issues and improve procurement processes. Also, highlight aspects of the procurement process that align with best practices.
Compile all findings, analyses, and suggestions into an audit report. Present the identified strengths and weaknesses, seeking input and additional context to enrich the audit findings. Finally, establish a monitoring mechanism to track the outcomes of the implemented changes. Regularly revisit and update procurement practices based on changing organizational needs, industry standards, and regulatory requirements.
Regular Audits for Efficient Internal Processes
Routine procurement audits aren't just crisis management tools; they are proactive investments. By dedicating time and resources to periodic evaluations, you prevent issues before they arise. The long-term gains in efficient processes, improved vendor relations, and heightened compliance far outweigh the initial investment.
Automation adds a transformative layer to your procurement process, speeding up audits and providing real-time insights. We have covered in-depth how procurement automation can reinforce your internal processes without impacting your supply chain. Read how you can automate procurement without unnecessary complications.
Expense Management; Definition, Types & Tips
Effective expense management is a critical aspect of any organization's financial health, ensuring smooth operation through controlled employee spending. Employees frequently incur various business expenses, from travel and entertainment to office supplies. To facilitate reimbursement, these expenses must be meticulously reported with detailed descriptions and receipts, subsequently reviewed and approved by line managers and finance teams. This process, central to expense management, not only streamlines how employees pay for business expenses but also provides a comprehensive track of their spending through organized expense reports.
What is expense management?
Expense management is the process of tracking, processing, and reimbursing employee spending. This involves scrutinizing expense reports, evaluating reimbursement claims, and enforcing company policies on permissible expenses. It is a key practice in ensuring adherence to the organization's expense policy while maintaining accurate financial records.
Why is expense management important?
As an essential part of any business, expense management is vital for various segments of a company, such as the following:
1. Finance teams
An expense management process is the most important to a finance team or accounting department. Their main goal is to sustain accurate business financial records and analyze past trends to determine future business decisions.
Additionally, it can help identify cost-saving opportunities and risks by providing insights into the company's financial health.
2. C-level executives & managers
Owners, managers, or C-levels are more concerned about growing revenue, managing risk, reducing expenses, satisfying employees, and having a productive business.
Having reimbursements processed quickly creates a feeling of trust and satisfaction among employees. This greatly influences the productivity of your employees and your company.
Maintaining detailed records of your business expenses ensures that your company stays compliant and assists companies in audit activity in case of fraudulent behavior.
Nevertheless, with the corporate income tax being introduced in 2023, expense management makes it simpler for businesses to file their taxes.
Expense management process
The expense management process is designed to safeguard against policy violations and mishaps, and it typically follows a uniform sequence across most businesses:
- Employee Expenditure: An employee makes a purchase for business purposes.
- Reimbursement Claim Submission: The employee submits a claim for reimbursement of the incurred expense.
- Claim Review: The submitted claim is reviewed and either approved or rejected.
- Payment Processing: Upon approval, the reimbursement is scheduled, often aligning with the employee's End-of-Month (EOM) salary.
Types of expense management
Approaches to expense management may differ from company to company. Here you'll find the different ways in which expenses are managed:
1. Paper tracking
Employees collect paper receipts and submit them to the accounting department for approval monthly or quarterly. This is the traditional (and outdated) method of managing expenses.
Businesses, especially in the UAE, usually use spreadsheets to manage their expenses and reduce dependency on paper receipts. Some common spreadsheet software is Microsoft Excel, Google Sheets, and Zoho Sheets.
3. Expense management software
An expense management software simplifies the process for companies by automating it. After an employee makes an expense, the managers are alerted to either accept or reject the expense. If the expense is accepted, it is usually scheduled to be reimbursed with the employee's EOM salary.
4. Pluto: Automated expense management software
Pluto is an expense management software that helps accounting teams save time by automating reimbursements, expense reporting, expense tracking, and budget control.
When a business expense is made, a Whatsapp notification is sent to the employee, prompting them to upload their receipt by snapping a photo; this also simplifies the reconciliation process. When that is done, the admin/manager is notified to accept or reject the expense. If the expense is accepted, it is reimbursed to the employee's bank account in seconds.
On the other hand, Pluto gives you the ability to create unlimited corporate cards with spend limits so you won't have to go through an approval workflow.
Real-time expense reports are also one of the many benefits Pluto offers, helping finance teams, CFOs and accountants make informed decisions. Learn how to improve internal control over financial reporting on our new post.
Traditional vs. automated expense management
Despite the benefits of automated expense management, a large percentage of organizations in the UAE still perform manual expense management. This leads to expense reports that are time-consuming and prone to error.
Traditional expense management
Traditional expense management is one expense management process that relies on several steps to manage spending and ensure the process for an expense claim is correct. As an expense management solution, expense tracking is usually in the form of paper tracking or excel sheets, as mentioned above.
Typically, once employee-initiated expenses are made, the employee must store the expense receipts and file them as reimbursable expenses at the end of the month when the accounting department is doing the end-of-month closing. After the expenses are submitted, the approval process begins. The employee's manager either accepts or rejects the reimbursable expense; if it is accepted, it is sent to the accounting team for reimbursement.
This is considered a nightmare for accounting departments, as they will have to go through manual data entry and spend countless hours on expense reporting at the end of month closing.
Automated expense management
Unlike traditional expense management, automated expense management software reduces time spent on processing expense reports, managing the business's cash flow, reconciliation processing, and controlling expenses incurred for finance teams.
Automated spend management software, such as Pluto, eliminates the manual process and automates the process for finance teams from A-Z. With expense management software like Pluto, you can automate different flows.
Benefits of using an expense management software like Pluto
1. Automate Reimbursements
Pluto helps you manage expenses incurred by digitizing the reimbursement process. Once an expense is made, Pluto sends you a Whatsapp notification prompting you to upload your receipt by replying to the Whatsapp or by uploading it onto the Pluto app. Once that is done, the expense record is saved, so employees don't lose it, and the expense is submitted for approval.
As an added perk, Pluto also auto-categorizes expenses made so employees and finance teams won't have to worry about categorization!
2. Streamline expense reporting
With Pluto, all expense records are in one place, meaning expense reports are automated; this helps accounting departments save hundreds of hours on manual work.
Additionally, expense reports are trackable in real-time, giving managers, finance teams, and accounting departments complete visibility over the business's finances.
3. Accounting automation
Close your books 5x faster!
Whether you use Zoho expense, SAP Concur, or Quickbooks, your accounting software can integrate directly with Pluto's platform.
Through our integration, you can also sync your chart of accounts and your GL codes to automate bookkeeping.
4. Smart budget control
Pluto allows you to issue your employees unlimited corporate cards with spend control. If you have daily allowances, weekly budgets, or travel expenses, you can get better control over your employee spending by setting custom limits on their corporate credit cards.
Expense management advantages for business
If you've reached this far, you might already know the advantages of automated expense management.
1. Accurate expense reporting
- Real-time, automated expense reports
- Sort reports by day, week, month, or by department, or category
2. Quick reimbursements
- Faster approval process for employees and finance teams
- Auto-categorization when uploading receipts
3. Monitor employee spending
- See what is being spent and where in real-time
- Set daily, weekly, or monthly allowances
4. Close books faster
- Integrate with all major accounting software to close your books 5x faster
- Sync your GL codes
What is an expense management policy?
Employee spending can be controlled by implementing an expense management policy. The policy can function as grounds for rejecting or questioning expenses and help determine whether they should be reimbursed.
In every expense management policy, the following items should be included:
Types of expenses
A complete list of everything employees may purchase and what they may not purchase.
The current budget should be disclosed to everyone, and those with questions should be able to contact those responsible.
A reimbursement policy must specify the reimbursement method, such as online, by credit card, or by other payment methods.
Key features to look for in an expense management software
If you're purchasing an expense management solution, make sure it fills your company's unique needs, offers the right level of functionality, and comes with a dedicated account manager.
Some of the key features you should be looking for are:
1. Real-time expense tracking and reporting
Having real-time expense reports is vital, as it helps finance teams monitor employees' expenses and manage them on the go.
For example, if the company's marketing department uses 70% of its monthly budget in the first two weeks of the month, the finance team can notify them that 70% of the budget has been used so they can plan and budget for the remaining 30%.
With Pluto, you can:
- Get notified as soon as an expense is made, so you know who spends what, where, and when
- Keep track of all business expenses, such as reimbursement, travel, and employee expenditure data, to avoid going over budget
2. Quick reimbursements
End-to-end reimbursements are crucial for a business to operate seamlessly. With quick end-to-end reimbursements, employees no longer have to wait till payroll to get reimbursed.
With Pluto, you can:
- File a reimbursement request through Whatsapp or the Pluto app
- Get reimbursed in seconds
3. Approval flows
Approval processes should be hassle-free. It's essential to have automated approval flows to ensure employee expenses and expense claims are approved by the right managers.
With Pluto, you can:
- Automatically assign expenses to the right reviewer
- Create your own customized approval flow
4. Integration with accounting software
Integrating your accounting platform with your expense management software reduces the time spent on bookkeeping.
With Pluto, you can:
- Integrate most major accounting platforms
- Sync your chart of accounts
- Sync your GL codes
- Close your books 5x faster
5. Customizable budget control
Setting limits and budgets is essential to control your company's financials fully. This helps your company stay within its budget and avoid mishaps with company spending.
With Pluto, you can:
- Create unlimited corporate cards with set limits
- Increase limits on corporate cards in seconds
- Issue vendor-specific cards
Pluto combines the above features with easy integrations, complete visibility, and total control over every aspect of your company's expense management.
Modern finance teams save time & money with Pluto.
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