Sachin Sharma, founder of ProcureDesk, walks through three ways to cut spending leaks: set up approval processes to block unauthorized purchases, use purchase orders to track committed spend and plan cash flow, and automate spreadsheets once you hit around 50 employees. He adds that good user experience matters or employees won't actually use the system.
After working with thousands of companies on implementing better procurement processes, I've seen one common theme and that is uncontrolled spending, either because of lack of approvals or a cumbersome purchasing experience. If you are a owner or a CFO of a company looking to improve your spend controls or reduce cost, this video is for you. Because here I'm going to break down three strategies that you can implement today to bring your spend under control and stick till the end where I'll share one simple tip to make sure that your procurement technology can be implemented in the most efficient way. So if you're joining me for the first time, welcome. My name is Sachin Sharma. I am the founder of procuredesk, where we help growing companies control spend through automation of their procurement and AP processes. So let's jump right in. Strategy number one, control unauthorized spending. So as the name states, right, if you do not have an approval process, of course you're going to have uncontrolled spending because every department have their own way of buying. They probably don't have visibility into their budgets or they don't even know they need to get approvals, right? So the first thing to do is set up an approval process. It could be a simple purchase recurse form, it could be a purchasing system like Procure Desk. The goal here is to give them the process on, hey, you need to get approvals before you make a purchase and this is how to do it. It could be, you know, simple, okay, anything less than $500, you don't need approval. If you want to give them more autonomy on how they can spend the money, right? So all those are processes that you can implement, but start with at least having a documented process that your employees can follow. Number two is you don't have visibility into committed spend which cause problem with cash flow. So a very common problem with many growing companies is even if they have a purchase request process, finance doesn't know about it, right? Because they have no way to look at what's your committed spend. So they can't look at that and plan your cash flow. And all of a sudden they have a surprise camp invoice. And now you need to kind of go pay it now because it's a critical vendor. So all that can cause a lot of chaos in your cash flow planning. If a simple fix for that is make sure you have purchase orders for your large purchase. So a purchase order allows you to have visibility into your committed spend. Because now you can go and look at one place and say, tell me all the purchase orders I have right now open, so I know what's my cash flow requirement and I can put in milestones in the purchase order so I can look at it and say, all right, I need to spend this money six months down the line or nine months down the line because I've issued a purchase order or I need that, you know, the vendor is going to send me an invoice, let's say next month or whatever the case might be, right? So implement your purchase order process to get better visibility into your committed spend. Number three is a manual process. So many companies start with understanding those first two points and then implement a spreadsheet or an email process to manage all that. And that's a great start. If you don't have anything, it's better to have something, right? An email process, a slack approval process, or a spreadsheet to track your purchases. But that doesn't scale. In our experience, if you go beyond 30 to 40 employees, this is not scalable. So if you're just starting now, maybe start with a email and a spreadsheet based process. But beyond 50 employees, you should definitely look for automating the purchasing process, the approval process in a system and not in spreadsheets. Because that not only give you a consistent control, but it also improves the productivity of your employees. Now, spreadsheets have a cost. You probably are not thinking about it because you need somebody to manage their spreadsheet, right? So either it's all the employees managing it or one person managing it. And if you want to scale that, you need to have another headcount to do that. So it comes with a cost. It's not that spreadsheet is free. So those are the three areas. So definitely look for automating manual process. You know, start with manual, but then automate using a purchasing system or something like that. Now regarding the bonus tip, which I share, which I said I will share at the end and that is when companies think about implementing a procurement system, they don't think about the user experience, right? So for example, when I say procurement system, I'm referring in general sense, right? For me, an email and a spreadsheet is a procurement system because it gets you the outcome you're looking for. But if you don't focus on experience, employees don't adopt it, right? So you have to think about the experience first so that you can drive better controls. Most of the times a, I would say initiative to control spend fails because you implemented with a bad experience. You can't go in into this with this saying, okay, employees will follow the process because I set one up. You have to think about is like, how do you make it easy for them to follow so that they can one, follow it? But two is it saves you a lot of productive hours which you're not thinking about today. Right. So if you're worried about uncontrolled spending, here are the three things you can do. Right Set up a a control purchase approval process. Right. So request goes through approval. Number two is implement purchase order process so that you have visibility into your future spending. And number three is automate your manual processes. If you like this video, feel free to hit the subscribe button. So we let you know when we release videos like that. Thank you for joining me today, and I will see you in the next video.
