Sajid Sharma of ProcureDesk identifies three broken procurement signs: approval black holes that delay new hires getting equipment, budget surprises from lack of real-time visibility, and spreadsheet mazes that hide spend data. Route your top 20% of spend to senior approvers and delegate the rest to departments. One client cut approval time by 66% in two weeks.
If the purchase approvals takes forever in your organization, chances are you have a broken procurement process. In this video, I'm going to talk about three signs that your procurement process is broken so that you know exactly what to look for and how to fix it and stick till the end where I'll share one simple tip that you can implement today to cut your approval cycle time by more than 50%. If you're joining me for the first time, welcome. My name is Sajid Sharma. I am the founder of procuredesk where we help growing companies automate their controls around spending through purchasing an AP automation. Now let's jump right in. So sign number one is what we call approval black holes, right? So you create a requisition, send it for approval and you hear nothing. You keep on chasing people for approval and weeks pass by, right? So that's what I mean by an approval black hole, that they just vanish. So here's probably what is happening, right? So you're sending a request to your manager. The manager has so many other priorities. They have crowded inbox so they don't know what to look for. They might be out of office. There's a probably a clear lack of escalation, right. If somebody's out of office, what to do and so on. So things like that slows down the approval process. And it's not just slowdown of the approval process, right? It has business impact. So you're, you know, let's say you are looking to hire a new person and you need a laptop to, you know, get them going and your manager hasn't approved that. So what that means the person is going to join and they can't be productive, right? So those are the real business impact of slow approval process Number two sign is you have budget surprises. So you have people always going over budget. You're discovering it in your quarterly review meetings that so and so went over budget in terms of what they had in the budget versus the actual spend. Based on my experience working with, you know, hundreds of companies, what we typically see is they don't have a proactive budget control. So either people don't know what their budget is or they are not checking at the time of the purchase, right? Or they have to call somebody like finance team and say, hey, what's my budget? And so on. And by the time, you know, you get all that, it's probably too late. So then you need to have awkward conversation with people and say, all right, why did you went over budget? What we can do to adjust it and so on, right? Number three sign is you're living in a spreadsheet maze. We all have spend data siloed in different systems. You probably have invoices, you have credit card spending, you have your purchase order data. If you are using a purchase order system that might be living in a spreadsheet. And when you have siloed data, it just becomes very difficult to get basic information. Let's say your CFO comes and asks and says, hey, I'm getting ready to meet this vendor. What did we spend? And that becomes a research project. At that time you're looking at spreadsheets and hours after you deliver something and you're not even sure whether that's a correct answer or not. And that is not just embarrassing, right? But that could be carrier limiting move for you too when you have siloed processes, right? The impact of that is you're not able to control spending, you're not able to negotiate vendor payment terms or for that matter, you're not able to reduce your overall cost, right? Because you're not spending time on that. You're just chasing spreadsheets to get the basic information going. So those are the three clear signs that your procurement process is broken and you should look at fixing them one by one. Now about the bonus tip I talked about. Here's a simple way to speed up your approval process. One of the common problem we see with most growing companies is they have a one size fit all approval process. Everything needs to go to a manager for approval or everything needs to go to a CFO for approval and so on. And guess What? Managers and CFOs are not sitting there just to approve requisitions. That's not their full time job. They have other business priorities they need to focus on. So the way to look for is, okay, what is the objective of approvals? Approvals is mainly for cost control. And if you do your what's called a Pareto or simply called 8020 analysis on your spending, you would realize that 20% of your transactions contribute to 80% of your spend. So if you focus on only those 20%, you will control 80% of your spend rather than focusing on all 100%. So what does it mean? Should you not approve the remaining 80%? No, what I mean to say here is you should focus on having the 20% approved by senior management. And 80% can be done at the department level. It could be a manager, it could be a director that is doing the approvals and so on. One of our clients recently implemented this strategy and they saw approximately 66% reduction in their approval cycle within two weeks of implementing that. That's how powerful this strategy is. So, just to summarize, if you're seeing these signs, your procurement process is broken, right? Number one, approval black hole. Number two, budget surprises. Number three, are you living in a spreadsheet maze? And the bonus tip is, you know, go figure out 8020 on your spend and configure your workflow processes accordingly. Now, if you like this video, feel free to hit the subscribe button so you get notified next time when we release videos like this. Thank you for joining me today and I'll see you in the next video.
