Spend analysis is the ideal way to gain a complete picture of how your company spends money. It can provide you with the knowledge you need to reduce expenses and identify savings opportunities for the future. With spend analysis, you can answer questions such as:
- Why are we making these purchases?
- Do our vendors charge a fair price?
- Should we negotiate rates?
- Can we improve the return on our spend?
Essentially, spend analysis can uncover meaningful insights that improve the way you operate and steer you toward success. If you’d like to use it to your advantage, here are some best practices we encourage you to follow.
1. Forgo Manual Processes
Gone are the days where spend analysis is a manual process. Thanks to technology, you can perform it without the hassle of Excel spreadsheets, data mining, sorting, and aggregating. As long as you choose a reliable, advanced software, you can ensure the information you receive is accurate and save a lot of time in the process.
2. Remove Duplicate Files From Your Vendor Master File
If you have a vendor master file, it’s important to keep it in optimal shape at all times. Not only can an unclean file prevent you from discounts and contract incentives, it’s one of the most common causes of inaccurate spend analysis. To ensure accuracy, follow our 5-step cleanse program:
- Deactivate unused vendors.
- Deactivate vendors you haven’t used for over 48 or 36 or 18 months.
- Deactivate duplicate vendors.
- Analyze remaining vendors for missing data.
- Match and verify taxpayer identification numbers.
3. Use Technology to Consolidate Your Internal Data
Internal data is the most important component of spend analysis. While you may have easy access to this data, it’s likely spread across various platforms. You may find it in p-cards, ERPs, finance spreadsheet and documents, and accounts payable tools.
Since gathering all this data manually is quite time-consuming and challenging, use technology to help. The technology should be able to leverage your data into one centralized source of truth.
4. Don’t Overlook External Data
It’s vital to focus on external data in addition to internal data. Here’s why: Let’s say your company purchases a lot of fabric. Imagine you want to figure out how many fabric vendors you’re using and how much you spend with each one. You can pull from an external database, instead of searching each line item and drastically expedite the process.
Try Technology Insight’s DataShark Today
If you’re in search of cutting-edge technology to help you with your spend analysis, DataShark can help. It features a FindIt tool that can allow to search for a vendor and pull up all your expenditure with them in a matter of seconds.
You won’t have to worry about the inconvenience of multiple platforms because DataShark keeps everything in one place and makes spend analysis a breeze. For more information, request your free assessment today.