Top 5 Ways To Cut Cost While Enhancing Operational Efficiency

Digital Strategies For Enhancing Operational Efficiency
Many companies would say that the best ways to cut costs in business is to focus on improving operational efficiency and reducing spending in the following areas:

• Office space
• Staff costs
• Out of pocket expenses
• Supply costs
• Advertising costs

While it is true that these areas contribute to a large percentage of the cost for any company, there is a single solution that can significantly address inefficiencies — go digital! Transitioning operations to a digital platform will increase productivity, reduce overhead in space and staff costs, mitigate error and provide the transparency and the data to inform future strategies that work.

Industries are adopting digital solutions for all aspects of business, the payment industry is no different. Companies like WEX are looking to technology to cut costs by streamlining complex business payments simultaneously becoming more competitive in the market.

The Top 5 Solutions Start With Integration And ERP

Enterprise Resource Planning (ERP) is a digital solution that was developed to address operational efficiency across all business units, including inventory and supply management, human resources, customer service and CRM, financial management and payments.

ERP software is integral in streamlining processes by integrating these business functions and information into a single and complete system database that can be accessed by the entire organization. This shared database provides employees across all divisions and business functions with visibility to specific information needed to accomplish their tasks. The system also creates continuity and accuracy in ways never before possible in business.

Once an ERP system is in place, additional digital solutions can be integrated, further strengthening the financial supply chain and cutting costs though efficiencies and transparency. Because these systems are cloud based, it can eliminate the need for some systems hardware as well, leading to savings on overhead.

A digital, cloud-based platform can apply savings to each cost center mentioned above while automation will drive profitability as well. Payment companies like WEX have developed products and systems that can be integrated seamlessly into any ERP platform. In the complex world of business payments, these 5 solutions offer cost saving and improved operational efficiency.

1. Virtual AP Solutions
A Virtual Payments program utilizes virtual card payments via the Mastercard® payment network to provide buyers an efficient and seamless way to pay their suppliers for invoice-based spend.

• A virtual card provides information for automatic reconciliation of entries which is quicker and more efficient than a manual system. This reduces the number of disputed entries and allows for better settlement processes
• The minimal amount of manual inputs not only reduces error rates, but also eases debtor management requirements and improves cash flow for the supplier
• The electronic processing of invoices and payments helps improve the overall operational efficiencies for the buyer and supplier
• Use of virtual AP reduces printing resource utilization which can have a positive impact on the environment

2. Integrated Payments Utilizing The ERP System
Integrated payables can work within any ERP system providing a seamless way to process payments, regardless of payment type. Bank agnostic platforms are designed to provide complete transparency and accountability for all supplier payment methods including virtual cards, ACH, and check.

• 100% electronic payments from day one
• Cost savings
• Increased security
• Improved supplier relations
• Flexible payment options (virtual cards, ACH, check)
• Greater overall visibility
• Bank agnostic network and platform

3. Card Solutions
The traditional procure-to-pay process is costly. The process cost of using a traditional procure-to-pay process – requisition, purchase order, invoice and check payment – is the same regardless of the dollar amount of the purchase. Meaning, the process cost of a $50 purchase is the same as a $20,000 purchase and often the process cost exceeds the value of the purchased item.

Purchasing cards simplify the complex payment process. In a majority of companies today, a large number of check payments are still being made for low-value items to a large number of suppliers, which is a costly, inefficient process. When the payment method is switched from the procure-to-pay process to a purchasing card (P-Card), efficiency savings range from 55% to 80% of the traditional process cost.

4. Big Data
Before you can control your company’s spending, you have to understand it. While the purchase of critical materials is top-of-mind for most businesses, hard-to-track indirect costs like travel, office supplies and out-of-pocket expenses are often left unmonitored, resulting in overspending.

Analytics and reporting shows you where your company spends money, on what and with which vendors. A deeper dive reveals outliers, variances and specific categories for a detailed picture of business expenses. Identify cost-saving opportunities, rein in out-of-policy expenses and target categories for strategic sourcing.

5. Mobile
As with most digital solutions there are efficiencies and cost savings, but mobile efficiencies are magnified by the digital solution in the palm of your hand. While there are many mobile solutions that save time and money, in the payment sector that generally means managing bank accounts and funds. Here are a few of the functions that a mobile app can provide:

• Get real-time card balances and recent transaction details
• Transfer funds from within the account or to external accounts
• Register and deposit checks
• Mobile payments

What we are quickly learning is that in order to ease the world of complex business payments, digital is the answer and is providing more than just a way to cut costs. These 5 solutions work to save money while simultaneously enhancing efficiencies, driving profitability and strengthening the financial supply chain for companies of all sizes.

Sources:
Virtual Accounts. The Panacea For Accounts Receivables!
10 Ways To Cut Business Costs