Visibility of Cost Data

Working with a diverse range of clients is great for a number of reasons not least of which is that it also gives us a chance to see if there are any consistent themes that transcend industries or markets. One comment that is made by the majority of our clients at Expense Reduction Analysts is the lack of data showing what they are actually spending their money on. It seems that accounts payable is rarely set up to provide Finance Directors with the information they need, which they will then be able to make an informed decision on the effectiveness of their procurement.

Below I have outlined the top issues that we find, and can provide a solution to, not just in our initial review and benchmarking exercise, but also in our ongoing audits for each cost area:

1. The reports produced do not reflect the needs of effective cost management – compliance and savings reports are needed.
2. Poor categorisation of cost codes – they sometimes do not reflect the products and services that are actually bought.
3. Multiple entries for the same supplier – we have found over 25 entries for one supplier!
4. Details of the items bought in the period are not held.

The solution could be to have a member of the accounts/purchasing team to set up separate reporting procedures and interpret the data for you every month, but given that the current climate means everyone is trying to do more with less, and that you still may not capture everything given the restrictions already built into the system, this probably doesn’t make sense economically or commercially.
Perhaps taking advantage of specialist reporting tools and the ability to focus in on, and therefore capture all the data in, each cost area would provide executives with the analytical detail and summary they require?
One thing I am sure of and that is that all the clients we speak with on a regular basis tell us that this reporting and auditing service is the most valuable part of our service. Of course I am sure that the savings we achieve help as well!