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Top 6 Procurement Software Solutions for Modern Businesses

Mohammed Ridwan

November 2, 2023

5

The traditional procurement process is time-consuming, prone to errors, complex, and challenging to implement efficiently. From raising a purchase request to making vendor payments, multiple stakeholders are involved. In addition, securing approvals through various channels of an organization leads to chaos. Hence, 77% of companies are shifting to procure-to-pay solutions, also known as procurement software.

What is Procurement Software? 

Procurement software are tools that automate the procurement process

Instead of relying on multiple platforms and different channels to procure goods and services, the process is automated and brought together on a centralized platform. 

A powerful procurement solution helps you in:

  • streamlining the request and approval process for purchases
  • generating, tracking, and managing purchase orders
  • creating, negotiating, and tracking supplier contracts
  • managing and maintaining supplier relationships 
  • automating invoice validation, approval, and payment workflows
  • integrating with other systems for seamless data flow and coordination.
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What Are the Benefits of Procurement Software? 

By automating your procurement process with a procurement management software, you can improve it in the following ways: 

  • Once you enter data, it is auto-populated throughout the procurement cycle. This minimizes the risk of errors due to manual data entry in purchase orders, invoices, and other documents.
  • You get real-time visibility into the procurement process. You can also track the status of purchase requests, orders, deliveries, and payments. 
  • With built-in reporting and analytics tools, you can generate detailed reports on spending, supplier performance, and other key metrics. This data-driven insight enables better inventory planning and strategic decision-making.
  • You can standardize workflows for purchase requisitions and approvals. Route the requests to the appropriate individuals for approval and reduce any delays. Notifications and reminders are automated, ensuring timely responses.
  • Invoice processing and payment workflows are automated. This ensures that invoices are paid on time. This helps in taking advantage of early payment discounts and strengthens vendor relationships. 

Top 6 Procurement Software 

To help you select the procurement management software best suited for the needs of your organization, we have listed the top 6 procurement solutions:

1. Pluto 

Procurement management software by Pluto

Pluto is an all-in-one procurement software designed to transform your accounts payable (AP) processes. It reduces your finance team's workload and makes procurement easy. From automating purchase requests to setting multi-layer approval workflows and managing vendors, it is the ultimate procurement solution to transform a chaotic procurement process into a faster and more efficient one. 

Key Features:

  • Features fully customizable and automated workflows for raising purchase requests and purchase orders, requiring no technical expertise
  • Offers flexible approval engine capable of managing intricate hierarchies
  • Enables multi-layer invoice approvals with policies to align with your company's structure
  • Ability to upload invoices easily via WhatsApp images, eliminating the need to search for invoice details. Also, facilitates invoice capture via emails directly to speed up the receipt capture process.
  • A centralized dashboard to gather bills in one place and track the status to avoid double payments
  • Vendor-specific corporate cards to control budgets and detect irrelevant expenses
  • Supports local and international wire transfers to make payments 
  • OCR technology minimizes manual data entry by creating and populating bills from invoices
  • Supports ERP integration to synchronize your vendors, POs, and bills and integrates with accounting software, such as Oracle, NetSuite, Zoho, Quickbooks, Wafeq, Xero, etc.
  • Raises alerts for upcoming payments and enables scheduling payments in advance and automate invoices 
  • Provides a complete audit trail of the process to ensure visibility at each step
  • Shows real-time analytics to facilitate deep insights for supporting budget control

Pricing:

Request the sales team for a custom quote

Pros:

  • More financial control with vendor-specific corporate cards 
  • Better Forex rates than most local banks 
  • Multiple integration options

Cons:

  • Slightly longer on-boarding due to corporate card offering 
  • Integrates with all other major ERPs except Tally

2. Yooz 

Procurement software by Yooz

Yooz optimizes the AP process, specifically focusing on invoice management. It is a cloud based software that uses artificial intelligence (AI) and machine learning technologies to enhance security and control in AP automation. It is suitable for mid-size companies of all sectors wanting to automate procurement with a cloud-based procurement solution. 

Key Features:

  • Enables online, real-time management of supplier relationships, improving communication and collaboration
  • Provides mobile access for invoice approval and communication
  • Maintains regulation-compliant traceability, ensuring adherence to relevant laws and standards
  • Automates real-time GL coding and purchase order matching
  • Captures all types of documents through various channels, such as email, drag-and-drop, mobile, scan, and sFTP, supporting multiple formats, including PDF, Factur-X, UBL, CII, and EDIFACT
  • Integrates with accounting software and  and ERPs
  • Allows users to approve and pay invoices in batches, offering multiple payment options, such as Virtual Credit Card, ACH, eCheck, and Paper Check
  • Offers a range of services, including consulting, configuration, training, and user support

Pricing:

Free trial for up to 15 days followed by a "pay-as-you-use" model.

Pros:

  • Integration with Sage Intacct
  • Ability to tag people in the comments and email them directly from the invoice
  • Numerous criteria available for setting up the approval workflows

Cons: 

  • Doesn’t offer payment services in UAE, so you need to carry out payments on a different platform
  • Doesn't have integrations with major suppliers as a form of punchout
  • Time-consuming to download and export files
  • Hard for vendors to send the invoices through Yooz

3. Procurify

Procurify's Procurement software solution

Procurify speeds up the procurement process, enhances internal communication, and reduces financial risks. It is an easy-to-implement tool that saves time for finance and operations teams. From catalog management to custom user controls, it helps to track the procurement process in real-time. 

Key Features:

  • Tailors purchase orders to match your internal processes and vendor expectations
  • Creates, tracks, and maintains an audit trail of all procurement transactions for transparency and compliance.
  • Enhances financial controls by enabling purchase order-based purchasing
  • Ensures that requested items are approved against budgets before procurement.
  • Sync purchase orders with your accounting system or ERP, whether via API, CSV, flat file, or direct integration
  • Integrates with trusted suppliers through PunchOut catalogs to streamline the ordering process.
  • Enables blanket purchase orders, which involve making multiple purchases against a single purchase order, even when details of future purchases may be unknown.
  • Purchase order workflows to save on shipping costs, unlock vendor discounts, and reduce paperwork 

Pricing:

Starts at $2000/month with a custom pricing tier

Pros:

  • Easy to make amendments in the original purchase order
  • Enables ordering from multiple websites for resources, including Amazon
  • Makes it easy to upload documents to support expense and order reports

Cons:

  • Doesn’t offer payment services in UAE, so you will need to carry out payments on a different platform
  • Isn’t catered to the UAE market, and does not support UAE specific workflows such as VAT management
  • Cannot edit orders once they are approved
  • Cannot see the order history for a catalog item without running a report
  • Physical inventory has to be tracked outside Procurify

4. Precoro

Procurement platform by Precoro

Precoro is a cloud-based solution designed to streamline operations, automate tasks, and centralize purchasing procedures. It enables tracking discounts, monitoring corporate expenses, and enhancing cash flow transparency. It also provides analytics and reports for strategic procurement planning.

Key Features:

  • Simplifies the approval by allowing users to approve from any device via email or Slack notifications. 
  • Supports customizable approval workflows with multi-step and role assignment
  • Facilitates creating, approving, and tracking purchase orders and transfer orders from Amazon Business via Punch-in
  • Connects with various ERPs and business tools like NetSuite, QuickBooks, and Xero, or its API
  • Ensures data security through Single Sign-On (SSO) and 2-factor authentication
  • Offers an intuitive interface and guidance from a dedicated customer success manager whenever needed
  • Gives a risk-free 14-day free trial with access to all features

Pricing:

Starts at $35 per user per month billed annually for teams with under 20 members and offers custom pricing for enterprises

Pros:

  1. Provides flexibility for enterprise needs
  2. Works well for budgeting procurement
  3. Allows tracking invoices in a centralized environment

Cons: 

  1. Requires training to customize complex workflows
  2. Invoice processing is slow
  3. Isn’t suitable for manufacturing industries
  4. Difficult to collaborate on invoice drafting

5. Kissflow

Procurement solution by Kissflow

Kissflow simplifies and enhances procurement processes while ensuring transparency and compliance. It helps to automate the entire process without requiring technical expertise or coding experience. It comes with 50+ ready-to-use applications, enabling unlimited automation applications.  

Key Features:

  • Offers fluid forms to enable easy capturing, approval, and tracking of purchase requests
  • Allows to register and maintain vendors effortlessly with access to multilingual catalogs
  • Integration with accounting systems, ERP, and finance systems like Quickbooks, SAP, and Microsoft Dynamics 
  • Accelerates the invoice approval process with timely alerts and automated checks. Connect invoices to contracts, purchase orders, and service entry sheets in a single dashboard
  • Customizable reports to visualize data using charts, filters, and heatmaps
  • Ability to define and manage budget restrictions with dynamic rules throughout the entire procure-to-pay lifecycle
  • Customized approval workflows to ensure transparency with rule-based approval processes
  • Smart alerts that provide real-time updates on the status of purchase orders and invoices to keep stakeholders informed 

Pricing:

Starts at $2499/month (billed annually). Pricing varies based on transaction volume and number of users.

Pros: 

  • Intuitive interface with a relatively short learning curve
  • Allows automated workflows to be created with limited technical expertise

Cons:

  • Not built specifically for procurement teams
  • Does not support payment flows in UAE
  • Cost of its license is high (particularly for SMBs)
  • Can not handle intricate processes that require a high degree of customization or involve multiple conditional branches
  • Customization options are limited, including specific integrations, advanced business rules, or more sophisticated automation capabilities

6. Vendr

Procurement management software by Vendr

Vendr is a practical solution for streamlining SaaS procurement. It simplifies the entire process, from intake requests to contract management. It provides essential SaaS insights, negotiates expert advice, and integrates with core business tools for procurement and vendor management. 

Key Features:

  • Buyer guides to provide negotiation insights and gain the upper hand in software purchases
  • Negotiation advisory to provide personalized guidance on negotiating like a pro and enter negotiations with confidence
  • Simplified intake forms to ensure company-wide compliance and visibility
  • Integration with different accounting and finance tools, such as Oracle, NetSuite, Intuit, Quickbooks. 
  • Integrates with platforms like Rippling Workday to include correct stakeholders. Additional integration with SSO providers such as onelogin.
  • Comprehensive renewal dashboard to receive early alerts and streamline the renewal preparation process to maximize savings.
  • Vendr Slack integration for quick answers and timely notifications to collaborate in real time with your team, minimizing approval cycle times

Pricing:

There are 2 packages—the basic one starts at $15,000/year and the pro package starts at $20,000/year.

Pros:

  • Offers assisted buying with a team who negotiates on your behalf
  • Comprehensive database of vendors in one place
  • Helps standardize procurement workflow 
  • Provides insights about fair market value 

Cons:

  • Restricted to SaaS procurement only 
  • Multilingual services are limited 
  • Navigating multiple workflows is not as fluid as desired
  • Doesn't support multiple currencies 

Find the Right Procurement Software 

When choosing procurement software, focus on user-friendliness, scalability, and integration capabilities. Make sure the software aligns with your specific needs.

Finding the right software for accounts payable automation will be crucial for your business. For instance, if you frequently deal with multiple suppliers and have a complex approval process, ensure the software can accommodate these intricacies. Similarly, if you're in the healthcare industry, look for procurement software that complies with industry regulations like UAE Healthcare Law and the Dubai Health Authority (DHA) regulations. This ensures the privacy and security of patient data and adheres to local data protection standards. Moreover, check if the vendor offers active support and training. In case of a technical issue, having an unresponsive support team can disrupt the process and create bottlenecks.

Don't rush the decision. Thoroughly evaluate multiple options. Investing in an appropriate solution will save you money and headaches in the long run.

Want a tool that is safe, fast, and transforms your chaotic procurement process into an automated solution? Book a demo today and see how Pluto can simplify procurement for your team.

Disclaimer: The comparisons and rankings of procurement software competitors in this article are based primarily on reviews found online. While we strive to provide accurate and up-to-date information, these reviews are subjective and reflect the opinions of the users who posted them. The information presented is intended for general informational purposes and should not be considered as a definitive guide for choosing a software provider. We encourage readers to conduct their own research and consider their specific needs before making a decision.

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At Pluto Card, our mission is to assist businesses of all scales make well-informed choices. To uphold our standards, we follow editorial guidelines to guarantee that our content consistently aligns with our high-quality benchmarks.

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5
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Corporate Cards
November 29, 2022

Vlad Falin

Best Virtual Corporate Card For Business [2024]

In modern business, cash and checks have gone the way of the horse and buggy: they’re simply too inefficient. But even their replacements – traditional payment methods like debit and credit cards – are overdue for an upgrade.

Welcome virtual corporate cards.

These digital payment methods offer numerous perks, from faster payments and reconciliation to greater control and security. They’re quicker, safer, and easier to integrate and use for accounting and operational teams alike.

Plus, the industry is on the cusp of an explosion, which could send innovation through the stratosphere. Between 2021 and 2026 alone, virtual card spending is predicted to skyrocket from $1.9 trillion to $6.8 trillion.

Here’s what to know.

First, A Brief Refresher on Corporate Cards

Corporate credit cards are credit cards issued to a business entity – not a person – as the responsible party.

In most other respects, corporate cards are like regular credit cards. They require a credit check to apply, charge a regular interest rate, and even come with reward systems. Corporate purchase cards are also unique in that the business can issue dozens of employee cards on the same account.

Pluto corporate cards come with specific controls to help your business manage spend. Real time tracking, setting limits on the go and quick reconciliations are just a few of the things that Pluto can provide.

But there is more. For companies who need to act quickly and require flexibility in their card issuing, there are virtual cards.

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What is a Virtual Corporate Card?

Virtual corporate cards, like regular corporate cards, are linked to the business’ budget. Employees can use these cards to pay for business expenses without using their own personal cards or cash.

But unlike physical cards, virtual credit cards reside solely in the digital realm. These cards are essentially unique, digitally-generated 16-digit card numbers that tie to a specific spending account. (In this case, the business’ account.) Each virtual card contains other essential card details, too, like the following:

  • Cardholder’s name
  • Company’s billing address
  • Card number
  • Expiration date
  • CVV

Virtual cards are also unusual in that they can be generated and destroyed in moments. They can be designed to permit one-off charges, expire same-day, or hold only a specific dollar amount. Some virtual cards can even be linked to a particular vendor for one-time or recurring payments, perhaps with weekly or monthly spend limits.

Virtual cards can be accepted anywhere that online payments, and even some in-store payments, are accepted. Due to their ability to generate new numbers on demand, they offer additional security and control for business accounts. Plus, they can’t be lost or stolen like a regular credit card.

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Virtual Credit Card vs. Virtual Corporate Card

A virtual corporate card is simply a digital credit card issued to a corporation. For the most part, you can use virtual cards the same way you could use regular cards. However, like corporate cards, these virtual equivalents allow the issuing firm and receiving businesses to set particular spend and monitoring controls.  

Because virtual credit cards are 100% digital and able to generate new 16-digit numbers on demand, they’re optimized for safety and flexibility. They also make it easier to reconcile books and otherwise manage spending.

Why Use Pluto Virtual Corporate Cards?

Pluto virtual cards offer tons of perks and use cases. With more control and yet unparalleled flexibility, your business can remain nimble as you grow.

At the same time, department heads can keep an eye on expenses, spending, and accounting practices.

Flexible Setup and Spending

Modern companies need to be nimble, able to make purchases on the fly and reconcile their books in minutes, not days. Virtual cards let your business do so –without breaking their budgets.

Virtual cards provide unprecedented levels of flexibility to businesses of all sizes. After signing up, cards can be generated and issued to individuals with just a few clicks.

They also permit companies to limit available vendors, set a specific spending limit, expiration dates, and even the specific department budget the card should link to.

Unlimited cards

One of the biggest perks of Pluto's cards is that you can create as many as you need in a matter of seconds.

The times when an employee had to wait several days for the approvals and the card details to arrive are over.

For example - at 9:00, we had a team discussion about additional performance marketing activities.hile we were on the call, the department head created 3 virtual corporate card numbers for us to use.

It took him roughly 2 minutes to create them. All that without missing a beat on the call itself.

Right after we finished the call, we could start setting up ads.

Spend Control

Once you’ve generated a card – either for your team or by employee request – you can quickly personalize them for added constraint.

These controls are admittedly extensive, allowing your business to:

  • Lock cards to a particular merchant or vendor
  • Ensure cards can only pay to specific accounts
  • Generate cards with set one-time, monthly, or recurring expenditure limits
  • Institute purchase approval practices for individual cards, persons, or teams

Companies can use these various limits to prevent overspending, surprise fees, and unnecessary surcharges. Plus, with specific cards linked to individual employees or vendors, compartmentalized spend management becomes even easier. For many businesses, this is a welcome alternative to issuing high-limit cards to every employee that requires one.

In the example above, you can see one of the popular uses of Pluto virtual cards - employee benefits.

When a new employee joins, how much time does it usually take your HR department to get wellness or children's educational benefits to that employee?

With Pluto, it’ll take you leess than 2 minutes.

Higher Accountability

Another perk of virtual cards is that they can be generated for and linked to a single individual or team.

That makes purchase tracking easier, which increases personal and departmental accountability.

By using built-in accountability and analysis tools, your business can better track how and when money is spent at every level.  

Streamlined Accounts Payable

Enhance your finance team's efficiency with Pluto, featuring virtual corporate cards and integrated accounts payable software.  Pluto can integrate with your accounting software, making it easy to sync your chart of accounts, automate mapping your GL accounts, and bulk verify & export your expenses so you can close your books 10x faster.

From there, settlements can happen immediately rather than taking days or weeks. This eliminates the slow, potentially error-riddled manual accounting process with a faster, cheaper, and more efficient digital alternative.

Better Security

Pluto's virtual cards can help greatly reduce your overall card risk profile. Their increased security is due to their unique design, including their:

  • Digital nature, which precludes them from being physically stolen.
  • Set spending limits to prevent overcharging.
  • Ability to block vendors and retailers from storing personal or card information long-term, helping to prevent fraud
  • Ability to include one-time or vendor-specific expenditures and other spending controls, limiting financial hemorrhaging
  • Auto-lock features to freeze cards instantly
  • Ability to delete and regenerate virtual cards in seconds rather than days

Real-Time Reporting

Pluto's virtual cards feed their data directly into a centralized interface, allowing all data to show up in real-time reports, simplifying the analytical process. The spend management systems also offer real-time notifications.

Together, these features offer companies greater real-time visibility over their expenditures. This level of transparency can inculcate a healthier spending culture within a company beyond merely increasing accountability.

Plus, real-time reporting means that accounting teams and department heads can immediately respond to budget requests, verify receipts, and manage card limits.

Pluto expense management dashboard allows you to see everything and makes spend control a breeze.

Simple Reconciliation

Virtual credit cards provide an easy approval system to allow finance teams to take advantage of automatic reconciliations whenever possible.

Accounting teams can set codes for recurring transactions and tag controls to identify transactions before posting them to the general ledger. Each card can be linked to a specific employee to link specific transactions to each employee.   

With the right card and accounting integrations, it’s possible to automate the bulk of manual data entry and reconciliation out of the gate. Plus, you’ll increase the accuracy of your data and insights.

Efficient Vendor Payment and Management

You can also use virtual cards to simplify vendor management.

You can link specific cards to particular vendors, allowing you to track which teams use them regularly and how their prices change over time.

By setting limits and expiration dates to your specifications, you can prevent teams from “forgetting” about upcoming auto-renewals.

Reward Options

Pluto virtual corporate card offers a wide range of perks and benefits!

Instead of giving you Starbucks gift cards, we formed partnerships with some of the most critical services for the day-to-day operations of your business.

Reduce the Risk of Fraud

When multiple employees and vendors share a high-limit physical card, you run the risk of operational problems and fraud.

The more people who can access a single 16-digit number, the more likely unauthorized expenses can slip through the cracks.

Virtual credit cards don’t come with the same fraud and data loss risks that physical cards do.

  • They’re impervious to hacks that come with swiping physical cards at in-person terminals.
  • You can create cards for a particular purchase, vendor or project.
  • You can easily link cards to specific employees and/or vendors, offering full control while minimizing risk.

Virtual Corporate Card Use Cases

Due to their innate flexibility and unprecedented control, virtual credit card programs offer multiple potential use cases. There are too many to go over here – but we’ll address a few of the most common or impactful.

Agencies

Digital agencies need to be able to make payments on behalf of their clients. This can be done using virtual cards, which allows the agency to keep track of spending and ensures that funds are used for the intended purpose.

With Pluto, you can create virtual cards for every PPC campaign or bigger project and keep track of your agency's spending in one place.

Not only does this allow you to scale the clients' performance marketing efforts, but the spend control dashboard shows you exactly how much was spent. You can go as far as naming and tagging your virtual cards, so you can see how much was spent per PPC channel on individual clients.

Event Organizers

Catering, lights, music, production, venues, drivers so many things that even organizers have to keep in the air! If you are an event organizer, chances are you understand how important it is to keep your spending in one place. That way when the time comes to file taxes or show ROI, everything is itemized and accounted for.

With a virtual card, all your charges will be automatically filed under the right categories. You can also set limits on how much can be spent per vendor, so you don't have to worry about overspending.

And if you have a team working on the event with you, you can give them each their own virtual Pluto card (or physical) with their own spending limits. That way, you can see at a glance who is spending what and where.

Startups

When you are a startup, your want to fully focus on your product and leave the rest to someone else. With a virtual card, you don't have to worry about setting up a corporate credit line or dealing with complex expense reports.

Just set up your team with Pluto virtual cards and let them manage their own expenses. You can see what they are spending in real-time and track progress against your budget.

Also, when you are at your early phase, there is no time for lengthy approvals. SaaS, ads, tools, plugins - virtual card can service them all.

E-Commerce

You business is digital and so should be your payment tools. With a virtual card, you can make payments online without ever having to worry about the security of your information.

Worried about that Alibaba supplier? Create a virtual card with a limit just for that vendor and you're good to go. Put a spending limit on it, and you limited any potential risks as well.

  • Need your team to buy TikTok ads? -> Done. TikTok Ads Virtual Card
  • Need to pay an Upwork freelancer? -> Done. Upwork Specific Virtual Card

You see where we are going with this. Create as many virtual cards as you need for as many occasions as you need.

Consulting

Consultants are on the road most of the time, and when they are not - they are seated in the client premises, helping to grow the business.

Employee travel is one of the most commonly-cited reasons for individuals requiring their own corporate cards. Travel expenses may include hotel rooms, a food allowance, or additional budgeting to purchase essential materials while they’re away from home, so to speak.

However, even in your own teams, it’s possible for employees to get carried away. An expensive dinner, unexpected expenses, and hotel room upgrades may all be well within your budget. But if you want to prevent excessive spending on your dime, virtual card controls hand you that power.

Fleet Management

Any company that have a vehicle fleet knows that a lot of time can go into fuel cards management.

Pluto can provide both virtual and physical corporate cards which makes it a perfect solution for efficient fleet management. 

You can issue fuel cards to the drivers as needed, and scale up and down depending on the current business situation.

In addition to that you see the fuel expenses real-time and can set limits and approvals where required. 

Key Takeaways

  • Virtual corporate credit cards pave the way for the future while addressing a multitude of modern business pain points.
  • They hand companies greater control over their spending, simplify accounting across the board, and even help protect employees.
  • Plus, with so many nuances and use cases, it’s incredibly easy to personalize virtual cards to meet your unique needs.
5
All
Guides
January 3, 2024

Mohammed Ridwan

How to Write a Petty Cash Policy in Four Easy Steps (With Template)

Here’s the difference between a vague and a specific petty cash policy:

Vague: Petty cash can be used for any business-related expenses as needed upon approval.

Specific: Petty cash is used for small, incidental business expenses, such as office supplies, minor equipment purchases (up to $100), business-related meals and entertainment (up to $25 per occurrence), and travel expenses (e.g., tolls, parking fees).

Companies often set vague policies or leave them to employee understanding; after all, having petty cash is about flexibility and saving time. The entire petty cash system sits on the foundation of trust, where a missed receipt isn’t considered a big deal. 

However, as the business grows, these missing documents, owing to a lack of structure, cause monetary setbacks and disrupt operations. The finance team pursues the employees for receipts, and the employees struggle to get them submitted on time and the budget goes off the charts. 

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What is a Petty Cash Policy?

A petty cash policy is a set of guidelines that govern the management and usage of small amounts of cash for nominal business expenses. It outlines the purpose, authorized expenses, and recordkeeping and replenishment procedures for the petty cash fund.

Suppose an employee wants to purchase office supplies. With proper documentation and approval, a policy in place can restrict the use of cash for office supplies and minor expenses up to $50 only. After all, petty cash should be used only when absolutely necessary, for all other larger purchases it is better to use corporate purchasing cards.

Hence, structured petty cash policies and procedures help the business track and control all expenses with proper recordkeeping, enhancing accountability and petty cash management.

4-Step Process to Set Petty Cash Policy and Procedures

Before you set up policies and procedures, assess the need for petty cash and the types of expenses you will cover. This study will become the foundation for your guidelines and provide an estimated figure for petty cash funds.

For example, a transport business’s petty cash expenses include fuel for vehicles, tolls, minor vehicle repairs, and possibly small office supplies for administrative needs. However, a property investment company’s petty cash expenses include office stationery, postage, property maintenance supplies, and likely local travel expenses for property visits or inspections.

Hence, the nature of petty cash expenses will vary based on your business’s specific needs and operations.

Once these fundamentals are clear, you can set your petty cash policies and procedures by following the steps mentioned below.

1. Get Inputs From the Finance Team

Collaborate with the finance team to discuss current processes and challenges. Understand the gaps in existing systems and get feedback for potential improvements and best practices.

For instance, if the finance team struggles with frequent delays in providing employees with adequate cash on time for urgent expenses, you can establish guidelines that they can follow for such instances. 

Another common instance is that the finance team struggles with frequent delays in employee reimbursement due to unclear approval processes. You can establish a streamlined approval hierarchy in the policy. It involves specifying designated approvers and setting clear timelines for reimbursement requests, ensuring timely resolution.

petty cash workflow

Additionally, discuss compliance requirements to create a framework that ensures legal and regulatory standards adherence. This can include provisions such as documenting receipts and carefully reporting cash transactions above a certain threshold to comply with company reporting & auditability requirements. 

2. Define Procedures

Create a comprehensive document outlining the workflow of petty cash transactions, including authorizations and documentation.

Define the approval process, specifying who needs to approve different transaction amounts. For instance, your approval policy could look like this:

The routine office supplies purchases under $20 require immediate department supervisor approval, larger expenditures for equipment up to $100 need approval from the finance manager, and any expenses exceeding $100 require executive-level authorization.

Similarly, create a standardized process and template for documenting each transaction, including separate fields for date, amount, purpose, and signatures. Additionally, you could add guidelines, such as submission of a receipt within a week. These measures further help you strengthen the structure and avoid any hassle.

3. Specify Controls

Once all the fundamental procedures are defined, you set the rules for operating your petty cash system to ensure proper control. Here are some examples:

“If the petty cash fund balance falls below 20% of the initial amount, the designated custodian is responsible for submitting a replenishment request to the finance department. The replenishment should be completed within two business days to ensure the continuous availability of the petty cash fund for essential business needs.”

“Authorized petty cash transactions for office supplies are limited to $25 per occurrence, while minor miscellaneous expenses are limited to $15. Any transactions exceeding these limits require prior approval as per the designated approval process outlined in this policy.”

“To ensure transparency and accountability in the management of petty cash funds, a policy of custodian rotation will be implemented. Every quarter, a new employee will be assigned the responsibility of a petty cash custodian. The outgoing person must provide a comprehensive handover to the incoming custodian to maintain continuity and accuracy in fund management.”

4. Communicate and Review 

Share the new petty cash policy with relevant stakeholders and conduct training sessions for employees involved in petty cash transactions. 

To assess the effectiveness, establish a monthly audit schedule, in addition to petty cash reconciliation, where the designated team member will verify the log, review the completeness and accuracy of documentation, confirm that the approval process has been followed, etc. 

The audit will help you identify potential loopholes, allowing you to modify the policy and procedure for effective petty cash management. 

In addition to these audits, implement a tracking system, such as a spreadsheet or an expense management platform, to monitor expenses. While the spreadsheet is a cost-effective solution, a dedicated automation platform will make tracking petty cash in real time easier with complete visibility. Moreover, you will have many more controls and features to oversee your petty cash without spending hours maintaining logs and Excel spreadsheets.

Template for Setting Petty Cash Guidelines

Modify this template and include specific petty cash guidelines to suit your business needs:

Petty Cash Policy and Procedures

1. Purpose

The purpose of this document is to provide clear guidelines for the establishment, management, and usage of the petty cash fund within [Company Name]. The petty cash fund is intended for minor, day-to-day business expenses, facilitating the quick and efficient processing of small transactions.

2. Custodian

The finance department will manage the petty cash fund, with [Designated Employee] serving as the petty cash custodian. The custodian is responsible for secure cash handling, accurate record-keeping, and compliance with company policies.

3. Petty Cash Fund Amount

The initial petty cash fund is set at [Enter Amount], subject to review annually or as business needs dictate. Any adjustments to the fund require approval from [Finance Manager/Authorized Approver].

4. Replenishment

When the petty cash fund balance drops to [Enter Minimum Amount], the custodian must submit a replenishment request to [Finance Manager/Authorized Approver]. These requests should include original receipts and a summary of expenditures.

5. Authorized Petty Cash Expenses

The following types of expenses are authorized for petty cash disbursement:

  • Office supplies (e.g., pens, notepads)
  • Small equipment purchases (under [Enter Amount])
  • Minor business-related meals and entertainment
  • Travel expenses (e.g., tolls, parking fees) 

6. Unauthorized Expenses

Petty cash funds should not be used for personal expenses, cash advances, or any expenditures unrelated to official business activities. Any unauthorized expenses must be reimbursed by the individual responsible.

7. Recordkeeping

The custodian will maintain a dedicated petty cash log. Each entry should include:

  • Date of transaction
  • Vendor or payee
  • Description of the expense
  • Amount
  • Receipt verification

8. Receipts

Original receipts for all petty cash transactions must be submitted promptly. Receipts should be attached to the petty cash log and clearly show the date, amount, and nature of the expense.

9. Auditing

The finance department will periodically conduct surprise audits on the petty cash fund to ensure compliance. The custodian is responsible for facilitating the audit process and addressing any discrepancies.

10. Reporting

A monthly summary of petty cash transactions, including the remaining balance and any discrepancies, will be provided to the finance manager. Any significant issues or concerns should be reported immediately.

11. Policy Review

This policy will be reviewed annually by [Finance Manager/Authorized Approver] to assess its effectiveness and relevance. The petty cash custodian can recommend adjustments or issue an official request.

Approval:

[Signature] [Date]

[Name, Title]

[Finance Manager or Authorized Approver]

[Company Name] 

Implementing a Foolproof Petty Cash System

To establish a dependable petty cash system, collaborate and automate. Stay in close connection with the finance team to gather feedback and insights. Use solutions like spend management software to automate the petty cash system and get real-time visibility. They provide more structure to your petty cash management and simplify workflows for employees.

In one of our posts, we have covered more about petty cash management and how you can automate it. It will help you understand the nuances and efficiently manage your petty cash.

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Updates
December 11, 2023

Vlad Falin

5 Strategies For Cost Reduction in Procurement To Improve Bottom Line

It’s challenging to always be on your toes, looking for ways to cut costs. Be it negotiation or automating manual, time-consuming processes, your main focus is always to optimize expenses and improve the bottom line. This comprises 36% of CPOs whose top priority is delivering bottom-line savings. 

Hence, in this post, we will discuss the top 5 procurement cost reduction strategies. We’ll also discuss the process of getting started and ways to improve the procure-to-pay process to ensure procurement cost savings

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5 Cost-Saving Strategies in Procurement

Here are the top 5 cost reduction techniques in procurement that you can implement in the short and long run:

1. Reduction in Maverick Spending

Reduction in Maverick Spending

Maverick spending refers to expenses beyond the established policy and procurement process. It involves unauthorized purchasing that is either not approved or doesn't adhere to the pre-approved vendors or negotiated contracts. 

Such expenses impact financial and operational efficiency, leading to budget overruns and supplier relationship strain. For instance, an employee purchases office supplies from a non-approved vendor. It can lead to higher costs due to a lack of negotiated discounts and impact the organization's ability to leverage consolidated spending for better terms and conditions.

To reduce maverick spending, you must actively communicate procurement policies to avoid such expenses. You must monitor all the transactions and address any such instances. This requires greater visibility into the spending at each stage and an analysis of how company resources are being used. You will also need to set spending controls based on the company policies to avoid constant monitoring. 

Purchase request flow

As a result, you gain better control over the procurement process, negotiate better contracts with preferred suppliers, and leverage volume discounts without disrupting the supply chain. This will help you maintain compliance with established procurement policies and save costs by avoiding unauthorized expenses. 

2. Contract Management

Contract management involves reassessing the existing contracts and negotiating supplier agreements. This includes negotiation, execution, and ongoing monitoring to ensure cost optimization.

Contract Management

To ensure strong contract management practices, regularly revisit contract terms, assess performance metrics, and proactively identify areas for improvement. Prioritize negotiation preparation by investing in training for procurement professionals, ensuring they possess the skills to secure favorable terms and adapt agreements to evolving business needs. 

Contract management aids in maximizing the value of agreements, minimizing risk, and ensuring that suppliers deliver as per the agreed terms. It also promotes better relationship management and identifies opportunities for cost optimization.

3. Request Specification

Request Specification

Request specification involves creating clear and detailed specifications for the goods or services that the organization intends to procure. This involves detailing purchase requests and understanding the needs of the teams to deliver what they need and not spend money on unnecessary features and misfit products. This helps ensure suppliers understand the exact requirements, leading to more accurate quotes and better value for money.

To ensure detailed request specifications, involve all the stakeholders in the approval process and get buy-in from each of them. Follow a standardized approval workflow to raise purchase requests. This ensures consistency and gets the maximum information possible. However, it is important to implement customized workflows to suit your business hierarchies.

hierarchies

This reduces the risk of feature overlap and better consolidates the purchases for negotiating more favorable deals. Moreover, the specificity of needs lowers the chances of cost overruns or disputes during the procurement process.

4. Spending Consolidation

Consolidating spending means automating procurement processes to achieve economies of scale. This includes consolidating purchases, standardizing suppliers, and leveraging bulk buying power. Doing so lets you negotiate better terms with suppliers, reduce administrative overhead, and achieve cost savings through volume discounts.

For instance, if you consolidate spending on packaging materials by sourcing from a single supplier, you negotiate bulk discounts, streamline procurement processes, and benefit from standardized materials. This approach reduces costs through economies of scale, simplifies logistics, and enhances overall operational efficiency.

Spending Consolidation

To consolidate spending, conduct a thorough spend analysis, identify opportunities for consolidation, and negotiate with suppliers for better terms. Additionally, implement procurement software to streamline procurement processes. This will give you insights into your spending behaviors and help you identify optimization opportunities. Also, create a cross-functional procurement team to promote collaboration and standardization across the organization. Moreover, ensure proper cross-functional workflows to get stakeholders involved at each stage. 

5. Vendor Diversity

Vendor Diversity

Vendor diversity involves engaging with various suppliers to reduce dependency on a single source. This strategy ensures increased competition, better negotiation opportunities, and improved risk management.

For instance, having vendor diversity enables you to source materials from multiple suppliers rather than relying solely on one. This creates competition among suppliers, encouraging competitive pricing and service levels to mitigate risks associated with potential disruptions from a single supplier. Hence, in the event of supply chain challenges or fluctuations, you get the flexibility to maintain production and minimize the impact on operations.

To ensure vendor diversity, adopt a global sourcing strategy and conduct thorough market research to identify potential suppliers across the globe with clear criteria for supplier selection. Additionally, actively seek partnerships with businesses that bring unique strengths to your supply chain. Moreover, it is important to also regularly reassess and diversify your supplier portfolio to ensure adaptability to changing market dynamics. Fostering open communication to build strong, collaborative relationships with various suppliers is a must

As a result, you get better pricing, quality, and innovation. It also provides a safety net if one supplier faces disruptions or fails to meet expectations.

Three-Step Process for Cost Reduction in Procurement

Before implementing these strategies, go through this strategic process each time you have to hunt down expenses for cost savings:

1. Analyze Spend

Analyze Spend

Start by conducting a comprehensive spending analysis to understand where the money goes. Use financial records, invoices, and procurement data to categorize and analyze spending patterns. In such cases, having procure-to-pay software helps a lot in getting insights and real-time visibility.

This step provides a clear overview of the organization's spending habits, allowing identification of areas for potential cost savings. It serves as a foundation for informed decision-making in subsequent cost-reduction strategies.

2. Identify the Biggest Expense

Compare across departments or suppliers to identify the largest expenses or categories and spot any unusual expenses. This step allows for targeted efforts in cost reduction.

Discuss these insights with relevant stakeholders to understand why these costs exist and their impact. Also, align the understanding of ‘savings’ with them to avoid unnecessary delays and rejections. It is advisable to align it with something measurable to make it easier to sell the business case and implement the necessary changes. 

For instance, the information technology (IT) department proposes investing in new software that, in the long run, promises increased efficiency and reduced maintenance costs. However, the finance team, focused on immediate budget constraints, may interpret ‘savings’ as strictly short-term cost reductions rather than considering long-term benefits. 

To align understanding, the IT team can quantify long-term savings through reduced downtime, improved productivity, and potential scalability benefits. This ensures both departments share a common definition of ‘savings’ and facilitates a collaborative decision-making process.

Additionally, you can target the smaller spend or tail-end spend as well. It is easier to cut people from making one-off purchases or buying small items on Amazon that another department may have. 

3. Conduct Market Research and Maintenance

Conduct market research to understand current pricing, trends, and available alternatives for the identified major expenses. Based on your research, you can optimize these expenses without impacting the supply chain. This includes incentives such as:

  • Use spending data analysis to negotiate improved terms with suppliers. Seek discounts or bundled services to reduce costs without disrupting the supply chain.
  • Research alternative suppliers or vendors for the identified major expenses. Assess their offerings, pricing, and reliability to diversify options and secure more cost-effective alternatives.
  • Invest in automation to optimize procurement processes, reducing administrative overhead without disrupting the supply chain.
  • Analyze inventory levels and adjust ordering practices based on demand forecasts to prevent overstocking or stockouts.
  • Regularly monitor the expenses and supplier performance and reassess strategies to adjust optimization efforts based on changing market conditions and organizational needs.

Keep updating this information to stay informed about changes in the market. This ensures that you are well-informed about competitive pricing and industry trends. Additionally, you get the necessary data to negotiate better terms with suppliers, explore cost-effective alternatives, and adapt to market fluctuations, contributing to more strategic and informed decision-making.

How to Ensure Maximum Procurement Cost Reduction

Most companies have procurement processes running on autopilot with standard operating procedures. However, this leads to inconsistent efforts of procurement teams in reducing costs. They have to dedicate hours to analysis and optimization, which can be changed with intentional efforts to ongoing cost savings practices in procurement. 

However, with traditional manual processes, getting real-time visibility and comprehensive insights is impossible. To streamline the process and consolidate the expenses, you must adopt tools that support your cost savings initiative. This means centralizing all the information to build a unified platform for complete visibility and control. 

Pluto simplifies this for you. Not only do you get insights and controls, but you can also create cross-functional workflows to facilitate the collaborative procurement process. You can integrate your entire accounting and accounts payable system onto a single platform and streamline the entire process. As a result, you get real-time visibility and can optimize expenses in time.  

Book a demo to know more about how Pluto fits into your business and helps you streamline your procurement process for collaborative cost-saving efforts.