Invu Research on Purchase Order Processing in Small Firms – Not a Pretty Picture

We see a lot of surveys and research coming into our email, but most of it focuses on large firms. So a piece of work carried out by Redshift Research for Invu was a bit different, focusing as it does on a sample of 200 finance staff in small firms employing just 10-250 people.

The research looks at their purchase order processing processes and systems. Perhaps not surprisingly, it found that the situation is not particularly healthy. Controls are fairly lax in many businesses, and processes are often inefficient as well. Thinking back to my experience, I was close to one situation where an SME with about 25 staff lost a fair bit of money to an internal fraud – carried out by the Finance Manager himself! That was based I believe around phony payments to “suppliers.”

On the “controls” side, 36% of firms still raise a Purchase Order (PO) manually while 30% can make a verbal purchase request leaving no audit trail, and 64% of finance workers say employees can use email to make a purchase request. 57% of companies do not have a set process for the way goods and services are received into the business, which also opens the door for various fraud opportunities.

In terms of efficiency, Finance workers are spending 8 hours a month responding to employee queries for approvals of requisitions and orders, and not surprisingly, 50% of those staff are unhappy with the current Purchase Order process. Actually, I wonder what the similar data would show for large firms? Would they actually be any better than these smaller business – I’m not so sure! But as the report says:

Clearly very few companies have a joined up purchase requisition to order system which must limit visibility of the process and impact on the cost of time spent providing that visibility.”

One problem for smaller firms has been that systems to address this were really designed for large organisations. A firm with 100 people is not really going to buy SAP or Oracle and would struggle to use it if they did, we suspect. But with the Cloud and software as a service revolution, we are seeing a lot more products, apps and platforms designed for smaller business.

Invu is one of those providers that is targeting smaller firms with its Electronic Document Management (eDM), Accounts Payable (AP) and Purchasing solutions – hence the research. We covered the firm briefly last year when we said this:

“(the firm) ... started out very much in the document management space with systems to read paper documents, and customised invoice processing solutions aimed at the mid-market. But it is now expanding into wider purchase-to-pay solutions for the mid-market. The logic is that, in a sense, and particularly for small and midsized firms, purchase to pay is as much about workflow and document management as anything – the handing of physical (as well as digital) purchase orders, invoices and so on.

And often its clients don’t have a procurement department. Some have never tried to automate the purchasing process, others may have tried to work with a Purchase Order system, added onto an ERP implementation, but it often fails because of a lack of structured processes to underpin the technology. So Invu has launched a simple, user-friendly PO processing and invoicing solution, designed to be easy to use for non-experts in those devolved buying situations, who don’t have the time or inclination to work through the pain of a full bells and whistles P2P system.”

Invu won’t be the only one targeting this sector of course, and we suspect the trend for the sort of solutions that traditionally have been the preserve of big firms to move down into smaller businesses will be strong in coming years. And do take a look at the research here. Or see the top-line details is this infographic (click through for larger size).

 

POP Report Infographic_FINAL (1)

Discuss this:

Your email address will not be published. Required fields are marked *