SOURCE
Payables
Your accounts payable system contains the most complete and
reliable source of what was spent on goods and services and
with whom. However without transformation of the raw payables data
your accounts payable data does not provide a sufficiently
complete, accurate or granular profile of your spend for the
procurement function's purposes. To avoid analysis that is
misleading, or overstates the value of spend that can be influenced
by the procurement or sourcing teams, there are several data issues
that need to be addressed including:
- General ledger, departmental and subjective codes are designed
for financial reporting rather than supporting decision making for
procurement purposes.
- Coding of payments to general ledger account codes is driven by
the budget to which funding has been allocated which may not be
consistent with the true nature of the goods and services
purchased.
- Allocation of payments to subjective or cost codes is prone to
error as the invoice may not provide sufficient information for the
payment to be coded accurately.
- The accounts payable system will contain significant numbers of
payments that are not relevant for procurement's purposes but are
difficult to accurately identify and remove.
Purchase Orders
Your purchase order system will usually contain a more detailed
and granular record of the goods and services purchased by the
organisation than your accounts payable system. However without
transformation of the raw purchase order data it does not provide
an accurate or fit-for-purpose profile of your spend for the
purposes of analysis by the procurement or sourcing teams. To avoid
analysis that is misleading, inaccurate or significantly
understates the value of spend that can be influenced by your
procurement or sourcing teams, there are several data issues that
need to be addressed including:
- The purchase order system generally provides useable data for
only a small proportion of the totality of spend on goods &
services.
- Coding and classification of the goods and services
purchased is incomplete, inappropriate or inconsistent –
particularly for the substantial majority of typical public sector
purchasing that is not a commodity or can not be purchased
from a catalogue.
- Descriptions of the goods and services purchased are often
incomplete, inconsistent, lacking structure and unhelpful in
attempting to determine what was actually purchased
Purchase Cards
The use of Government Procurement Cards (GPC) to more
effectively manage small and one-off purchases is becomingly
increasingly widespread. Analysis of purchase card data has the
potential to provide useful insights into tactical purchases of
lower value. However without transformation of the raw purchase
card data spend it is difficult to reconcile the detail with your
accounts payable system and is thus, in effect, invisible. To
generate meaningful analysis of your purchase card spend there are
several data issues that need to be addressed
including:
- Coding and classification of purchases to support decision
making for procurement purposes such that it can be reconciled to
the accounts payable system.
- Identification of those of your vendors that are merchant
enabled but where you are not currently using a GPC card to order
and pay for goods and services.
Contracts
Your contract register or contract management system contains
data that becomes more valuable for managing maverick spend when it
is joined to your spend in each of the 500+ categories in which
public sector organisations typically buy goods and services.
To generate maximum value from your contract data beyond its use
for the contract management process there are several data issues
that need to be addressed including:
- Collation, centralisation and classification of the contracts
currently being used.
- Joining the contract data for each vendor with its
corresponding spend in the accounts payable system.