CFO Cornerstone: Navigating Finance's Complex Landscape

PlutoCard now becomes GetPluto — your new one-stop solution for all payables.  

What's New?

After much anticipation and hard work, we're excited to announce the migration from plutocard.io to getpluto.com, a step towards redefining corporate payments.

With getpluto.com, we are extending our vision beyond providing corporate cards. 

We understand the challenges that businesses face when handling their finances. It involves more than swiping a card and filing expenses. That's why we've developed a comprehensive suite of products and features to simplify everything from procurement to payables. 

So, whether you want to streamline purchase requests, integrate your ERP without impacting costs, or manage reimbursements — getpluto.com has you covered!

Beyond Cards: The All-In-One Platform

Here's a glimpse of what Pluto has to offer:

1. Procure-to-pay: Streamline your procurement process from purchase requests to invoice matching, all in one place.
2. Bill management: Centralize bill management and payments for faster approvals, better vendor relationships, and more accurate two/three-way matching.
3. Accounting ERP integrations: Sync seamlessly with major ERPs like Xero, Zoho, QuickBooks, Dynamics, and Netsuite to close your books 10X faster.
4. Petty cash management: Digitize cash-in-hand management to eliminate leaks without losing flexibility or visibility.
5. T&E reimbursements: Simplify travel and expense reimbursements with unlimited budget-controlled corporate cards and custom approval workflows.
6. Corporate cards: Get budget-controlled corporate cards with built-in compliance management — from receipt capture to policy enforcement. 

“We have been using Pluto for a few months now, and we literally have everything in one place.”

~ Lee Kersen Mascarenhas, Head of Operations at BloomingBox

From Our CoFounder — Mo Aziz

Pluto's Corporate Cards have been serving the largest businesses in UAE powered by a platform built for companies of all sizes: from small-scale SMEs to businesses with 1000s of employees.

But company spending does not happen just through Corporate Cards…

At Pluto, we believe CFO & Finance teams need a unified, comprehensive platform that solves all types of corporate spending problems end-to-end.

The new Pluto is our step towards this future where UAE businesses get a best-in-class platform, helping manage company spending across Cards, Reimbursements, Invoice Management, Procurement & more.

Join Us At getpluto.com

We're excited about the possibilities that getpluto.com brings. 

We understand the importance of this change and are here to support you at every step of the way, offering a more comprehensive platform to meet all your financial needs.

Sign up for a demo or create a free account at getpluto.com today and discover how Pluto simplifies payments for—finance teams, procurement teams, and employees.

Thank you for your continued support!

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Managing small, everyday expenses in a business can be cumbersome without an efficient system. These minor payments, such as office supplies, postage, or refreshments, are often handled through petty cash – a small fund allocated for such incidental expenses. 

Petty cash management involves setting aside this fund, appointing a custodian to oversee disbursements, and maintaining meticulous records to ensure transparency and accountability. Proper management of petty cash is essential to avoid inefficiencies and potential misuse, especially as these small expenses add up over time.

What is petty cash?

Petty cash refers to a small amount of money that businesses keep readily available for handling minor payments and expenses that are too small to be processed through regular accounting procedures. It is often kept on hand and is reimbursed periodically.

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What are Petty Cash Examples?

Petty cash includes small miscellaneous expenses, such as:

• Office supplies
• Gifts
• Client lunch
• Refreshments
• Postage
• Medicine and first aid
• Minor repairs
• Transportation

What is Petty Cash Management?

Petty cash management is the process of overseeing and recording small, everyday expenses incurred by a business. It involves setting aside a fixed amount of cash, known as an imprest fund, which is used for minor expenditures that are too small to warrant issuing a check or processing through the main accounting system. These expenses can include items such as office supplies, postage, refreshments, and minor repairs.

Effective petty cash management ensures that these small transactions are handled efficiently and transparently. Key aspects of managing petty cash include:

Establishing a Fixed Amount

The imprest system starts with a predetermined sum of money. This amount is kept in a secure place and used exclusively for minor business expenses.

Appointing a Custodian

A designated individual, known as the petty cash custodian, is responsible for handling the fund. The custodian disburses cash for approved expenses and maintains detailed records of each transaction.

Recording Transactions

Every expenditure from the petty cash fund is documented with a petty cash voucher, receipt, and a brief description of the expense. This ensures accountability and provides a clear audit trail.

Replenishing the Fund

As the petty cash is used and the fund diminishes, it is replenished to the original fixed amount. This is typically done by submitting the recorded expenses and receipts to the accounting department, which then issues a check to restore the fund.

Ensuring Transparency and Accountability

Regular reconciliation of the petty cash fund is essential. The total of the cash remaining and the receipts should always equal the original imprest amount. This process helps prevent misuse and ensures that all expenses are accurately recorded and accounted for.

What Is the Process of Petty Cash Disbursement?

The first step in petty cash disbursement is to define policies and procedures. This includes specifying:

• The purpose of the fund
• The maximum cash amount 
• The types of expenses the fund can cover
• The process for replenishing the fund

The next step is to appoint a petty cash custodian. They are responsible for handling the petty cash fund. 

Then, you set up the fund by transferring the initial sum of money into a safe or locker. This amount should be sufficient to cover minor expenses for a defined period. 

When employees make small purchases, they request funds from the custodian. After the purchase, they return with a petty cash voucher, receipt, and cash balance. 

The custodian reviews the receipts and provides reimbursement. They maintain detailed records of every transaction, including the date, purpose, recipient, amount, and a brief description of the expense. This record-keeping method ensures transparency and accountability.

After that, the custodian reconciles the petty cash fund at regular intervals. They add up the safe's cash balance and the receipts' value. The total should match the original amount in the fund. 

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What are the Two Types of Petty Cash?

To manage petty cash, the custodian relies on either of the petty cash book systems:

1. Imprest Petty Cash Book

An imprest petty cash system involves maintaining a fixed amount of money in the petty cash fund at all times. 

For instance, you set up a fund of $100. When the fund gets down to $20, the custodian requests reimbursement and replenishes the fund to $100.

2. Columnar or Analytical Petty Cash Book

A columnar or analytical petty cash book is a detailed and structured method of recording petty cash transactions. It categorizes expenses into different general ledger codes for better tracking.

For instance, you create separate columns, such as "office supplies," "refreshments," "meals," etc. Whenever a transaction occurs, the custodian records it in the appropriate column and specifies its purpose.

What are the Challenges of Petty Cash?

While the process of petty cash seems linear and simple, it has many intricacies in practice. 

Imagine the custodian getting hundreds or thousands of requests and receipts every day. So, maintaining a petty cash system is easier in a smaller business with limited expenses and reporting needs. However, for larger enterprises, relying on manual vouchers and physical safes/lockers causes a lot of chaos. 

1. Vulnerability to Theft and Misuse 

Unlike an automated system, a manual petty cash system lacks controls and security measures.

For example, if the custodian is not vigilant, employees can use the cash for personal expenses. Similarly, if the custodian gets stuck between multiple requests and receipts, it leads to oversight.

Moreover, the physical nature of cash in a petty cash box makes it an easier target for theft. Since there's no immediate digital record, anybody can steal money, which goes unnoticed for a while. This lack of transparency and a digital audit trail makes it difficult to identify funds misuse.

2. Poor Receipt Management 

Receipts are the document of proof for the expense. With the traditional approach, custodians have to chase employees for receipts. This results in incomplete or unaccounted-for submissions. 

Moreover, relying on the manual petty cash process makes it harder. The custodians have to manage countless receipts daily, making reconciliation tedious. Hence, you end up with misplaced, duplicate, or even damaged receipts. 

A common example of this issue is when a custodian receives multiple receipts and with an analytical petty cash book to maintain. It takes them hours to reconcile, report, and ensure accurate categorization. 

The worst is when it's time to report, and locating these receipts takes hours.

3. Chaotic Approval Workflow  

In smaller companies, getting approval for expenses is easy. But, in large enterprises, even small expenses can prompt approvals from various departments and stakeholders. This makes the approval workflow complicated and time-consuming. This delays the fund release, disrupting the workflow and reimbursement process.   

For example, imagine an employee who wants to buy a subscription for less than $300. In a big company, it will prompt approval from the manager, IT, finance, and legal departments.  

All this back-and-forth slows things down a lot.

4. Internal Resentment

In big companies, there's tension between the finance team and other departments.  This issue occurs when employees can't access the funds and have to wait for approval. Such a delay disrupts the work or delays the reimbursement.

For instance, an employee needs to buy a subscription for work. But the delay in approval impacted the deadline and client relationship. This creates problems and stress between the finance team and other departments.

5. Branch-Level Petty Cash Management

Large enterprises use separate petty cash systems for departments at the branch level. This means that each department has its own petty cash fund to manage.

Managing small amounts of cash at individual branches is tricky. Employees misuse/steal the money as there's not much oversight. There is no visibility on how money is being spent. Maintaining funds for multiple branches becomes a headache. Also, departments find it challenging to request more funds.  

Reconciliation becomes challenging as the finance teams have to chase branches for complete information. This leaves a lot of loopholes for employees and branch custodians to misuse petty cash.

6. Tedious Reconciliation Process

Reconciliation ensures that the petty cash fund's balance matches the sum of all expenses. 

Manually, reconciliation in large enterprises takes weeks and is prone to errors. Moreover, when adding up expenses, the process is prone to manual errors, which are hard to identify and correct.

For instance, the custodian overlooks a receipt. This mismatch between the recorded expenses and the actual cash on hand can take him weeks to spot errors. 

7. Low Visibility Over Expenses

Traditional petty cash systems lack real-time data. At any given point of time, the custodian is unaware of the fund's current status. This lack of visibility delays financial decision-making. For instance, it can take weeks before the custodian realizes that the petty cash fund is running low. This can lead to temporary cash shortages for essential expenses.

The absence of a clear record makes it slower to notice problems and reconcile the cash. Moreover, transactions and expenses are recorded on paper, which leads to further errors. For example, when an employee uses petty cash to buy office supplies, there will be a delay until the expense is recorded.

Similarly, when many employees spend money simultaneously, tracking them in real-time is tough. This lack of transparency allows employees to misuse petty cash for personal expenses.

How to Manage Petty Cash Effectively With Pluto? 

To overcome the challenges described previously, you can not rely on any automation tool. Instead, you need a product that is tailored to your specific needs. While many tools can assist you in digitizing petty cash management, Pluto goes the extra mile.

With Pluto, you no longer need to maintain a physical safe or countless vouchers and receipts. Pluto records every transaction in real time and gives you visibility at each step. From receipt to reimbursement, you manage everything with complete control and clarity.

Unlimited Corporate Cards

Pluto enables you to issue unlimited corporate cards, simplifying petty cash management. It eliminates the need for physical lockers or safes, promoting smoother cash flow. The availability of unlimited cards allows you to replace shared credit cards. This enables the use of cards for even small petty cash expenses. 

Finance teams get full control and visibility over each petty cash expense in real time.

Employees can either swipe the cards for a seamless process or withdraw cash from ATMs. Every expense made with the corporate card triggers an approval workflow. It prompts employees to add receipts and managers to approve expenses. They can then add the receipts simply via WhatsApp and get reimbursed without any delays.

With all the data consolidated on a single platform, reconciliation becomes easier. This simplified process eliminates the need for a dedicated custodian to manage petty cash.

Not only do you get more control, but you save money with visibility at each step.  

Budget Control

Pluto allows you to specify limits for corporate cards issued. This ensures employees stay within budget. 

When the spending exceeds, employees can request more funds. The budget expands on the manager's approval in seconds, allowing for necessary spending.

Administrators can also issue zero balance cards. These cards with zero balances prompt an approval request for each expense. This approach ensures budget control without causing any delays or resentment.

Easy Receipt Management 

Pluto simplifies receipt management thanks to its seamless WhatsApp integration. 

Your employees can upload receipts via WhatsApp, which are recorded in real-time. The custodians no longer need to run after employees for the receipts.

However, Pluto does more than just store receipts. It extracts vital information through OCR, including vendor names, amounts, and GLs. As a result, your accounting team spends less time on manual tasks like creating logs.

Approval Workflow  

Normally, getting approval for expenses can involve a lot of back and forth. But with Pluto, you can set up custom approval processes to make the process smoother. 

When an employee uploads receipts, Pluto automatically starts the approval workflow. It notifies the custodian and managers to approve the expense, removing the friction.

The reimbursement process accelerates without any compromise on efficiency.

Further, Pluto uses OCR to detect duplicate receipts to avoid dual payments and fraud. This makes it easier to double-check expenses and approve the legitimate ones. 

Digital Expense Report  

Pluto offers digital expense reports that compile data from all the receipts. 

The report simplifies the task for your finance teams to see how each branch/department is spending. It enables them to make adjustments to policies and procedures as needed.

For instance, a company has small office supply purchases spread across various departments. Pluto's real-time visibility and report help to locate these costs. As a result, finance teams can reconsider and promote bulk purchases for cost savings. 

With Pluto, the custodian gets complete visibility into the expenses and the available funds at all times.

Close Books 10X Faster  

Pluto simplifies the process of closing books. 

Since employees can submit receipts directly through WhatsApp, custodians don’t need to chase employees for receipt submissions. This enables you to close the book 10X faster by accelerating the reconciliation process.  

Pluto records all transactions in a centralized digital platform. This streamlines audit logs and eliminates the need to maintain physical records.

With its OCR-based receipt retrieval, finding specific receipts and information becomes more effortless. This simplifies the reconciliation process, making the entire book-closing process faster. 

Replace Petty Cash With Corporate Cards

Small expenses and cash transactions can not be removed. However, finding an expense management tool can make petty cash management simpler. 

Stop relying on manual traditional processes to manage petty cash. Choose Pluto to replace your tedious petty cash books and vouchers with corporate cards. 

Sign up today to digitize your petty cash for complete visibility and control.

Companies use petty cash for managing driver and transport expenses, including maintenance, repairs, and small purchases, by allocating a small amount of physical cash to drivers. Drivers submit receipts for reconciliation, and they manually track these small transactions. 

However, tracking numerous trivial transactions becomes time-consuming, and discrepancies emerge during reconciliation. There's always a risk of misuse or theft, demanding strict security measures. Moreover, negotiating favorable terms with vendors for minor, recurring transactions becomes challenging. They must carefully budget and maintain a sufficient petty cash fund, which strains their overall cash flow.

Overall, the manual process raises efficiency concerns, necessitating a balance between control and practicality in managing day-to-day vehicle-related expenses.

A better alternative to petty cash is a fleet card. 

This post will explore corporate fleet cards, their benefits for transport and logistics, and strategies to overcome potential fuel card challenges for improved spend management.

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What Is Meant by Fleet Card?

A fleet card, also known as a fuel or gas card, is a specialized payment card used by businesses to cover expenses related to their vehicle fleets. It is issued by fuel companies or financial institutions specifically for fuel purchases, maintenance, and other vehicle-related expenses.

What Can Fleet Cards Be Used For?

The fleet cards are primarily used for fuel purchases, maintenance, and repairs. They facilitate seamless payments for routine servicing, tolls and parking fees, and purchasing vehicle-related products.

You get cards with custom spending limits and advanced controls, such as real-time transaction monitoring mechanisms, category-specific restrictions, and automated alerts for enhanced security and streamlined expense management.

Drivers purchase fuel, maintenance, and other vehicle-related expenses at authorized locations with the cards, and you enjoy complete visibility on a centralized dashboard for each transaction.

What Are the Benefits of a Corporate Fleet Card?

Switching from manual petty cash management to a fleet card yields the following benefits:

• Simplifies payment processes by reducing the complexity of cash handling
  
  
• Improves tracking and monitoring of all vehicle-related expenses
  
  
• Minimizes the risk of theft or misuse, providing enhanced security measures
  
  
• Automates the expense management and reconciliation process, eliminating manual record-keeping and ensuring accuracy with reduced likelihood of errors
  
  
• Promotes compliance by enabling you to set controls and restrictions on card usage according to company policies
  
  
• Enhances budgeting by providing detailed reports and insights into the spending patterns for a structured and controlled approach to managing vehicle-related costs
  
  
• Streamlines transactions with vendors, offering an efficient payment method for small, frequent transactions
  

Should I Use a Fuel Card or a Credit Card?

Fuel cards and credit cards share similarities in providing a convenient payment method for expenses. Both can be used at gas stations and offer detailed transaction records for monitoring expenditures. Moreover, both cards come with features such as spending controls, reporting tools, and rewards programs.

However, here are some differences between the two:

• Fuel cards restrict card usage to fuel and maintenance-related purchases, providing greater control and limiting potential misuse.
  
• Fuel cards come with fuel discounts or rewards programs at specific gas stations, providing potential cost savings that credit cards do not generally offer.
  
• While credit cards provide transaction records, fuel cards offer more detailed reporting on vehicle-related expenses like fuel consumption, maintenance costs, and odometer tracking.
  
• Fleet cards partner with fuel providers, service centers, and other vendors, allowing businesses to negotiate favorable terms and discounts for bulk purchases or regular transactions. For instance, a fleet card's partnership with a fuel station yields discounted fuel prices, facilitating substantial cost savings.
  

So, for transport and logistics businesses, corporate fleet cards offer specialized controls for fuel and maintenance, streamlined reporting, and potential fuel-related discounts.

What Are the Risks of Fuel Cards?

Fuel cards, tailored for fleet management, are designed to address the unique needs of companies in the transport and logistics sector. However, organizations face the following challenges when switching to corporate fleet fuel cards:

1. Gas Station Availability Issues

Fuel cards encounter challenges related to gas station availability that limit refueling options. As a result, drivers can not find suitable gas stations, leading to increased travel time and delays in delivery schedules.

3. Location-Dependent Acceptance

The acceptance of corporate fleet cards varies by location, leading to constraints and inconveniences for companies operating in areas where certain cards are not widely accepted.

Drivers will encounter difficulties during interstate routes if you offer a nationwide delivery service and the fleet card is only accepted at specific gas stations or regions. It complicates expense management and hinders the company's ability to streamline fuel-related transactions.

3. Management Complexity

The specialized design of fuel cards introduces an administrative burden when managed separately. For instance, a company using distinct fuel cards for different vehicles finds consolidating expenses difficult, leading to increased administrative efforts and potential operational inefficiencies.

As a result, administrators have a hard time reconciling statements, accurately tracking expenses, and ensuring compliance. This burden increases processing times and errors in financial reporting.

4. Reward Limitations

While crafted to suit industry needs, fuel cards encounter limitations in cashback offers. Consider a scenario where a company's preferred fuel card provides cashback benefits only at select stations, restricting potential cost savings for the entire fleet. 

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Why Should You Switch to Pluto Corporate Fleet Cards?

Pluto fleet cards don't restrict the use of cards at their discretion. Instead, they facilitate advanced controls and real-time visibility. From issuing budgeted fuel cards to creating vendor-specific cards, you can set rules that align with your company's needs and policies. Then, with each transaction, you track all fleet expenses from a single dashboard and get real-time data without manual effort.

So, you set cards and add controls, and you are good to go! Drivers can spend them at convenient gas stations while you enjoy complete visibility and control. Each transaction appears on the dashboard and notifies drivers to upload the receipt directly from WhatsApp. Once uploaded, you can approve the expense, and the data syncs with your accounting software to help you close your books ten times faster.

Here are the top six benefits of switching to Pluto corporate fleet cards:

1. Unrestricted Access Anywhere

Unlike traditional restrictions, Pluto corporate fleet cards liberate your drivers. There are no limitations on locations or specific fuel stations. Enjoy the convenience of using cards at the most budget-friendly and strategically located gas stations, repair shops, or truck stops that welcome Mastercard.

2. Easy Cashback

Pluto corporate fleet cards make cashback benefits straightforward. With up to 2% unlimited cashback on over 100+ currency spends, enjoy seamless cost savings without intricate conditions or restrictions.

3. Smart Budgeting

Pluto fleet cards, functioning as debit cards, provide smart budgeting without blocking cash flow. Drivers can request limit increases in seconds, ensuring operational flexibility with swift approvals. This distinctive feature sets Pluto apart, seamlessly blending budget management and uninterrupted cash flow for efficient fleet operations.

4. Driver-Friendly Controls

Provide drivers with budgeted fuel cards and set spending rules. Real-time data and advanced controls give you complete transparency of fleet expenses, enabling strategic decision-making.

5. Grow With Ease

Whether you have hundreds or thousands of drivers, the streamlined process of issuing corporate fleet cards and setting controls remains hassle-free, supporting your scalability with ease.

6. Eliminate Fraud

Lock or freeze cards instantly from the Pluto app, ensuring proactive measures against fraud. Enable company policies to ensure in-policy transactions, eliminating the risk of unauthorized spending.

Enhance End-to-End Spend Management

Pluto eliminates the need for separate investments in corporate fleet cards, offering an all-in-one spend management solution. 

Pluto's comprehensive platform facilitates both corporate purchase cards and fleet cards, streamlining your financial operations. Enjoy the same benefits as traditional corporate fleet cards but with enhanced functionality, all within a unified platform. With Pluto, you get unparalleled efficiency in managing corporate expenses, ensuring a seamless and integrated approach to financial control. 

Transform your spend management today. Book a demo and discover how Pluto can optimize your financial processes and elevate your business operations.

For every expense, teams maintain extensive documents like purchase orders, goods received notes (GRN), invoices, etc. With each increasing expense, the finance team has to spend more and more time on spend management — maintaining these documents, syncing data across accounting systems, ensuring proper approval, categorizing accurately, etc.

This manual process is time-consuming and prone to errors like missing receipts, employee fraud, unrecorded expenses, data entry typos, etc.

As a result, teams have inconsistent data across company systems and spend more time fixing these issues than focusing on their core activities. So, when finance teams strive to improve budget allocations, streamline expense tracking, and enhance financial reporting, they find themselves dedicating substantial time to addressing discrepancies among different financial databases and systems.

This blog will cover improving the expense reconciliation process and replacing manual and old methods with an improved solution.

What is Expense Reconciliation?

Expense reconciliation is a process that matches the actual expenses with the corresponding book entries. It involves comparing two sets of financial records, such as bank statements, credit card statements, receipts, etc., to identify and rectify discrepancies between them.

So, for every expense, you have an entry at an external source and in the internal systems. You match them together to ensure the accuracy of financial reporting, compliance with accounting standards, and prevention of errors or fraud.

However, companies rely on outdated systems — entry-level accounting tools, spreadsheet-based solutions, or legacy ERPs, which cannot handle end-to-end reconciliation processes. These compel finance teams to spend valuable time on manual tasks like data entry and receipt management, hindering reconciliation efficiency and increasing the risk of errors in financial data. 

Hence, submitting and tracking expenses becomes cumbersome for employees, while finance teams face manual verification and reconciliation challenges. Managers struggle with delayed approvals, and the overall process becomes susceptible to errors, affecting accuracy and compliance.

How to Reconcile Expenses Faster

Invest in spend management software to reconcile expenses faster. With spend management software, you can track and monitor each transaction on a centralized platform in real time.

The automated process makes reconciliation simpler and faster by providing a single source of information and enabling advanced controls. You can create customizable approval workflows and specify spending rules to suit complex hierarchies and ensure compliance with company policies. 

Especially with Pluto, each expense triggers the approval workflow and notifies employees to upload the receipt through WhatsApp. The accounting system integration syncs data across the financial systems to provide a consistent and accurate database.

Here is how switching to Pluto helps you reconcile efficiently and close your books of accounts ten times faster:

1. Easy to Identify Discrepancies

In a traditional manual reconciliation process, identifying discrepancies involves sifting through piles of paperwork or navigating complex spreadsheets.

With Pluto's automated system, this cumbersome task is simplified. The platform's alert system actively flags potential issues, promptly notifying users of duplicate receipts. It not only streamlines the identification of irregularities but also introduces a proactive layer of fraud prevention.

You can visualize and interact with discrepancies directly on the centralized platform, turning what used to be a tedious task into a more intuitive and efficient process.

2. Speed and Accuracy 

Automation, real-time tracking, receipt capture (via optical character recognition (OCR)), approval workflows, and robust controls accelerate reconciliation cycles on Pluto. 

You need not spend a minute on a manual redundant task. The platform captures and extracts invoices from emails and WhatsApp on a centralized platform. The trigger-based workflows ensure prompt approvals without any friction. Matching documents for three-way and four-way matching simplifies with all the documents on a single tool. 

Therefore, the inherent accuracy of financial data, coupled with efficient discrepancy identification, ensures speed and reliability in the reconciliation process. 

3. Real-Time Tracking and Visibility 

Unlike conventional tracking methods, Pluto offers real-time insights through its centralized dashboard. This furnishes internal teams with immediate visibility into transactions, guaranteeing proactive adherence to company policies.

The agility provided by real-time tracking enables timely data-driven decision-making based on the latest and most accurate data.

4. Better Data Sync for a True Picture

Manual data entry is prone to errors and delays, leading to discrepancies in financial records. Pluto's seamless integration with major accounting systems like Xero, Zoho, QuickBooks, Netsuite, and Dynamics ensures that the financial data is up-to-date and aligns with the organization's accounting records. This synchronization eliminates the need for manual adjustments and corrections, providing a true and accurate picture of the organization's financial status.

5. Enhanced Controls Over Processes 

Building intricate approval workflows is simplified with Pluto. You can set up approval processes using simple if-then rules without the need for complex coding. Devise custom workflows that align perfectly with your company policies, creating a seamless and controlled process.

6. Traceable Audit Trail

Pluto maintains a traceable audit trail of all financial transactions and activities. It provides a comprehensive record of changes made to financial data. From the initiation of a transaction to any subsequent modifications, the traceable audit trail ensures transparency and accountability. This trail helps you avoid fraud and trackback discrepancies without friction.

Also, you can lock transactions post-approval, which adds an additional layer of security and integrity, facilitating smoother audits.

7. Save Time and Money

Automating financial processes, including procurement, expenses, and payables, significantly reduces manual steps in reconciliation.

Pluto's ability to capture general ledger and tax codes from expenses automates data entry. It reduces the time spent on routine reconciliation tasks. This efficiency allows finance teams to allocate resources more strategically, focusing on higher-value initiatives rather than repetitive manual tasks.

Timely financial insights help finance teams support decision-making processes with precision and confidence, fostering a data-driven financial ecosystem.

Internal Controls Strengthen Expense Reconciliation

Expense reconciliation burdens finance teams with time-consuming manual efforts and the constant threat of challenges like duplicate receipts and policy violations. These complexities lead to prolonged reconciliation cycles, hindering financial efficiency.

However, the actual progress happens when you strengthen internal control over financial reporting (ICFR), which is the anchor for successful automation in finance.  

When you embrace ICFR strategically, it bolsters internal controls, protects against risks and fraud, and sets the stage for smooth automation. The impact goes beyond just easing manual work; it promotes precision, reliability, and transparency in financial workflows. 

In simple terms, ICFR mitigates risks tied to financial inaccuracies. Read how to improve your ICFR framework for enhanced reconciliation processes.

The procure-to-pay process doesn’t mean the procurement process. It is a subset of procurement that integrates purchasing and accounts payable.

Traditionally, the procurement process is scattered across the business, and the procurement team needs help to gain visibility or control. The employees purchase from different vendors, the approval process is chaotic and delayed, the stakeholders are stuck in email threads to review the expenses, and the procurement team struggles to get an overview of the organization’s needs.

Procuring the best goods and services becomes problematic since the team is left with open information loops. As a result, it spends more time optimizing the procurement cost and improving the bottom line.

What is the Procure-to-Pay Process?

The procure-to-pay process streamlines the scattered procurement parts to combine purchases and payments. Instead of a process spread across different software, the procurement process shifts to a centralized platform.

The employees get a dedicated platform to raise purchase requests and obtain approvals. The platform notifies stakeholders, such as managers, legal teams, finance teams, IT teams, and other relevant decision-makers to review and approve the proposals. As a result, the procurement team seamlessly moves to the vendor evaluation and negotiation stage without worrying about approvals or delays. The finance team efficiently handles accounts payable since the purchase and payment process is integrated.

So, while earlier, the purchases were handled solely by the procurement team and payments solely by the finance teams, the procure-to-pay process gives both teams an overview of the process from start to finish. In this post, we will discuss how this procure-to-pay process helps you optimize your procurement function and improve your bottom line.

Why Do You Need a Procure-to-Pay Process?

The procure-to-pay process is not just for your finance team or procurement team. It helps the entire organization to gain resources efficiently. Here are eight ways that demonstrate how moving to a streamlined process benefits you:

1. Visibility

All the relevant stakeholders get visibility into the process and the status. Be it the employee, managers, finance team, legal team, IT team, or procurement team — each one can track the progress without delving into multiple email threads. Additionally, teams get insights that help procurement teams optimize costs with data-driven decision-making.

2. Compliance and Control

You can implement advanced controls, such as customized approval workflows and spending budgets, without micromanaging the teams. You can successfully enforce internal control over financial reporting without creating unnecessary team resentment. 

So, for instance, if any expenses or purchases beyond $50,000 require additional approval from the legal and IT team, you can easily configure those controls within the approval workflow.

3. Streamline Workflows

The traditional process demands the employees to go from one office to another or spend days on email and Slack conversations before the managers give the green signal. At times, approval of a critical stakeholder is missed, causing delays and disrupting the workflow.

With the procure-to-pay process, you can create custom workflows depending on the purchase category, department, amount, etc. This accelerates workflow, and all the relevant stakeholders get notified right away.

4. Centralized Management

The procure-to-pay process integrates purchases and payments to bring all the critical information on a single dashboard. As a result, any discrepancies in the procurement process are identified in minutes. The entire procedure accelerates the real-time visibility of each stage.

5. Reconciliation

A centralized management system makes collecting and storing documents easy; additionally, since it integrates purchases and payments, the information syncs across accounting systems and ERPs.

During the audit season, this becomes a blessing where the finance team doesn’t have to chase teams for complete records. Also, it becomes easier to store and lock all the transactions and share these records with external parties.

6. Risk Management

The procurement operation is prone to financial, operational, and reputational risks. With the procure-to-pay process, teams can efficiently manage the vendors, purchase requests, approvals, and payments on a centralized platform in real time. It reduces the risk of fraud, ensures policy compliance, and provides visibility into spending patterns without burdening any team.

7. Insights

You can easily see the inside out of your procurement process, whether you want to know how much the marketing team spends or which vendor costs you the most. It makes it more convenient to reduce procurement costs and optimize purchases to improve the bottom line. Also, as all the information is centralized, there are no gaps or missing loopholes, providing complete transparency of your expenses.

8. Invoice Management

The procure-to-pay process ensures that all the invoices are captured and extracted into a centralized platform. This facilitates two-way and three-way matching without causing delays. Moreover, the reconciliation process becomes easy as all the records are systematically recorded.

So, whether you receive an invoice via email, WhatsApp, or physical copy, you can easily add it to the system without risking losing an invoice.

What are the Stages in the Procure-to-Pay Process?

The traditional procurement process has over nine steps strewed across different platforms. These include identifying goods and services, purchase requests, vendor selection, negotiation, purchase orders, inspection of the goods received, three-way matching, approvals, and payment and reconciliation.

While the procure-to-pay process doesn’t alter these stages, it integrates them for a streamlined workflow. So, earlier, if the approvals took days or weeks, keeping employees and the procurement team on hold, now it only takes a few minutes or hours. You centralize the procurement process and save money and time.

Here are five key stages in the procure-to-pay process:

1. Purchase Request

Employees no longer need to travel from one office to another, seeking approvals manually from managers. The streamlined procure-to-pay process gives employees a centralized dashboard to raise requests and specify their needs. It helps the procurement team to understand what the employee needs as well as examine the purchase details. Moreover, the stakeholders can quickly approve or reject the requests from the dedicated platform.

Administrators add customized approval flows to enforce internal policies. They create trigger-based approval workflows based on the expense amount, category, and department to accommodate intricate hierarchies.

For instance, they have the option to create separate workflows for expenses below $5000 and those exceeding a certain budget. Similarly, they can add specific stakeholders to the custom workflows for minimum friction and delay. 

2. Purchase Order

While the vendor evaluation, selection, and negotiation happen on dedicated ERPs, the procure-to-pay process enables you to bring all this information on a consolidated platform. You maintain a synced and consistent database to make purchases faster and more secure.

Pluto integrates with your ERPs and allows you to maintain a centralized vendor database. You can add the vendor directly to the platform and systematically record information. You can add a field in your approval workflow to determine whether the employees are purchasing from a vendor list or a new vendor.

A systematic list helps you consolidate expenses and optimize costs. Moreover, ordering becomes more accessible with a unified platform for raising and approving purchase requests and maintaining an ERP-synced vendor database.

3, Invoice Management

Traditionally, vendors send invoices to a dedicated email or an address. The employees send them for approval and payment. It takes days to clear the expenses. Additionally, the accounting team spends considerable time and energy on maintaining records.

The procure-to-pay strategy reduces this effort and streamlines the procedure. It captures and extracts the invoice from the emails and attaches to a dedicated purchase request and order. This helps the teams match the purchase order, invoice and goods received note (GRN) without juggling multiple platforms.

It pulls all the information with optical character recognition (OCR) technology, reducing manual data entry. Since this platform syncs with the accounting system, the accounting team spends minimal time on data entry.

4. Payment Processing

Processing payments becomes a task when the finance team has to chase employees for invoices and wait for approvals and verification. The procure-to-pay technique centralizes the entire process, giving real-time visibility and helping finance teams make timely payments. 

Moreover, with Pluto, you can integrate your procurement software with the payment gateways to ease the payment process further. Also, you get better Forex rates than banks, helping you save more money. Overall, with the approvals and invoices streamlined, payment processing becomes easy.

5. Reconciliation

Reconciliation is the hardest part, even when you perform the data entry and data sync monthly. You risk losing documentation and creating gaps in the records.

The procure-to-pay process consolidates the entire procurement cycle to bring all the critical information on a single platform. There are minimal gaps; records are up-to-date due to real-time tracking and recording.

With Pluto, you can integrate with platforms like MS Dynamics, Oracle Netsuite, QuickBooks, etc. So, with your ERPs and accounting software synced, you can easily record all the transactions digitally and securely.

Pluto further enables you to lock the transactions to avoid fraud once approved. Moreover, you can create view-only access for your records to simplify auditing for external parties.

Improve Your Bottom Line With the Right Procure-To-Pay Solution

Overall, the procure-to-pay process helps you automate your procurement process without changing your approach too much. You just need to find the right solution that assists your procurement process. 

We discussed more about this in our procure-to-pay solutions post, where you will find what procure-to-pay software does and how to pick the right one.

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

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

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. 

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.

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 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.

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.

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 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

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.