Procurement, the silent partner of Finance and Sales, is the backstage magician, pulling the levers of #cost, #efficiency, and risk management. Let’s uncover 5 ways #Procurement drives #financial #performance.
1. #CostReduction: Studies show that effective procurement can reduce costs by up to 20% and from experience it can be more depending on the level of the maturity of Procurement in the organization.
2. #CashFlow: we can easily improve cash flow by negotiating favorable payment terms, leveraging early payment discounts, ensuring timely deliveries (avoiding penalties and supply chain disruptions), and automating payment processes to further accelerate cash disbursements.
3. #RiskManagement: Procurement helps mitigate financial risks by assessing supplier risks, managing contracts effectively, and implementing appropriate insurance.
4. #Financial #Reporting: we can provide accurate #spend #data for financial reporting, including real-time visibility into every purchase. This enables the identification of potential #cost #savings and ensures compliance with financial regulations. By monitoring spending patterns (#CostControl), procurement can identify areas of potential #overspending and implement corrective measures, further contributing to improved financial performance.
5. #WorkingCapital: This is a particularly important area where we can optimize working capital by minimizing #inventory levels and #streamlining payment processes, freeing up #cash that can be reinvested in the #business to drive growth.
What strategies are you using to optimize cash flow & working capital? Share your experiences in the comments below.
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