By Aniket Bose. Edited By Arjun Chandrasekar and Swastik Patel.
Everyone needs to be able to track their savings, regardless of what job and industry they work in so that they can estimate how much cost reduction they need to implement if organizations and companies adopt strategic sourcing and other cost-effective tactics. The majority of companies use “source-to-pay” or other finance softwares to configure, manage, and track their custom savings. According to company policies, these are more advanced softwares, allowing organizations to track both their recognized and unrecognized savings and repayment agreements.
Why is Savings Tracking Important?
The type of savings tracking that is important for businesses is procurement savings tracking because it plays a pivotal role in businesses having accurate data. Businesses need to track their procurement savings the right way because it directly correlates to the company’s bottom line and other factors such as risk mitigation. A survey by Delloit reported that more than 79% of Chief Procurement Officers (CPOs) agree that procurement savings tracking is the first thing any organization needs to perform for a better future. The maturity of procurement strategies helps companies understand the importance of cost savings to be an important objective to achieve. This is not as shocking as it would have been compared in the past because, in most organizations, 50-70% of revenue is spent on procurement operations.
There are a lot of reasons for this being the case, including an increase in the outsourcing tasks that were once performed within the organization. Additionally, procurement savings have become responsible for traditional commodities, such as business travel, insurance, marketing and communication, and professional services. Moreover, when companies can get their savings to report continually, they can immediately direct their business in the right direction, as they will have relevant and valuable information about the company at their disposal.
There are a multitude of ways to track savings. Still, the most effective and popular strategy is procurement because it allows companies to have continuous improvement, demonstrate their added value, and improve their credibility as a company as well. The most important thing that procurement helps companies in is tracking if their savings are earning a higher profit. The benefits of tracking savings significantly outweigh not tracking them; they help in identifying and eliminating wasteful expenses, controlling expenses, and promoting better financial habits.