CFO identifies expenditure trends with personal dashboard

A Business Spend Management (BSM) platform maps suppliers, contracts, terms and expenses. Primary benefits of digitising this process include acceleration, a lower error margin and less administrative work. The latter is no luxury in the current labour market. "The CFO needs to have a clear understanding of the capacity within his own finance team," De Ru argues. "You want to use the available FTEs as efficiently as possible."

The secondary benefit, namely the ability to see into the future based on the data, has even more potential. “This makes expenses more plannable, increases operational flexibility and enables you to prevent incidents."

To that end, ISPnext has developed dashboards that are function-specific. There are, for example, dashboards for CEOs and managers, for contract managers and budget holders, as well as one specifically for the finance manager and CFO. "The data needs and challenges of a CFO are different from those of a buyer or contract manager," explains De Ru. "Based on our practical experience, we offer the most optimal overview for each role."

Within such a dashboard, several KPIs (key performance indicators) are illustrated, which are, of course, unique to each role. An example of such a KPI for a CFO is so-called contract compliance: the extent to which purchases are made within agreements with contracted suppliers. After all, the aim is to use concluded procurement contracts as much as possible, as they (are meant to) provide the best terms and prices. 

"The KPI may be that 80% of spending should take place within existing contracts. Otherwise, you may miss out on contract discounts or target revenue goals with certain suppliers may not be met. Moreover, you run additional risks off-contract, such as non-compliant business as well as price fluctuations and security of supply."

“Suppose contract compliance is 60%," De Ru continued. “You’re throwing away valuable capital. It doesn't just stop at noting that you are behind target, though. No, we broaden such a KPI. The platform reaches out with suggestions on how to achieve the goal, a roadmap." In this case, these include suggestions to make contracted suppliers better known within the organisation or - more drastically - not to process invoices from suppliers without a contract (no contract, no pay).

Other KPIs in finance include invoice turnaround time (how efficient the invoice process is) and the percentage of invoices paid on time. "Late-paid invoices create unnecessary effort for the financial administration, with phone calls, emails and processing reminders. Down the chain, however, financing problems can even lead to delivery problems." Again, the system offers suggestions for meeting the goal (90% paid on time).

"A customised dashboard helps the CFO recognise trends," is how Maarten de Ru summarises the usefulness of spend dashboarding. "Insight into expenses provides opportunities for cost savings and reduction of supplier risks. Intelligence in the procurement process also greatly increases the resilience of your organisation."

This article was created in collaboration with Executive Finance.