Innovation Update

Prevent procurement ‘leakages’ and save precious working capital

Chief financial officers (CFO) are always looking for opportunities to optimize working capital and plough it back into their businesses. (Working capital is the money a business uses in its daily operations. It’s calculated as current assets minus current liabilities.)

Let’s say your CFO uses a fraud risk management program to save your organization 1% to 5% of total procurement spending by finding improper expenditures. If your organization invests a fraction of this savings it will increase its bottom line.

So, if your annual procurement spending was $50 million, you could retrieve $500,000 to $2.5 million in recoveries or cost savings with minimal personnel and financial investment. Would you do it? I’m sure your answer is an unequivocal yes.

The timing has never been better to implement monitoring mechanisms to forensically mine procurement data for potential irregularities. Improved compliance and anti-fraud monitoring technologies use advanced data analytics, automation and intelligent risk-scoring techniques. Organizations can now deploy comprehensive spending analytics cheaper and faster than traditional tools or controls.

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