Many housing providers are already using e-procurement technology to streamline their financial and purchasing processes to give a clear view of cash flow and organisational spend, while both purchase-to-pay (P2P) and source-to-pay (S2P) have become more accessible to housing providers as cloud computing has helped improve accessibility and lowered costs.
With the introduction of universal credit, the majority of housing benefit recipients will be expected to ‘self-budget’ and ensure their rent is paid on time, despite many critics saying that this would lead to higher arrears.
The critics’ predictions were proved correct during the scheme’s pilot phase, when one of Warrington’s biggest housing providers reported that payments from tenants had become completely haphazard, and with many now in arrears.
So with the UK-wide introduction of the welfare reforms now underway, housing providers are having to deal with the change from very regular, predictable cash flows to more irregular payments dependent on the tenants’ abilities to pay on time.
And while cash flow is one concern, another is the sheer weight of the processes needed to manage and track incoming payments from tenants. Uncertainty about funds coming in means that housing providers will have to increase their knowledge of what funds are going out of the business and when, and this is where P2P and S2P software can help them monitor their cash flows more effectively.
Housing providers need to purchase hundreds if not thousands of products and services on a regular basis. A structured approach to sourcing – the process of carefully choosing who to buy these things from and at what price, then actually doing the purchasing – is therefore an essential starting point to ensuring best value in line with the Social Value Act, and also controlling costs and managing purchasing in line with a fluctuating cash position. Done manually, this process is extremely time consuming and offers little visibility, but S2P removes the necessary manual labour from the entire cycle from the starting point of analysing spend and selecting suppliers, through to the end point of paying suppliers correctly and on time.
E-sourcing solutions, which can operate independently or as part of S2P, can help rationalise suppliers and negotiate better deals on products and services, and enable tender processes to become more automated using pre-defined tender clauses dragged and dropped into place. The suppliers then respond within the system and it automatically checks, compares and scores responses against chosen criteria, helping to narrow down the best suppliers and products.
Once supplier contracts are in place, staff can then begin to requisition agreed products and services. The use of P2P or S2P solutions enables this by providing an intuitive and simple to use buying system that acts very much like Amazon. This makes buying easier across an organisation, but also ensures that people buy in-line with agreed purchasing policies and helps to eliminate maverick spending.
Catalyst Housing has recently adopted our S2P solution to improve its financial performance and, in the wake of the benefits reforms, there has never been a better time to do this.
Russell Herbert, head of procurement, Catalyst Housing, said, “Source-to-pay will enable us to gain a better understanding of the supply market, and electronic tendering will help reduce costs through increased competition and gain easier access to specialist suppliers.
“Budgetary control and forecasting will also improve as requisitions will only be approved if the budget is available to spend. All staff will now be personally accountable for raising purchase orders, enabling us to keep a closer eye on all spend.
“Ultimately, if our cash flow does become affected by universal credit, it will now be much easier for us to renegotiate and implement extended payment terms with our supply chain if necessary.”
Universal credit will inevitably serve up some financial challenges for housing providers. Increased uncertainty around income makes increased certainty over spending and costs a pre-requisite. E-procurement software offers bottom-line benefits at a time when the protection of your finances matters most.
Daniel Ball is the commercial director at Wax Digital.