Back to basics - what is the business problem a VMS solves? Who are the stakeholders in that process?

Explore the fundamental business problem addressed by a VMS and the key stakeholders involved in the process.

Introduction to the topic - why I wrote this blog

I came across a LinkedIn post the other day from Siv Koivukorpi  - https://www.linkedin.com/in/sivkoivukorpi/ who is a SAP consultant from Swedish company Corechange

The post (in Swedish) was referencing investigative work from a freelance journalist around faulty or fraudulent invoicing involving Swedish government agencies. The area of focus was the procurement of contingent workers.

Safe to say the Swedish government agencies wasn't very forthcoming to discuss the situation and the piece revealed a disturbing lack of modern tools and practices - think BBC Panorama style reporting...

Understanding the Business Problem

Why is this relevant to you if you are a Finance, Procurement or HR stakeholder in a UK based company? The level of details in the article took me back right to the very basics of management and control of spending in the end to end business process around buying people that aren't employees.

When we first started the Fieldglass business in the UK in 2004 I still vividly recall visiting a office of one of the largest global staffing firms in Kingston-on-Thames. It was a Friday and the offices was bustling with activity. On the big desk in the reception area was stack upon stack of papers. It was the timesheets and invoices that had been generated for that's weeks work, that was being sent out to customers. Thousands upon thousand of paper document - one timesheet with the corresponding invoice.

I remember thinking to myself - jeez - how is this not digitised - what an opportunity for a VMS like Fieldglass. In todays world where contingent workers (from staffing or consulting firms) have grow to represent a much larger proportion of the workforce for an organisation the fundamental problem has multiplied exponentially.

In that world where invoices are still paper based, and moreso where I don't have a digital process tool (a VMS) to help me manage the vendors that are selling me services how do I know if invoices are correct? If the work has been performed? If the work has been signed off by the right stakeholder? Do I have the appropriate contractual relationship with these suppliers? Did the stakeholder have the authority (Budget or Purchase order) to spend this money? How do I do cost accruals by months in a timely manner without having to spend hours and hours? I could list out many more legitimate questions

When this paper invoice hit my AP team how do they start un-packing all those question?  In the case of the Swedish government agencies they didn't - they just paid the invoice that was sent. Ouch...

Key Stakeholders in the VMS Process - Finance

When talking about Vendor Management Systems and managing a contingent workforce we often refer to the key stakeholder being either HR or Procurement but at the core of the problem is a very basic Finance issue. Given the transaction volumes this problem becomes hard to manage very quickly

Think of a VMS as a shared digital Plattform to facilitate the electronic exchange of documents (PO, SOW,Timesheets and Invoices).

All the stakeholder - the supplier, the worker doing the work, the hiring manager at the client wanting the work done, procurement and finance all have realtime visibility to the documents as they move through the process.

The documents are linked to one and other in a chain that has timestamps and audit trails enabled.

What cost center was used to land the cost. How much budget was available to that cost centre. How much of that budget was already consumed and how much was left 

The suppliers have been vetted and checked as part of their onboarding process

Imagine what this does for the productivity of you AP-team once you get to the invoice payment

Challenges Faced by the finance professional today

One of the most challenging problems for todays Finance leader are how do I combine the growth we are seeing in the business with using the owners capital in an efficient  and diligent way. Burning through cash is no longer an option in todays funding environment.

There are so many projects we as a business need to get done - doubling down of product development, expanding our go to market teams and breaking into new market, really servicing our existing clients well as we are growing. Building out the procurement function might not be on the CEO's top 10 list

As a business we already have bought a plethora of technology tools to support the overall business as well as specific systems by department and as a Finance leader I am sure you are getting request to buy new or more technology solutions every other week.

If you only have an embryonic procurement team that's focused on the direct procurement (or no team at all as someone in finance is wearing two hats) its hard and eventually expensive to start planning for a digital and effective procurement process 

How does FaaST Flex make this easier to try?

The three core components are 

1. No upfront commitment or locked in contracts through our pay as you go model

2. No cost to implement and have you up and running in a week using best practice

3. Ready to go supplier network with vendors vetted and onboarded

If you are on a tight budget from a cashflow perspective we can also offer an invoice factoring option with extended payment terms. You get one invoice per month across all your suppliers

If this sounds like a problem you recognise as a finance leader you can book a meeting with me or David to discuss your situation and how we could help - click this link https://meetings-eu1.hubspot.com/mikael-lindmark/meet-mikael to book a meeting at your convenience.

Or you can grab your HR colleague and attend our upcoming webinar "Building a flexible On-demand workforce in the digital age". Registration page below. If you want to meet in person you can attend the webinar at the SAP offices in Feltham

https://www.linkedin.com/events/buildingaflexibleon-demandworkf7169346043355058177/comments/