Procurement as a lever for trust and accountability in the third sector

Those working in third-sector organisations have an obligation to their donors and, ultimately, those who need their support to deliver value for money. In an age where scrutiny is rife, it’s increasingly important that they can demonstrate they are spending money wisely and cost-effectively. Failing to do so – or becoming embroiled in a controversy over how money is spent – could cause serious reputational issues and even impact future donations.

 

It’s essential that those working in procurement teams can provide clear audit trails of where donors’ money goes. Where organisations make large purchases – such as investments in aid supplies, buildings or staff – they will typically have conducted a proper procurement process, seeking bids from potential suppliers and assessing the most suitable option.

 

But many third-sector organisations have less clear processes when it comes to indirect spend. This is money spent on items that are essential to running the operation, but may not come into contact with end-users. Examples could be office furniture, technology and stationery, as well as books or gifts for those in need of support.

 

Often such purchases are made by office managers or those who need them, and bought from a local shop or online provider, with little due diligence conducted on whether it is the most appropriate product or the best price.

 

These are often bought by individual employees and then claimed back through expenses, or purchased on company credit cards, with little in the way of receipt. This creates huge issues for accounts teams trying to reconcile purchases, and leaves organisations open to accusations that money has not been spent effectively.

 

Digital marketplaces, though, are helping third-sector organisations take control over such spend. Amazon Business, for instance, allows authorised buyers to make purchases up to a pre-agreed amount, from a wide range of items that allows for easy comparison around pricing.

 

Crucially, invoices for each item can be downloaded, allowing accounts teams to reconcile transactions and providing a clear audit trail on what has been spent, and there’s also the option to choose a monthly invoice covering all purchases. Access to such information can also allow managers or procurement teams to analyse spend and identify opportunities for further efficiencies.

 

The use of such marketplaces also helps charities and third-sector organisations meet wider objectives. Organisations can choose which suppliers are put forward, enabling their buyers to spend with those which have sustainability certifications, for instance, or which are small businesses or from the local area. Progress towards these goals can be tracked over time, allowing charities to demonstrate how their own buying is helping the planet or boosting the local economy.

 

One organisation that has benefited from using Amazon Business is care provider Keys Group. As well as getting more control over its purchasing and create operational efficiencies, it wanted to enable the young people moving into its care to be able to purchase items to liven up and personalise their bedrooms.

 

Using Amazon Business has allowed it to streamline its procurement processes and reduce the number of suppliers it deals with by approximately 1,000. From a reporting perspective, it has chosen to receive a monthly invoice for all items rather than receiving multiple invoices, which has improved efficiency in the accounts department. It has also generated cost savings of 10 to 15 per cent by ensuring it receives VAT invoices.

 

“We’ve been able to make some big efficiencies in invoice processing, and have seen some significant savings as well,” says Shane Gidman, Group IT and Procurement Director. “With consolidated invoicing, we get just one invoice a month, so that back-office process is much more efficient.”

 

As well as financial savings, this has also freed up time and resources in the organisation. Adds Gidman, “Any time we can free up for anyone, whether they’re in the central support teams or on the ground, will only be beneficial for the people who use our services.”

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To find out more about how Amazon Business could help your charitable or not-for-profit organisation deliver more through smarter procurement, click here