By Max Clarke
The majority of companies in the UK and Europe are putting unnecessary pressure on themselves by overpaying in the [b]purchase-to-payment cycle.
Basware, a leading provider of purchase-to-pay solutions, has found that looking at the savings companies can make when implementing automation and centralisation in their procurement and invoicing procedures shows how much cash businesses are potentially wasting.
Basware is calling for more awareness of the unnecessary costs in the purchase-to-payment (P2P) cycle, which cause many UK businesses to suffer or even go under. “As a nation, we can’t afford to have so much capital lost in P2P,” commented Andrew Jesse, VP Basware UK. “Businesses need to be able to see where cash is leaking from, and then plug those gaps. The results speak for themselves: imagine what a company could do with a capital boost of 20 per cent, because that is what is possible.”
The way that businesses can cut down this lost cash is through greater visibility of supplier portfolios and the automation of documentation throughout the P2P process. Ritter Sport, the German chocolate manufacturer, implemented P2P technology and reduced its supplier portfolio by 40 per cent in a consolidation effort, and achieved a 10 per cent reduction in purchasing costs as a result.
Similarly, Helsinki Energy in Finland saved €2 million on procurement costs; ISS, the global cleaning company, had a 90 per cent pricing variation across its 50 supplier contracts but consolidating them saved £28.5 million. A leading professional services company, which used 1,500 marketing suppliers, cut its spend — representing one quarter of total indirect spend — by 20 per cent through P2P improvements.
Andrew Jesse continued: “An obvious way for businesses to improve their performance in difficult economic conditions is to stop unnecessary costs. This kind of overspend on suppliers can be easily rectified and has the potential to save companies a lot of money, keeping them competitive and ultimately stopping them going under.”
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