Coupa’s 2021 Business Spend Management (BSM) Benchmark Report highlights the need to revitalise processes to make organizations stronger, smarter and safer.
The impact of Covid-19 has highlighted the need to react to sudden disruptions by quickly sourcing from alternative suppliers, finding substitute goods and services and having the visibility to control costs when needed – something which is not always the case in constrained conditions.
The report helps provide some tips on how to improve BSM. It starts with a comprehensive strategy for end-to-end BSM, including how emergency actions shouldn’t be the norm going forward. This calls for the need to implement smart end-to-end strategies for companies to have full visibility and control over their business spend and highlighting that data is key and beneficial.
Companies implementing BSM
- Britvic says that BSM helps them understand supply chain complexity and the need to be more efficient. It helps them to understand ‘where we’re spending our money, with whom and how.’ Always driving to be more effective and efficient, BSM has enabled them to do so.
- Sonic Automotive managed to cut contract time to weeks that would have taken months to negotiate before by using Contract Lifecycle Management, one of the factors monitored within BSM.
Implementing BSM practices helped top performers save more than 6% of their total addressable spending compared to the average 2-3% using traditional spend management!
There are 3 main areas that BSM helps:
- Optimise spend and cash: companies can enhance their value by reducing spending and holding onto their cash for longer.
- Drive more spending through structured buying channels and automated invoicing to better manage payables and optimise working capital.
- Improve operational performance: reduce time and effort spent on processing POs, invoices, payments, managing contracts.
- Instead, companies should focus on higher value, strategic work
- Reduce risk: nowadays, companies rely more on 3rd parties, yet an element of risk comes with that.
- It suggests businesses look at value drivers to improve compliance with procurement policies and contract terms to prevent late payments. It’s also worth assessing 3rd party risk through electronic surveys.
“You can become an agile decision-maker and be part of the movement to spend smarter together”
Some of Coupa’s KPIs and stats
Here are some of Coupa’s BSM KPIs and benchmark statistics that companies can use as a comparison to assess how they can improve their strategy and have full visibility and control over their business spending.
- On-Contract Spend 79.6% Higher is better
This refers to the percentage of spending put through contracts negotiated and established to enable better prices and terms. Greater figures show a reduced financial risk and related business costs from supplier liability, thus enabling better prices and terms.
- Electronic PO Processing 99.2% Higher is better
The percentage of total POs approved, processed and received by suppliers electronically: it is low-value, manual work and helps avoid manual errors.
- First-time match rate 85.8% Higher is better
The percentage of invoices 2 or 3-way matched with POs and receiving documents without the need for exception handling. A high match rate indicates efficiency meaning there are fewer invoices that have to be manually reviewed (time is money after all)
- Invoices paid digitally 86.6% Higher is better
The percentage of payments made digitally. This strengthens supplier relations by reducing the amount of time and error in paying suppliers and receiving payment from customers. It also helps improve working capital with the possibility to invest in more ventures.
The pandemic has highlighted the need for digital transformation in the workplace as companies become more agile, remote and accessible which can be further enhanced by implementing Business Spend Management practices to avoid reacting in the least strategic way to emergencies.