SMBs Have Nine Times More Suppliers Than They Have Employees, Spendesk Report Reveals
04 July 2024 - 8:00AM
Business Wire
Spendesk research shows that SMBs struggle to
manage their mass of vendors, with dormant suppliers costing nearly
£1 billion annually
Spendesk, the complete spend management platform, today released
the findings of its new report: Uncovering the Hidden Costs of
Supplier Management. Analysing 4.7 million suppliers across a
sample of 5,000 Spendesk customers in the UK, France, Germany and
Spain, the report found that the average small and medium-sized
business (SMB) has nine times more suppliers than it has
employees, however it only uses one quarter of these. The
findings indicate that today’s SMBs rely heavily on outsourced
capabilities yet they may not be holistically and actively managing
them, resulting in hidden financial losses.
Overview of key findings:
- SMBs have nine times more suppliers than employees, with a
median average of 800 suppliers.
- Many SMBs only use one-quarter of the suppliers on their books,
resulting in a potential total loss of £964,440,000 in wasted time
and management costs.
- The top five areas of spend with suppliers are: business
services, travel and accommodation, utilities, maintenance and
office supplies, food and beverage, and retail and
merchandise.
The findings emphasise the need for businesses to adopt an
active spend management approach. With outsourcing continuously
increasing and each supplier on the books costing a business £855
per year, supplier management (including holistic overviews,
negotiation, and payment) become an increasingly important subset
of managing a company’s spend and eliminating these hidden
costs.
The report into supplier management comes on the back of
Spendesk's acquisition of procurement company Okko in April 2024.
Julien Chriqui, co-founder and CEO of Okko, said:
"The findings of the report highlight how crucial it is for
businesses to optimise their vendor management processes to keep
costs under control and reduce inefficiencies.”
“SMBs need to adopt an active spend management approach. By
consolidating payments and negotiating as a single entity, finance
teams can leverage their combined purchasing power to secure more
favourable rates and terms from suppliers. This approach not only
helps in managing costs but also strengthens relationships with
suppliers," he continued.
The report also examined where SMBs are spending money with
suppliers. According to Spendesk's data, the top three card spend
categories are business services (such as software subscriptions
and consulting services) at 42%; travel and accommodation at 19%;
and general business expenses such as utilities and office supplies
at 9%.
Julien Lafouge, CFO of Spendesk,
commented: “Actively managing spend is not just about managing
“who” you are paying, but also “how” you are paying them. Knowing
where the money goes is crucial for financial controllers to
improve financial operations. Paying a supplier by invoice is a
great option when the cost of the invoice and the cost to push the
invoice to payment balances out. For example, if you have a £200
invoice but the time spent receiving and putting it through your
systems costs £100, then your invoice has cost you nearly 50% more.
This also isn't including the bank fees for transferring money to
pay suppliers. However if the invoice is £20k then the management
costs are minimal in comparison. So, large one-off invoices are
fine, but everything else you should pay with a card.”
A full copy of Spendesk's report: Uncovering the Hidden Costs of
Supplier Management can be found here.
About Spendesk
Spendesk is the complete spend management platform that saves
businesses, up to 1,000 employees, time and money by connecting
company spend. With the integration of everyday technologies,
built-in automation, and an easily adopted approval process,
Spendesk’s single solution makes agile, efficient spending easy for
employees and gives finance leaders complete visibility across the
entire company spend. Trusted by thousands of companies, Spendesk
is proud to have over 200,000 users across brands such as
Soundcloud, Gousto, SumUp, and Bloom & Wild. With 600 employees
and offices in Paris, London, Berlin, and Madrid, Spendesk also
puts community at the heart of spend management. Spendesk-backed
CFO Connect is the fastest-growing global community of finance
leaders with more than 12,000 members. For more information, visit:
https://www.spendesk.com/en/press/
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Srishti Bahadur, GingerMay spendesk@teamgingermay.com