Companies can save through better control of indirect expenditures

Accenture surveyed more than 50 leading companies in the U.S. and Europe across 12 industries to determine how organizations are handling their procurement to payment processes. The following are some of the key findings of the study.

--Companies are losing money daily, forfeiting negotiated savings with preferred suppliers because employees continue to buy from the wrong suppliers. Nearly a third (32 percent) of all spend does not comply with company purchasing policy.

--Despite companies investing millions of dollars on eCommerce systems, paper still dominates the process as 35 percent of all transactions are entirely paper-based, and 67 percent of all orders generate a paper invoice.

--Companies can dramatically cut the average transaction cost (from US$94.93 to $20.57) in three months by implementing a purchasing card system -- a savings of 79 percent over traditional manual paper processes.

Fact Sheet

Accenture surveyed more than 50 leading organizations in the U.S. and Europe across 12 industries to determine how organizations are handling their procurement to payment processes. The majority of companies surveyed (63 percent) had more than US$5 billion in annual revenues. In particular, the study focuses on indirect expenditure where many organizations have opportunities to improve their procurement performance through effective sourcing of goods and services, management of preferred supplier compliance and efficient processing of large volumes of transaction fees.

-- 32 percent of all spend does not comply with company purchasing policy.

-- Purchasing Cards can improve preferred supplier compliance levels by 12 percent, taking the industry average (68 percent) to 80 percent.

-- The average discount achieved by using a preferred supplier is 11 percent.

-- Company spend on everyday goods and services: typically 40 percent of a company's total expenditure - is fragmented across the organization, making it difficult to identify and manage cost saving opportunities.

-- 35 percent of all transactions are entirely paper-based

-- 67 percent of all orders generate a paper invoice.

-- An average transaction costs $94.93* for the majority of companies who continue to rely on manual, paper-based processes.

-- Companies can dramatically cut the average transaction cost by implementing a Purchasing Card (from $94.93 to $20.57), in three months, a saving of 79 percent over traditional manual paper processes.

-- In contrast to competing purchasing systems, Purchasing Cards typically cost under $158,380 to implement compared with ERP and eProcurement systems that typically cost 10 to 100 times as much.

-- Enterprise Resource Planning (ERP) and eProcurement solutions have struggled to make an impact accounting for only 25 percent and 14 percent of companies' indirect expenditure.

-- Purchasing Cards only account for 5 percent of spend and approximately 16 percent of transactions.

-- Measuring ROI, the study found that against other Purchasing Cards, the American Express Purchasing Card program doubles cost savings - up to $3.16 million annually for a typical company – through greater compliance, spend visibility and a commitment to client implementation.

-- Organizations, on average, achieve 5 percent cost savings through consolidating spend with preferred suppliers.

-- Despite being the most expensive process for indirect spend, manual paper process is still the most commonly used, accounting for an average of 42 percent of spend and 35 percent of transactions.

-- Companies anticipate an increase in Purchasing Card and eProcurement usage by up to 6 percent over the next twelve months, and a decrease in paper based processes by 9 percent.

*The rate of exchange used in this fact sheet is 1.5821 U.S. Dollars per U.K. Pound.

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