Mar 15, 2021

Soldo: The high costs of poor spend controls

Soldo
Spendmanagement
spendcontrol
Procurement
Laura V. Garcia
4 min
Spend controls
European businesses lose £301 billion per year due to poor spending controls, according to Soldo...

Soldo, a leading European pay and spend automation platform, commissioned a Coleman Parkes study that revealed the high costs of poor spend controls. 

According to the study, European businesses lose £301 billion per annum.

  • UK economy loses around £37bn per year.
  • Germany is losing £54bn per year
  • France £37bn per year
  • Italy £26bn per year

For the UK, this figure is equivalent to 2% of revenues for every business in the country – with losses starting at around £50,000 for small businesses, rising to around £12m for the biggest UK firms. The figure is concerning considering the low productivity and the economic impact of the pandemic and highlights the need for improved spend management.

"Although many businesses in the UK are struggling to manage cashflows in this exceptionally challenging economic landscape, we see that many are losing significant revenues on an annual basis simply through poor management of spending," said Carlo Gualandri, CEO of Soldo. "Looking at this loss of revenue at a macro-level, the numbers are quite staggering."

Inefficient procurement practices threaten longterm viability

The study, conducted by Coleman Parkes, 'A Brighter Future: better Spend Controls Key to Economic Recovery' of 900 finance and business leaders across the UK, France, Germany and Italy, highlights how poor visibility, over-spending and duplication of spend are the biggest contributing factors to limiting organisational growth.

The research also reveals companies across the UK are further losing out in unclaimed VAT, to the tune of £19 billion, £3.8 billion of which is lost due to errors in the way receipts are processed. 

"Finance functions need to transform to drive business results, too much time and revenue is being wasted because of inefficient practices that are holding finance teams back. After all, it is these teams who are ideally placed to provide the strategic insight that will enable the company to thrive (or survive) in the wake of Covid," said Gualandri.

Cumbersome processes and poor visibility impeding better spend management

Inadequate spending controls are said to be to blame, with only 14% of UK businesses deeming current measures "very effective". The challenges span multiple areas, with finance teams reporting over-centralisation causing slowdowns, excessive paperwork and poor visibility on spending.

The impact of these inefficiencies is stark. The Soldo report demonstrates that inefficiencies within spending processes are damaging organisations. 40% of UK businesses say that bad financial practices have led to unnecessary spending, and 29% report the duplication of costs.

UK finance teams also struggle with effective time management. Soldo's research shows that senior UK finance staff lose over 350,000 hours each week performing unnecessary admin tasks, which worked out to a staggering 15.4 million hours being wasted each year.

"The road to recovery is long, but digitising the processes that free up valuable time and resource is the starting point every business needs to be looking at. The pandemic itself has given us lots of food for thought on how we can 'build back better' in our own teams and is something we will focus on as we start to emerge and recover from 2020," said Matt Emerson, Chief Financial Officer at Atrium.

Duelling objectives

"This study clearly demonstrates the dual challenges businesses have of reducing costs while enabling a route to recovery. While cash is leaking at a staggering rate from within organisations, they have to find ways to optimise and speed up spend management practices, as well as patching up the holes within organisations to ensure they are better positioned for future growth," commented Stephen Saw, Director, Coleman Parkes.

The Soldo study also showed how UK finance teams still have a long way to go in digitising core areas of work – 45% of payroll tasks, 49% of receipts/invoices obtainment and management, and 41% of data copying into accounting systems are still paper-based processes and demand some kind of physical process.

"Businesses that create efficiency and help teams to delegate the responsibility for spending to anyone in the businesses will be key to a swift return to growth. Technological adoption will empower business leaders, armed with better data and real-time information around spending, tech-enabled businesses are much more confident in their ability to invest for future growth," concluded Gualandri.

Soldo is headquartered in the UK, with additional offices in Dublin, Milan and Rome and was founded by serial entrepreneur Carlo Gualandri. 

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Jun 13, 2021

How Covid-19 Shook Up the Who's Who of American Retail

Ecommerce
Retail
covid-19
Amazon
3 min
We check out the new Digital Commerce 360 Top 500 analysis report to see how Covid-19 shook up the who's who of American retail

According to the new Digital Commerce 360 Top 500 analysis report, the massive shift in ecommerce habits due to COVID-19 resulted in a windfall for the US’s largest retailers, including Amazon, Walmart and Target.

The study found that the top 500 companies generated a combined total of $849.5 billion in online sales in 2020, representing a 45.3 per cent increase YoY, the largest jump since Digital Commerce 360 began tracking the statistic in 2006 and more than double the median growth of 18.0% seen over the last decade.

Although retailers of all sizes saw an uptick from online sales, in large part, throughout the pandemic, customers looked to familiar big name brands to fulfil much of their essential needs. Demand for items began to spike as manufacturing in Asia was forced to shut down, causing supply chain shortages. As large retailers tend to hold more inventory, this became a crucial differentiator for customers, says Digital Commerce 360.

Combined, Walmart Inc., Amazon.com Inc. and Target Corp. added $265 billion in US revenue to the $791.70 billion U.S. ecommerce market in 2020, accounting for a third of the market.

Considering the need for people to stay busy during lockdowns as well as the requirements of homeschooling, it’s not surprising Joann, a crafting company, showed the fastest online growth of Digital Commerce 360’s top 500.

  • In 2019, the bottom 100 of the top 500 registered the fastest growth while the top 100 showing the slowest growth rate. In 2020, however, the analysis showed the opposite, the top 100 largest companies grew at a rate greater than that of the whole, and the top 10 on the list enjoyed a growth rate even faster than the top 100.

 

  • In 2020, collectively the top 10 grew web sales 52.5%, almost five percentage points faster than the top 100 and accounted for 62.8% of Top 500 sales, up from 59.9% in 2019.

 

  • Who made the top 10 was shaken up some. For example, Walmart made it into the second spot, both Kroger Co. and Costco Wholesale Corp. crept into the top 10 for the first time, landing at No. 8 and No. 10 respectively

Segments of retail that enjoyed fueled courtesy of COVID included toys and hobbies, jumping an average of 24 spots in the rankings and food and beverage merchants moved up an average 23 ranks. In contrast, apparel retailers dropped an average 15 positions in the Top 500, whereas jewellery retailers fell an average of 10 spots.

Although Digital Commerce 360 attributes some of the growth to stock positions and the ability of large retailers to manage supply chain issues, even the largest internet retailer experienced disruption. In March of 2020, during the first save of the US pandemic, even the Amazonian giant found themselves running into meeting customer commitments and delivering orders on time. Order cancellations and extended lead times became commonplace. For a time, Amazon stopped fulfilling orders for items considered “non-essential”.

Despite the issues, Amazon maintained its spot as the top online retailer in North America by a large margin, representing 35.7% of all Top 500 sales. Although it should be noted that the share is down from the 36.7% it saw in 2019.

At the outset of the pandemic Etsy, a solely ecommerce company focused on handmade, vintage items and craft supplies, was expected to perform poorly. However, as supply chain shortages for face masks caused a sudden need for cloth masks, many began to turn to Etsy, tripling its stock value by June. 

 

You can check out the new Digital Commerce 360 Top 500 analysis report here.

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