Soldo: The high costs of poor spend controls

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.