Spendesk Report on the Hidden Costs in Supplier Management

Spendesk, the spend management platform, revealed the findings of its new report, "Uncovering the Hidden Costs of Supplier Management." This report, from the company founded in 2016, analysed 4.7 million suppliers across a sample of 5,000 Spendesk customers in the UK, France, Germany, and Spain.

It found that the average SMB has nine times more suppliers than it has employees, but 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.

Key findings

The report uncovered a number of trends, including the following:

• 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 US$1.23bn (£964.44m) 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.

These discoveries 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 US$1129 (£855) per year, supplier management (including holistic overviews, negotiation, and payment) is becoming increasingly important as a subset of overseeing a company’s spend and eliminating hidden costs.

In April 2024, Spendesk completed the acquisition of procurement company OKKO, and this report into supplier management follows that acquisition. The spend management platform says it acquired Okko, the French procurement company, to integrate procurement and spend management, putting more focus on a smarter end-to-end purchasing experience, from procure to pay. They believe that spending at work should be controlled, efficient, and easy.

Julien Chriqui, co-founder and CEO of Okko, says: "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 strengthens relationships with suppliers," he continued.

Where the money is going

The report also explores where SMBs are spending their money on suppliers. According to data from Spendesk, 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, adds: “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 balance out. For example, if you have a £200 (US$255) invoice, but the time spent receiving and putting it through your systems costs £100 (US$127), 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 (US$25,516), then the management costs are minimal in comparison. So, large one-off invoices are fine, but for everything else you should pay with a card.”

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