Organizations have tremendous financial opportunity to optimize areas of the Source-to-Pay (S2P) process via technology. Business Spend Management (BSM) solutions like Coupa, for instance, are delivered via the cloud and consist of an annual recurring software fee and one-time implementation fee.
CrossCountry Consulting has experience using several tactics that allow the software to pay for itself: Using native Coupa functionality, the software quickly returns value to the organization in excess of the fees associated with using and implementing the software.
This is an incredibly advantageous lever to pull when evaluating the vendor and implementation partner landscape, especially during times of economic uncertainty when cost improvement measures are imperative.
To fully leverage the power of your spend, here are six steps procurement teams can take to implement Coupa for free:
1. Complete a Spend Analysis in Advance
Before implementation, review key spend categories and compare the benchmark savings delivered via Coupa’s Sourcing module. Prior to the Coupa project, or in the early phases, a spend analysis of the past 12 months allows teams to measure spend versus internal benchmarks and deliver savings in key areas. This analysis can also be used to determine key target vendors for virtual card or negotiated early-pay discounts.
2. Introduce Coupa Sourcing
A typical S2P project timeline is 4-18 months. Coupa’s Sourcing module can be ready for use by week six. This means you can invite vendors to participate in Sourcing events six weeks after signing your Coupa contract. Your procurement team can run sourcing events on your behalf, which is a key learning opportunity to identify where sourcing events can be executed, how quickly savings can be delivered, and how effectively end users can be trained to run their own sourcing events in the future. So, with one modeling exercise, organizations can extract a multitude of benefits.
3. Convert Vendors to Virtual Cards
Leading BSM applications like Coupa can transmit virtual cards on purchase orders or at the time of invoice via most card providers, which offer 50 bps-1.5 bps per transaction. Using a merchant match, you can identify key vendors that accept credit card payments and convert them to this payment method.
4. Identify and Implement Early-Pay Discounts
Coupa makes it easy to identify vendors that have opted in for early-pay discounts. Your organization will receive a discount, in some cases up to 5% but usually in the 2-3% range, if you pay your invoice within a certain number of days. The Coupa Growth team supports you during your project to identify vendors that prefer early payments. Using Coupa Pay, you can quickly and easily identify which bills are eligible for discounts, a service provided at no charge for all customers who license Coupa.
5. Use Preferred Suppliers to Secure Savings and Monitor Compliance
When a preferred supplier for a spend category is identified, the tendency is for procurement and legal to secure negotiated pricing in a signed contract and immediately jump right into enabling that supplier for transactions and tallying up the savings. Following the negotiations, there are other steps required to communicate why that supplier is “preferred” and integrate the supplier into the operations.
Ensuring that the identified savings have been secured requires clear communication, change management, proactive compliance monitoring, and education. Otherwise, end users may continue purchasing outside of the preferred supplier program, rendering the contracted pricing useless.
When a strategically managed program is also backed by Coupa-automated contract compliance validations, and users are directed through intuitive buy-pay channels (for example, a catalog with pre-approved items, pricing, etc.), the risks of non-compliant suppliers cannibalizing identified savings are mitigated.
6. Access Pre-Negotiated Discounts via Coupa Advantage
The Coupa Advantage Program is free of charge for all Coupa subscribers and brings a set of pre-negotiated discounts from major indirect suppliers leveraging the combined spend power of all Coupa clients. This includes categories like Car Rentals or Background Checks, and in some cases, Coupa Advantage can deliver as much as 20%-50% in named categories.
Ronnie Beardsley, Sr. Director of Supplier Partner Success, manages Coupa’s supplier relationships and the Advantage Program and noted, “[E]mbedded in the success of the Coupa platform is ease of integration and adoption for suppliers. Our Advantage program has 70 suppliers, many of these with native catalog integrations that can quickly be deployed, delivering cost savings in purchasing and efficiency savings in AP processing.”
Most suppliers in the program will honor the discount the day you sign with Coupa. With Coupa Advantage, you can recoup a portion of your subscription and implementation costs in as fast as three months, sometimes even before you’re live on the Coupa platform.
When creating the business case for spend management technology, it’s easy to see one-time fees as a hurdle. The bigger and more costly hurdle, however, is not implementing spend management technology for fear of fees.
For expert support implementing a cost-effective business spend management application, contact CrossCountry Consulting.