Lack of transparency in purchasing: Four in ten European companies lose out on granted cash discounts

Neu-Isenburg, April 23, 2024

European companies purchase a large proportion of goods and services from suppliers with whom they do not have a contractual relationship – often to their detriment. Four in ten companies have already missed out on granted cash discounts, according to a survey of 534 purchasing managers in nine European countries (Austria, Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Switzerland, and the UK) conducted by corporate payment expert AirPlus.

Non-contracted suppliers: Maverick buying, late payments, and missed discounts

Suppliers with whom no contractual relationship exists are primarily providers of software (mentioned by 21 percent), hardware, and consulting services (16 percent each).

On average, these suppliers account for 43 percent of the total purchasing volume of European companies. A considerable proportion of this share goes to suppliers from whom companies only order once a year: Around 40 percent of respondents accordingly stated that more than 30 percent of this volume was accounted for by one-time suppliers.

The relationship with suppliers without contractual agreements repeatedly presents companies with challenges. The number one problem area cited was the monitoring of maverick buying (purchases that do not comply with purchasing guidelines). 44 of those surveyed stated that they find it difficult to check order details and payment methods for this purpose.

Advance payments from employees and the associated reimbursement procedures are a problem for one in three (33 percent), with a further third (32 percent) complaining about the lack of a clear overview of total spend. One in five (20 percent) complain about the lack of cost transparency to manage the available budget.

All of this can have negative consequences for companies' payment processes. Two thirds of respondents (65 percent) stated that they were only able to make payments late and sometimes even received a dunning. Another third (38 percent) were unable to realize granted cash discounts.

Contracted suppliers: Easy payment

The relationship with suppliers with whom contractual agreements exist also poses challenges for purchasing professionals in some cases. However, the approval ratings here are significantly lower. For example, one in five (21 percent) criticize the excessive manual administrative effort, 15 percent the limited selection of accepted payment methods, and 14 percent the late delivery of goods and services.

In the process from order to payment, the processing of invoices in particular proved to be tedious for those surveyed. Compliance with legal requirements, such as due diligence in the supply chain, also involves a lot of effort. Payment, on the other hand, came last in the ranking and was rated as rather uncomplicated.

Stefan Waelde, Head of Business Development B2B Payments at AirPlus, comments on the results of the survey: "For companies with a large number of suppliers without a contractual relationship, the major challenge is to bring transparency to their procurement processes. Only then can they prevent dunning, late payments, or losses due to missed cash discounts. Payment methods that provide important information on transactions and are also secure and easy to use are a game changer. Virtual credit cards fulfill all of these criteria. In addition, they can be configured, for example, with individual budget limits and specific purposes or validity periods, so that purchasing guidelines are adhered to at the time of purchase. Maverick buying is therefore under control."

Expertise in corporate payment

AirPlus has continuously expanded its range in recent years – from an expert in business travel management to an expert in corporate payments. The company has introduced a special virtual credit card for the payment of items such as software licenses, office supplies, and online advertising, and has entered into partnerships with well-known players in the procurement industry, including Coupa Software, Mazepay, Billhop, THL Pay, and Piteco. In total, AirPlus has connected more than 4,000 partners and data sources, working closely with more than 60 IT partners to ensure that all solutions can be seamlessly integrated into any customer ecosystem.

About AirPlus International:

AirPlus International is a leading international provider of corporate payment solutions. 53,000 corporate customers rely on AirPlus for the payment and evaluation of their business trips and other purchasing services. The products and services are marketed worldwide under the AirPlus International brand. AirPlus is an issuer of the UATP and Mastercard card schemes. The AirPlus Company Account is the most successful billing account within the UATP. For more information, visit www.airplus.com.