Is all Finance and Procurement spending really essential?

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Jason Busch, Editor of sourcing, trade and supply chain blog Spendmatters.com says:

If we look at the current situation inside many of our companies, clearly we can see a path to achieving savings from many programmes and initiatives. Perhaps an outsourcing agreement is going to give us savings within a near-term window. Maybe an IT investment the CIO is pushing is essential, and will give a near-term R.O.I as well. Certainly many initiatives in Procurement will give a quick return. But what is essential, and what is not? It’ easy to cut travel budgets; it’s easy to cut other discretionary spending areas – but what do you think? How can Procurement and Finance best decide together?

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Basware's Response

Naturally, the customer in the end decides what is necessary spend and what’s not. At Basware, we support our customers to achieve maximum efficiency – by making sure all purchases are done against contracts, to corporate approved models, at the right time and against an approved budget. Automation ensures the Purchase to Pay process runs as efficiently as possible, with true supply chain visibility.

What others are saying

Liesbeth from Finance on 16/7/09

Essential should not necessarily be arbitrary, as different groups in the company define it, but the definition should be flexible based on how our needs change.

Oscar from Procurement on 13/7/09

Agreed. But visibility helps – at PO level, invoicing and payment level, inventory level and so on. Surely you need to know what you’re spending on, before you can decide whether it’s essential or not?

Erik from Finance on 9/7/09

I think everyone has a different definition of ‘essential’. That’s the problem. What was essential yesterday given the financial climate, may not be essential given how our needs have changed in the last hour.

Renske from Procurement on 6/7/09

I think it ultimately comes down to our customers to determine what’s essential and what isn’t. It’s easy to target discretionary spending, but this really is in the minority, at least for our business (manufacturing). Spend should always be demand-driven. Do our customers demand certain service levels or qualities that dictate a certain supplier or type of relationship? If yes, then the spending is essential. That’s not to say we can’t lower it on the unit cost level, however.

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Basware is the global leader in purchase to pay solutions with more than 1,500 customers and 850,000 users in over 50 countries around the world. Basware solutions automate business-critical financial processes and deliver value by providing compliance and control, as well as fast return on investment. The solutions are distributed and implemented in Europe, the US, and Asia-Pacific through an extensive network of Basware offices and business partners
In 2008, net sales reached EUR 86 million. Founded in 1985, Basware Corporation is a public company listed on the NASDAQ OMX Helsinki Ltd. Headquartered in Finland, it has seven subsidiaries in Europe and one in the US. www.basware.com