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Lack of Spend Visibility Is Really Costing Businesses

New Razorsight Sponsored Aberdeen Survey Finds That More Than Two-Thirds of Enterprises Have Limited-to-No Visibility into Corporate Expenditures

FAIRFAX, VA - July 24, 2006 - On average, enterprises spend nearly half of every dollar they earn on external goods and services. For manufacturers, 60 percent to 80 percent of the cost of a final product comes from external suppliers. Razorsight co-sponsored the new Aberdeen Group’s benchmark report, The Invoice Reconciliation and Payment Benchmark Report, which found that 69 percent of enterprises have limited visibility or no visibility into critical financial information relating to the costs for these external goods and services. Three pressures cited by survey respondents are linked directly to visibility:

• Reduction of cycle times to post expenses
• More timely recognition of costs
• Rising supplier costs impacting the enterprise

“We’ve known for years that this lack of visibility was costing businesses billions of dollars annually; we’re pleased to be part of this study that quantitatively validates our observations,” said CEO Charlie Thomas of Razorsight.

“One of the challenges in gaining visibility into costs is the large volume of paper-based transactions and variety in the types of billing processed,” said Joe Basili, an Aberdeen research director and lead author of the report. Paper remains stubbornly entrenched for billing (83 percent for domestic and 86 percent for international is received in paper format). IR&P is more than simply processing large volumes of paper invoices and paying the bills. The data from processing bills should be integrated with sourcing, procurement and ERP systems to provide visibility into costs and maintain competitive position.

The report examines the implications of labor-intensive manual processes. The report offers specific recommendations for improving management of IR&P processes, which include the following:

• Determine which manual steps cause the biggest delays and cost the most money.
• Automate labor-intensive invoice processing, by adopting optical character recognition scanning and increasing the use of HTML and electronic transactions.
• Identify top obstacles to capturing cash discounts and to an alert system of escalations to get bills approved on time.
• Increase use of financial institutions’ trade services and working capital solutions.
• Review your IR&P technology. If you are using multiple systems, compare the costs of integrating these systems with evaluations of newer integrated approaches.
• Create benchmarks to measure improvements for the costs of processing bills, time to process invoices, audit findings, costs to pay invoices and volume of transactions in terms of bills and dollars being managed.
• Work toward a fully visibly, integrated environment for sourcing, ordering, invoice processing, ERP systems and payment processes.

The goal is to find an approach that will enable the enterprise to collect critical information; organize the data; and integrate it with the ERP program or reporting, spend analysis and business intelligence.

To download a complimentary copy of the report, click on this link: http://www.aberdeen.com/summary/report/benchmark/RA_IRP_JB_3185.asp.

About Aberdeen Group

Aberdeen Group (www.aberdeen.com) provides fact-based research and insights focused on the global, technology-driven value chain. Aberdeen’s benchmarking, market and solution assessments; sales acceleration programs; and conferences support Global 5000 value-chain and technology executives and the solution providers who serve them.

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