Credit cards are a challenge for finance and procurement teams due to their fees and inability to provide granular data.
Credit cards are a challenge for both finance and procurement. Cards were designed for the consumer world and their adaptation into the business world requires breaking some procurement rules.
Credit cards provide Level 1 and Level 2 data, which details who the vendor was, and how much was spent. Because they do not provide granular data, using credit cards can hinder a procurement teams’ inability to effectively do strategic sourcing. While Level 3 data is possible through credit cards, it is not very well used; it does not have to be great data, and the data can be quite limited. Therefore, one of the main limitations is the quality of the data.
Another limitation is the business model, which was designed for the consumer world, and does not adapt quite as well between known parties of buyers and suppliers. Credit card transactions can be expensive, so cards have never penetrated more than about 5% of all business-to-business transactions. In summation, bad data, limited acceptance and high fees result in low credit card usage in the business world.
To Recap:
Credit cards do not provide quality, granular data for finance and procurement purposes.
The business model was designed for consumers and is difficult to adapt to the business world.
Cards have not penetrated more than 5% of B2B transactions due to transaction fees.
My colleague, Teran Andes, US Practice Leader, Procurement and Operations Advisory, Health Care Life Sciences at KPMG, wrote a compelling article on the significant cost savings and benefits of implementing a spend management solution for the meeting and event category.
“It’s a dirty little secret of meeting and events planning business, but M&E organizations are driven by throwing the “best event ever”. That being said, it is highly likely that at the end of the day planners will not have a full and detailed grasp of how much was spent and what, at a very granular level, is needed for the next event.
It may seem surprising that meeting and events planners may not realize what they are spending such an enormous sum of money on. The challenge they face is that meeting plans change so much from plan to execution and the cost of change is buried in venue and hotel invoices with virtually no level of detail. The priority of meeting and events planners is to pull off the “best event ever” without participants being made aware of the mechanics behind it.
Meeting and events spend, has a lot of moving parts and levels of visibility. There is spend such as AV, transportation, catering and lodging, plus cost of emergency items. Event planners are focused on maximizing the attendee experience at the expense of the annual meetings and events budget. As procurement professionals – we can’t help event planners source the best portfolio of products and services, because it is very challenging to understand, at a detailed level, what was bought and whether the pricing, markups and rebates were appropriate.
Without visibility into this spend, Procurement finds it difficult to properly partner with their peers in Meeting and Events to help them deliver the “best event ever” while maximizing and extending their overall annual budget.
These issues can be addressed through enhanced processes designed to capture the meeting spend up front, manage the change process throughout, communicate easily with suppliers, and streamline the process from budget set-up to final payment and settlement.”
Each year, finance and procurement professionals are met with the same challenges and pressures — save money, reduce risk and improve efficiencies. Your meeting and event category may just be the diamond in the rough that can help you achieve significant wins in each of these areas.
Large corporations spend millions of dollars on events each year, but why? Live events are an important marketing channel and a major revenue source. They range from internal meetings to large external conferences and promotions. For as large of a category as events is, it operates shockingly inefficiently. The procuring of services is largely done offline using Excel sheets, with little to no consistency across planning teams or even within teams. The inefficiencies trickle downstream to invoicing, reconciliation and payment, contributing to lack of detailed spend visibility. With a lack of visibility, a lack of cost savings opportunities is inevitable. After all, you can’t leverage spend that you can’t “see.”
But why is this category so challenging to manage? There are three main elements:
· A unique supplier base. A large number of suppliers are required for any size event, many of them one-off instances and potentially located internationally. The high quantity and sporadic vendor usage increases compliance risk — how confident can you be that every supplier is approved? If your payment method is a credit card, that only further increases exposure.
· The dynamic nature of the industry makes it a hard fit for traditional ERP systems. The event category exposes the shortcomings of traditional ERP systems. Traditional ERP systems were built around SKUs, which are not intended for service industries.
· Supplier payment processing. There are a lot of data sources in events — including p-cards, Excel, various supplier systems, project management systems and niche meetings management systems — that prevent companies from seeing collectively where dollars are being spent. Read full post on Spend Matters.
Spend Matters, Eli Lilly & Company and Eved teamed up to discuss how the event category is currently manage. Using technology, Lilly was able to achieve visibility through event category transformation. Check out the full webinar.
Don’t make your event supplier crazy with your RFP…
There’s the common misconception that event suppliers are giddy with delight when they receive a new RFP from a client and that they are falling all over themselves to respond quickly. Often that isn’t actually the case-most often when an event planner has neglected to include key information that the supplier needs to be able to craft the RFP repsonse you’re looking for. Be a good partner to your supplier by offering up as much detail as possible when creating RFPs for your suppliers.
There are some important items that should be included in every meeting and event RFP.
Detailed Program Information. Include as much information about the program as possible. If this is a program or event that has been held in the past, try to give your supplier some history about previous years. Tell your supplier about the objective of the program so they understand what you’re trying to accomplish. The more they know and understand about your program will help them to tailor an RFP response that meets your needs.
Attendee Demographics. Demographics of the attendees is always helpful and can guide your supplier in proposing events, activities and other options that are appropriate to your group.
Dates. Expected dates of your program and any events you’re asking your supplier to submit a proposal for. Dates can impact availability and pricing significantly.
Detail or Estimates. Tell your supplier how much detail do you expect back from them-are you looking for a very specific proposal or are you ok with estimates and high level ideas?
Contract Clauses. Make sure to tell your supplier if there are specific contract clauses you will need to include or other non-negotiable concessions and expectations.
Budget. We all hate to show all our cards, but there’s nothing more frustrating for a supplier than to have no idea of budget. They all know you want their best price, but your budget allows them to select options that you can afford. Most suppliers will also break out additional options and upgrades so you can decide if you have the wiggle room in your budget for more bells and whistles. Even giving a budget range to a supplier can help them in their response.
Response Due By. Clearly communicate to your supplier when you expect them to respond to your meeting and event RFP and don’t forget to do the same for them. Make sure they know when you expect to make a decision. Some suppliers may have put holds on space, activities and more with the hopes that they hold the winning proposal.
RFP Format. How do you want the information returned to you? Is there a specific format you need them to use?
Review Process. Let your suppliers know how RFPs are going to be considered. Do you have a client that is going to review their proposals? Is a committee involved?
Additional Applicable Information. Depending on what your RFP is for (hotels, DMC services, A/V needs, etc), you may need to include additional information for your suppliers such as what your meeting space and sleeping room needs are, manifests for transportation or show schedules and agendas. Remember, the more information you can give your supplier, the better their proposal back to you will be.
Using these basic guidelines can help to make the RFP process go much more smoothly for you and your event suppliers.
Planners-what drives you crazy when working with suppliers on RFPs?
Suppliers-anything else you’d like to see from clients when receiving RFPs from them?
WHO? Chief Imaginator at the Event Nerd, former Special Event Magazine”30 Under 40” recipient, and award winning event producer.
WHY? The Event Nerd is a passionate advocate for bringing new technology into event experience, and covers everything from conference coverage to event marketing to everyday tech and words of wisdom.
Who? Founder of event marketing consulting agency DAHLIA+, creator and curator of the popular DAHLIA+ Daily newsletter, in demand public speaker, and CMP.
Why? No one quite has the pulse on the tech side of the industry like Dahlia, who is never afraid to share her passion on apps and social media.
WHO? A company dedicated to bringing meeting and event professionals into the 21st century through open dialogue.
WHY? Think of them as the event tech world’s water cooler. Great conversations, advice and industry banter begins here, and there’s no easier way to keep up than adding them to your Following list.
WHO? Owner of Corbin Ball Associates, producer of Corbin Ball Daily and the Tech Talk newsletter, frequently named one of the Most Influential People in the Meetings Industry by leading publications, and established speaker, consultant and writer.
WHY? Between running one of the largest tech focused meeting websites and traveling to speak at events, he somehow manages to also share breaking news and thought provoking content with followers on a daily basis.
WHO? An innovative company bringing sharp data analytics to the events industry.
WHY? They aren’t just tooting their own horn, they’re a content source and passionate advocate for all technologies bringing real measurement, ROI and efficiencies to the industry.
WHO? Author of “Conferences That Work: Creating Events People Love,” conference designer and facilitator, speaker, consultant and all-around conference guru.
WHY? A strong web presence and a love of efficient and streamlined events brings his newsfeed into the technology realm frequently.
WHO? One of the oldest and most respected blogs for event professionals, with Julian Solaris at the helm.
WHY? They recently released the second installment of their popular Event App Bible and they are a prolific producer of white papers and original content for the meetings and events industry.
RECENT TWEETS:
Are there any twitter accounts I’ve missed? Would you like to add yours to the list?
Recent Comments