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Losing money by not
improving source-to-pay
processes

How hotel companies can lead in source-to-pay procurement in finance and accounting to create efficient operations.

Overview

Due to the lack of visibility into expenditures, hospitality companies are losing out on millions of dollars in potential cost savings. According to Accenture professionals working to improve source-to-pay (S2P) processes at large hospitality companies, only about 30 percent of expenditures are under effective category management. Even in the portion being managed, many of the contracted savings are slipping away due to lack of follow-through on contractual compliance.

Accenture recommends, on average, that hospitality companies set long-term goals to boost the percentage of spend under management from 30 percent to 80 percent.

Greater synergy will result as related functions are linked together in a streamlined S2P superhighway. Systems that integrate procurement with accounts payable, for example, can show the percentage of spend going through contracts and which properties are buying off-contract with greater frequency. In addition, thorough integration of digital data—in sourcing, procurement and payment processes—paves the way for data analytics, which can provide insight into expenditures and deliver faster feedback on compliance.

 

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Background

Automated systems have streamlined procurement processes, as well as activities in hospitality finance and accounting, yet significant gaps remain in the overall source-to-pay flow. That’s partly because narrow technology solutions have been deployed in multiple areas with insufficient attention given to overall integration.

From working with organizations across a wide range of industries, Accenture estimates that hospitality companies are leaving money on the table due to a lack of category management, not enough market intelligence and fragmented processes across the source-to-pay continuum.

Internal procurement teams frequently lack sufficient depth and knowledge in multiple categories to realize greater savings. Consequently, many companies turn to service providers for expertise in source-to-pay processes.

Analysis

Major barriers to managing indirect spend in the hospitality industry.

Across industries, Accenture estimates only 49 percent of spend is being effectively managed. In the hospitality industry, where management of source-to-pay processes is less mature, the percentage of indirect spend not being managed is much higher—closer to 70 percent.

Deeper market intelligence could realize from 3 percent to 5 percent in additional savings. In addition, the lack of follow-through in end-to-end processes means that 30 percent of savings are never being realized due to a lack of compliance with terms in negotiated contracts.

Recommendations

Hospitality companies, particularly those with decentralized operations, stand to benefit from stronger management of the entire S2P flow. Having greater visibility into spend and negotiating better contracts drives deeper discounts in categories that matter most.

Synergy results when related functions are linked together as a streamlined S2P superhighway. Systems that integrate procurement with accounts payable, for example, can show the percentage of spend going through contracts and which properties are buying off-contract. In addition, thorough integration of digital data paves the way for analytics-powered systems, which can provide deeper insights into expenditures and automate non-compliance alerts.