Spend analytics plus overpayment recovery equals successful procurement practice

An expert in spend analytics and overpayment recovery in the public sector has highlighted the…...

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An expert in spend analytics and overpayment recovery in the public sector has highlighted the importance of both preventing overspend and safeguarding cost reduction.

Equally importantly, the recovery process is conducted in a sensitive and respectful manner to avoid damaging relationships with important suppliers, thereby also contributing to good supply relationship management.

Sam Hunt, commercial agreement manager of ‘SARS 2’ at the Crown Commercial Service (CCS), opens his article in Open Access Government by observing that overspend is a fact of life for most organisations, whether they’re private or public sector bodies.

Experts in SARS (Spend Analysis and Recovery Services) estimate that approximately 0.01% to 0.05% of all transactions are incorrect – an apparently small percentage that translates into a large sum in high-spending organisations, especially public sector bodies.

This is a perpetual headache for procurement professionals, of course, undermining their most assiduous efforts to achieve sourcing savings and other cost reductions. 

The SARS 2 Agreement designed by the CCS offers a variety of efficient yet tactful means to recover overspend erroneously transacted to suppliers, and procurement practitioners in both private and public sectors may have much to learn from it.

The approach begins with a detailed analysis of accounts payable and statement reviews to determine all spend registered on company/organisational ledgers.

An initial meeting is then held with specific suppliers to work out scope and timespans, allowing them to explain what information they require.

In the event of overspend, SARS professionals are able to begin a respectful and tactful recovery process that eschews allotting blame and avoids all risk to the client-supplier relationship – a key ingredient of sound supply relationship management.

This is perhaps an exemplary case of why automated processes such as new spend analytics technologies have to be augmented by human agents: respectfulness and tact require uniquely human skills and intelligent spontaneity.

A reassuring smile and a calm tone of voice can ease tensions in a scenario like this in a way that hard data can’t. 

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