It's no exaggeration to say that large corporations worldwide have optimised their strategic spend to near perfection. 

Through years of cultivating crucial supplier relationships, streamlining Source-to-Pay (S2P) and Procure-to-Pay (P2P) processes, and employing benchmarking practices, enterprises are primed to secure the most competitive prices in the market.

Yet, while the corporate world was focused on refining their business-critical spend processes, their tail spend management inevitably fell by the wayside.

In recent times, though, businesses are redirecting their well-deserved focus towards the intricacies of tail spend.

What is Tail Spend? 

Tail spend, often referred to as indirect, maverick, or C-class spending, accounts for 20% of a company's overall expenditures. 

While this figure might appear insignificant in the broader context of the entire procurement spectrum, this category encompasses a significant 80% of the total supplier count.

Those unfamiliar with procurement processes may not fully appreciate the difficulties this poses for a company.

As corporations expand, so will their tail spend purchases. They consist of many one-off, ad-hoc expenses ranging from office supplies to event sponsorships and marketing activities. 

Research has shown that it can take up to 6 months for a large organisation to onboard a single supplier onto their ERP systems. 

Needless to say, it’s impractical to onboard these one-time, low-value suppliers. 

Given that the majority of tail spend is made up of these low-value suppliers, it comes as no surprise that 74% of CPOs surveyed in Deloitte’s 2023 Global Chief Procurement Officer survey identified “driving operational efficiency” as their top priority. 

Understanding Tail Spend 

The tail can be split into three categories - Recurring purchases, catalogues and marketplaces, and typical expenses.  

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Most procurement teams are well-equipped to deal with their Business-to-Consumer (B2C) and Travel and Entertainment (T&E) expenses. 

This can be attributed to the fact that most of these payments can be made with credit cards or purchasing cards (P-cards). 

In fact, P-cards are already used by around 72% of companies as an alternative purchasing method to traditional cheque payments or bank and wire transfer. 

Once connected to an enterprise’s Expense Management System (EMS), these cards act as a single point of contact, streamlining reconciliation processes and improving transaction visibility.

Unlocking 100% Card Acceptance 

What if there were a solution that enables you to streamline all tail spend payments, treating them as straightforward expenses? 

This solution would serve as a centralised touchpoint for managing transactions with hundreds, or even thousands, of one-time, low-volume suppliers.

Unlike the B2C environment, where most merchants accept card payments, card acceptance in the B2B sector remains surprisingly scarce. 

This is where emerging Fintech companies like Billhop truly stand out. 

What is Billhop?

Billhop’s revolutionary buyer-funded solution allows enterprises to pay suppliers with their corporate credit cards. Paying by card effectively eliminates the need for supplier onboarding. 

This is an elegant solution for managing tail spend transactions, where the cost of onboarding a single supplier can range from 10% to well over 100% of its principal amount.

Moreover, as a payment service, Billhop is SOC 2 Type II compliant and adheres to stringent regulatory requirements. This involves validating supplier details and transaction data prior to releasing funds to destination banks. 

The argument can be made that supplier onboarding is essential for mitigating risk and guaranteeing accurate payment details.

When it comes to one-time F&B purchases costing less than €50, it is more trouble than it's worth to onboard the supplier. 

Free up Cash Flow 

Marketplaces and e-catalogues, such as Amazon Business and Basware, often issue lump-sum invoices to their consumers.

By paying these invoices by credit cards, businesses can leverage their interest-free payment days and better manage their cash flow.

Additionally, many suppliers offer early payment discounts in a bid to get paid earlier. 

Credit cards empower businesses to pay their suppliers on time and negotiate better payment terms. 

This strategic approach allows them to preserve funds for as long as possible, ultimately improving their working capital without the need to resort to loans or factoring. 

Why Spend Management Tools Alone Aren’t Enough

A quick search on Google for Tail spend solutions will return numerous web pages promoting the latest AI and machine learning spend management platforms. 

While these solutions are useful for enterprises to identify opportunities for savings and gain greater visibility over their entire source-to-pay procurement processes, they do not address the crucial issue of supplier payments. 

They can be seen as a natural first step to tackling the headache that is tail spend. 

Once enterprises have a good grasp of their spend, they can begin to look for better payment solutions that can allow them to minimise the amount of time, money and resources spent on onboarding many ad-hoc, low volume suppliers.  

Billhop: Single Touchpoint for All Tail Spend Purchases

Billhop is the cutting-edge B2B payments platform that enables large corporations to pay any supplier invoice with their existing credit and purchasing cards.

With Billhop, businesses can pay all tail spend suppliers without onboarding them to existing ERP systems. 

Similarly, suppliers do not need to make any changes to their existing receivable process as they will be paid by a regular bank transfer. 

By eliminating the need for supplier onboarding, procurement teams can better allocate their manpower and resources to more productive tasks such as sourcing and negotiating more favourable terms with strategic suppliers. 

Schedule a demo with our sales team today to streamline supplier payments and maximise the use of your P-cards today!