E-procurement hampered by paper payments

E-procurement hampered by paper payments

Business-to-business electronic procurement systems may be growing in importance, yet paper cheques remain the most common form of payment according to a survey conducted on behalf of Visa USA at the National Association of Purchasing Management (NAPM) conference in New Orleans, LA earlier this year.

Visa's third annual survey found that 67% of respondents, consisting primarily of senior-level procurement professionals, currently engage in some form of e-procurement - up 10 percentage points from 1999, and of those who do not engage in e-procurement, 86% said they would in the future - up 26 percentage points from just two years ago.

The survey results also indicate companies of all sizes are using e-procurement technologies. Large companies still dominate with 76% currently engaging in some form of e-procurement, while 56% of both small and mid-sized companies reported participation. However, the most common method of e-procurement varies by company size: mid-sized companies tend to browse supplier Web sites on the Internet (59%), while larger companies order directly from suppliers through Electronic Data Interchange (EDI) (30%).

The largest percentage of respondents (47%) reported paper cheques as the most common payment method used with their e-procurement solution, although only 2% of respondents felt cheques were the most efficient method of payment.

Commercial card products, at 40%, were cited as the most common form of electronic payment used with e-procurement systems (more than wire transfer and Automated Clearing House).

Participants were also asked to identify features of "the ultimate payment mechanism". The overwhelming majority pointed to:

* minimising transaction costs (98%;)
* reducing internal processing/integration costs (96%);
* ensuring availability of line item data (91%); and
* improving supplier relationships (87%).

Visa says it will provide a more detailed analysis of the results to member banks next month.

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