Why profit often starts with procurement, not sales

Organisations that want to improve their financial results often look at revenue first. More customers, higher sales figures, new markets. That makes sense, but a growth path like that also calls for significant investment in people, marketing, technology, distribution or product development. And it’s far from always a guarantee of success. What organisations often forget is that there’s another powerful way to improve results structurally: by organising procurement and invoice processing more smartly.

According to Tim Schaefers, managing partner and co-founder of Spendlinq, that’s where the biggest opportunity lies. “Every euro you save because your processes are set up properly goes straight to your bottom line. You don’t need to generate any extra revenue for it. That actually makes it the surest way to improve your financial performance.”

Revenue is nice, profit is better

It was exactly this thinking that laid the foundation for Spendlinq. Tim explains: “Many organisations invest heavily in sales and marketing, but leave processes like ordering, approving and invoicing untouched. Yet that’s where value is lost, often without anyone noticing.”

Commercial growth requires investment, that much is clear. Think of campaigns, sales training, CRM systems, e-commerce platforms, international expansion or new product lines. Important and often necessary, but also complex, costly and dependent on factors you don’t always control. “Extra revenue usually means extra costs too,” Tim explains. “More sales means more production, more customer queries, more suppliers, more invoices. If you don’t process that flow efficiently, you’ll end up eroding your margin anyway.”

Every euro saved counts

Tim illustrates the difference with a simple calculation. “Say you want to generate an extra million euros in profit. With a gross margin of 10%, you’d need to generate ten million euros in extra revenue to do that. That takes serious effort and investment. But if you can save that same million through smarter procurement, more efficient process design and better use of supplier contracts, that profit feeds straight into your result. No sales, no risk.”

“That’s why it’s at least as important to let the cost side of the organisation grow too,” Tim continues. “And especially the Source to Pay process, or rather: the complete chain through to invoice processing. By digitalising and connecting that process smartly, organisations can prevent waste, reduce manual work and get far more control over their spend.”

Step by step

A proven approach is to start by digitalising the Purchase to Pay chain: from purchase request through to invoice handling. “Think of digital requests, approval flows, order authorisation and automated invoice matching. By streamlining those steps you save on processing costs, shorten lead times and improve visibility,” Tim says.

“A next step is the Contract to Pay process. This actively links the contract to the ordering process. That way you make sure orders always comply with the agreements made, and you capture discounts and terms that would otherwise evaporate,” Tim says.

“If you truly want to steer on value and risk, you expand to the full breadth of the Source to Pay process. Then supplier selection, sourcing and spend analysis become part of the digital process too. That enables organisations to make better choices, negotiate in a more targeted way and steer more strongly on performance and collaboration.”

Start small, think strategically

Tim stresses that organisations don’t have to do everything at once. “Improving even one element delivers a demonstrable benefit. Many organisations start with one process (invoice processing, for example), one category (such as IT or contractors) or one business unit, and build from there. The key to success is to start somewhere,” he says. “You don’t need to reinvent the wheel, as long as you choose a clear scope and know exactly what you want to achieve.”

The benefits go beyond cost savings alone. Organisations that set up their Source to Pay process well also see more collaboration between procurement, finance and the business, better data quality and greater predictability. That brings calm, control and confidence – and so room to do better business at the front end of the organisation.

From operational to strategic advantage

Yet this topic is still too often seen as ‘something operational’. “As long as Source to Pay isn’t on the strategic agenda, organisations will keep missing opportunities. It’s not an IT project or a back-office improvement,” Tim stresses. “It’s an investment in control, structure and profitability.”

So it isn’t a choice between commercial growth or the digitalisation of the cost side. The organisations that make a difference do both. They invest in sales and in Source to Pay. What’s more, the two reinforce each other.

“When your spend is under control, your processes are well set up and you manage your supplier relationships professionally, you can invest at the front end with far more certainty,” Tim explains. “You know what’s coming in, what’s going out and where you have room to spare. That gives you calm and momentum.”

Source to Pay as the engine for sustainable growth

Organisations that take Source to Pay optimisation seriously don’t just work more efficiently, they work more professionally. They grow with control, avoid waste and make better choices based on reliable data and clear processes.

Digital transformation of Source to Pay isn’t an alternative to growth, then. It’s the engine behind sustainable, profitable growth. “That’s exactly where Spendlinq’s strength lies,” Tim concludes. “Helping organisations work not harder, but smarter, and structurally improve as a result.”