We talk a lot about the problems that impact business payments. And there are several challenges that lead to losses of company funds from fraud and errors. What we’d like to focus on today are the savings you can achieve if you eliminate these issues. To help illustrate this we’ve developed a Savings Calculator that provides a range of potential savings for enterprise businesses. It’s easy to set up a calculator that spits out a bunch of numbers, but what do these numbers really mean?
Our calculator makes certain assumptions based on trends we’ve seen involving different businesses we’ve evaluated and with whom we’ve conducted POCs. Depending on the selections made, the calculator measures a high range and a low range of losses based on several underlying assumptions. Let’s walk through all these factors to understand why the savings gained by eliminating fraud and errors are material to your business.
The selections requested on the savings calculator involve two parameters: the range of your annual revenue and the number of vendors you currently have. There are four annual revenue breaks that fall between that range from $500M to over $10B. Similarly, there are five selections to choose from for the number of vendors you could have, ranging from under 10K to over 500K. These parameters cover a wide range to account for the sizes of different businesses.
While everyone struggles with fraud and errors, we’ve found that the businesses at the greatest risk are large enterprises with a big number of vendors. When a business has a large annual revenue and many vendors, the management of all these suppliers and vendors becomes increasingly complex, which requires more people, more systems, more steps in the payment cycle, and more manual work that can lead to errors. Furthermore, we’ve seen that mistakes and complexity provide greater opportunities for bad actors to compromise the business payment process. We've directly seen that the amount of losses scale exponentially as a company’s annual revenue and number of vendors grow. In other words, the bigger the business and the more vendors a business has, the greater the risk of fraud and mistakes. For more information about why more vendors means more problems, read our blog post here.
However, annual revenue for different businesses does not always equate to the same bracket of vendors. For example, a business of $10B annual revenue or more may have 100K vendors, whereas a vendor with $5B could have 200K. To account for this, we’ve assigned every permutation of annual revenue and number of vendors a certain percentage of losses from errors and cyberattacks based on what we’ve seen in the market and in our evaluations of various businesses. We scale those percents for both the number of vendors and the annual revenue at a rate that is independent of the other to account for the different possible combinations of annual revenue and volume of vendors.
In the end, the range of losses that our calculator shows are directional and point out the risk to your business, and not necessarily an absolute truth. Just because your business has an annual revenue of $2B and 100K vendors doesn’t mean you’ll lose $34.5M. However, there certainly is a risk that you could lose the $6.9M on the lower end of that scenario. To illustrate this point, these numbers above are taken directly from a real-life scenario. We spoke with a public company recently that has annual revenue of around $2B. They told us that they have a little over 100K vendors, and then admitted to losing $10M to only fraud last year—this value did not include losses to errors like duplicate payments or other accidental mistakes. In other words, the total financial losses this company experienced are probably much higher than that $10M number they shared.
We invite you to play around with the calculator and see what your potential losses could look like. For those who have experienced losses due to fraud and errors, are these numbers in line with what you've seen in your business? And if not, what kind of losses have you experienced and how much do you anticipate to lose in the future?
If you’re interested in seeing how our tech can help you achieve these savings for your business (by eliminating fraud and errors), get in touch today.
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