Afternoon Coffee: Coupa launches $50 million venture fund for business spend management; Medius study reveals cost of late payments; US economic rebound unlike any in history

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Coupa on Thursday launched Coupa Ventures, a $50 million investment fund that will aim to foster innovation in business spend management (BSM).

The fund will invest in early and growth-stage companies. In a press release, Coupa said it will focus on breaking down inefficiencies in how businesses manage spend, aligning processes and decisions across the supply chain, procurement and finance functions.

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Coupa also unveiled the first two portfolio companies under Coupa Ventures. Zylo has a platform that helps businesses manage their cloud operations. SourceDay focuses on solutions for smoother direct procurement spend and supplier relations.

Spend Matters Managing Director Pierre Mitchell called Coupa Ventures "a smart move" and lauded the first two choices.

"This is standard fare for the elite echelon of large enterprise SaaS firms that have recognized that delivering value is more than just apps. It's also about platforms and ecosystems," Mitchell said. "The procurement and supply market ecosystem that supports spend/supply management is huge. We track over 500 vendors in the space, and being able to be a strategic 'partner of choice' through these investments is not just good treasury management to earn high ROI and brand multiples, but it also pragmatically creates good ecosystem development and deeper integration/alignment with these partners.

"The first two investments in Zylo and SourceDay make a lot of sense. Regarding Zylo, managing digital spending is obviously more critical than ever, and regarding SourceDay, we've advocated for a tighter connection between Coupa and the specialist for supplier collaboration and smarter direct spend management for quite some time. Direct spend execution is about supply management as much as spend management, and the ability to orchestrate agile and resilient supply chain execution in the face of volatile inbound supply conditions out there right now is absolutely critical. We applaud this strategic move and the first two investment choices."

Medius study reveals cost of late payments to supplier relationships

The latest research from spend management provider Medius revealed that damage to supplier relationships because of late payments has cost businesses 24% in lost orders.

The study surveyed 400 finance and procurement decision makers in the US to assess the risks to supplier relationships as purchasing transitions from procurement to finance. Nearly three quarters (73%) of procurement professionals said supplier relationships had suffered from late payments, according to a press release announcing the study.

The research points to the start of supplier relationships as the reasoning for late payments. Over half of respondents said vendors struggle with onboarding processes.

“This research clearly shows that late payments are causing significant issues for both procurement and finance, causing the business to lose money and even in some cases causing damage to business reputations,” Daniel SarasteSVP Product Strategy at Medius, said in the press release. "While it's procurements role to maintain strong supplier relationships, finance's priority is to ensure the organization is in the best cash position, meaning the timely payment of invoices isn't a top priority. Without a common view of what's important and why, procurement and finance will continue to find themselves at odds with each other.

"The good news is that the research shows that 2 in 5 respondents claim that finance and procurement have a good working relationship but admit there's room for improvement and better communication between the two departments.”

US economic rebound unlike any in history

The US economy is beginning its recovery from the Covid pandemic, but it looks unlike any in recent history, powered behind consumers with extra savings, eager-to-hire businesses and policy support, according to the Wall Street Journal.

When Covid-related restrictions hit the US economy in spring 2020, economists and policymakers worried how long it would take to heal again. They are now expecting the economy’s size to surpass pre-pandemic levels this quarter. Analysts also project that by the end of the year, gross domestic product will reach the path it was projected to follow had the pandemic never happened.

Recoveries from the most recent recessions didn’t look like this, the WSJ reports. The speed of the rebound is even triggering turmoil, with shortages of goods, raw materials and labor cropping up much sooner than traditional recessions. Economists and the Federal Reserve expect the jump in inflation to be temporary, but some say it could persist.

“We’ve never had anything like it — a collapse and then a boom-like pickup,” Allen Sinai, chief global economist and strategist at Decision Economics, Inc., told the WSJ. “It is without historical parallel.”

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