The Real Cost of Supplier Fees

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Hubwoo doesn’t charge suppliers like other business networks do.

From leading analyst and creator of the supplier fee calculator, Pete Loughlin:

“The Ariba supplier fee model could put you in a position of charging significant sums of money to your most important suppliers simply for the privilege of sending you an invoice. Supplier fees add to the cost of doing business the same way that high interest rates, unfavorable exchange rates and taxes do.”

Source:  Pete Loughlin, Purchasing Insight

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…and Ariba will continue to increase their fees

Per Bob Calderoni, Ariba CEO and SAP Executive Board member: “Our first customer liked our software. Our second customer liked our software, and that it had someone on it,” Mr. Calderoni said. As this builds, he said, Ariba can move from collecting a very modest commission (about 0.06 percent of the transaction) to “hundreds of basis points,”or several percent, by managing awareness and fulfillment, the way Amazon does between consumers and third-party sellers.

SAP needs to recover the $4.3 billion cost of their Ariba acquisition somehow …

“We are committed to being a triple-digit growth business in the cloud,” said William McDermott, SAP’s American co-chief executive.

Source: New York Times Article

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What suppliers are saying about supplier fees:

Costs come back to bite. If more customers talked to us earlier in the process of selecting or rolling out a P2P system, there are ways we can look to avoid paying fees that will detract from customer value.”

When we are getting charged, they are getting charged. In the case of invoicing, I’m paying their e-commerce platform provider. I’m also paying their platform provider to send an invoice. Our customers might not realize this is happening.”

Source: Spend Matters: Network Fees and Innovation: Are You Considering Supplier Opinions?

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Hubwoo does have some legacy contracts under a split-funded model where both buyer and supplier pay. Those will continue to be honored.

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