Page 6 - Getting a Handle on Unmanaged Spend - SIB Whitepaper

Brokers & Billing Management
Brokerage services may seem like a dream come true. Allow someone else to manage your vendors and contracts, and pay one single, consistent bill for services.
The broker manages their own costs and you’re free to conduct business as usual.
While these types of vendors can add a lot of value to your organization, especially in terms of time, this method can also expose you to certain risks that you ought to be aware of.
With brokers and billing managers, vendor relationships and contracts are with the broker, not you, and so the price presented includes the vendor’s margin plus a usually undisclosed broker’s fee. As a result, only the broker can determine how much you will actually save, and you have no true understanding of what the best market rate may be.
Additionally, because more services equals more money for the broker, brokers can be unmotivated to help you optimize service to ensure cost efficiency and may fail to keep you advised of areas in which you may be over-serviced.
Lastly, brokers leverage their own relationships, usually steering clients toward preferred vendors, which not only represents a conflict of interest – it can also necessitate a disruptive change in vendor or service.
Rebilling errors with brokers like these are another very common cause of excess spend. The process of copying a charge from one bill and adding it to yours is a simple exercise, but it doesn’t always happen accurately. Taxes, tariffs, and other charges are frequently copied incorrectly or sometimes even duplicated, resulting in excessive charges to you. Without continual monitoring, these charges often pass by completely unnoticed.
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Getting a Handle on Unmanaged Spend | © 2016 SIB Fixed Cost Reduction