This article first appeared in The Edge Financial Daily, on September 13, 2016.

KUALA LUMPUR: Homegrown software company Plenitude Solutions Sdn Bhd has built in a banking component to its flagship e-procurement software, a feature that facilitates easier payments and discounts for business-to-business purchasing.

Plenitude Solutions Sdn Bhd’s flagship product Plenitude eXchange is essentially an integrated sourcing-to-payment solution for businesses procuring goods for internal use or production.

Aside from convenience, Plenitude eXchange stands out from other competitors in the e-procurement software space in its ability to make purchasing slightly cheaper.

According to Plenitude Solutions’ co-founder K C Tong, the software does this by working with banking partners, namely Citibank and CIMB Bank, to offer a credit line to companies using the software.

So, instead of writing multiple cheques and juggling multiple payment terms and dates, the company using the procurement software just pays the bank at the end of the month much like how consumers pay their credit card bills.

But banking convenience is not the only attraction. What Plenitude eXchange does is that it facilitates a discounted rate for immediate cash settlement on a purchase.

“If a company were to buy something from a vendor, most of the time they will enjoy credit for either 30 to 45 days. But if you were to go to the vendor and say “I will pay you cash, what is the discount you can give me?” almost all vendors will give a discount. It just depends on the quantum of the discount. It roughly ranges from 3% to 7%, some may go as high as 10% depending on the type of product,” said Tong who founded the company with IT veteran Jonathan Ng.

According to Tong, the discount enjoyed on each procurement transaction is shared three ways: the purchaser, the bank and Plenitude Solutions.

“It’s a win-win-win situation. It’s a strong value proposition.

“Every 1% of cost saved on procurement goes straight to a company’s bottom line”, Tong added.

At present, procurement systems for many companies large and small are still very much manually processed, from request for quotations to issuing a purchase order, all the way to invoicing and payment.

There is a strong case for more automation of procurement. It includes increased efficiency and accuracy of procurement, faster turnaround time, cost savings as well as reduced risk of fraud or corruption.

A Bain & Company study of Asia-Pacific companies’ procurement systems in 2013 found that those who continuously improve procurement capabilities and culture enjoy initial cost savings of 8% to 12% followed by a consistent 3% to 4% savings every year.

Tong cites an internal survey done by an oil major which found that the total cost that goes into purchasing a single item can be as high as US$200(RM822). This includes all the manpower and administrative costs that goes into procurement. When the oil company started automating its procurement systems, it managed to slash the procurement down to a mere RM10.

According to Tong, Plenitude Solutions’ clients include financial services firm K&N Kenanga Holdings Bhd and instant noodle and snack food manufacturer Carjen Food Sdn Bhd.

Plenitude Solutions is in the midst of talking to more potential clients in Singapore as well as Malaysia.

The challenge though for Plenitude Solutions is in persuading companies to automate their procurement processes, something which still requires a great deal of educating. What’s more, companies that already have some procurement software or systems in place may not necessarily want to jump aboard a brand new wagon.