Coupa Software announced the findings of its Q2 2020 Coupa Business Spend Index (BSI). The Q2 Report revealed that business spend sentiment dropped well below the trend line across all industry sectors with the exception of Health & Life Sciences, indicating that businesses have grown significantly more cautious about the outlook of the economy.
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Leveraging billions of dollars of aggregated and anonymized business spend decisions, the Coupa BSI serves as an early indicator of macroeconomic health, giving businesses insight into where the economy is headed over the next three-to-six months.
Q2 Findings
While the BSI was already showing indications of a slowing economy as far back as Q4 2019, not surprisingly, businesses’ economic concern in the midst of COVID-19 has increased significantly.
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In the Q2 Report, RFIs (the number of new requests going out to suppliers to procure goods and services) increased by 60 percent and average time to approve spend decisions decreased by 38 percent. In prior quarters, the inverse relationship between these two factors indicated confidence in the economy. However, while the data in the current quarter followed a similar pattern as prior quarters, the interpretation is different. The increase in RFIs this quarter indicates that businesses are scrambling to find suppliers to fulfill their orders, and once goods are located, businesses are acting quickly to approve spend to purchase those items. This combination, as opposed to prior quarters, shows there is instability and uncertainty for businesses, leading to a murky outlook regarding near-term economic growth.
“The Q2 2020 BSI shows clearly the impact that the global pandemic has had on supply chains and businesses’ confidence in the economy over the coming 3-6 months,” said Rob Bernshteyn, chairman and chief executive officer at Coupa. “While uncertainty may remain a principal theme for some time, businesses can build resilience with their business spend. Today’s modern technologies provide them with the visibility and control and supplier insights needed to not only navigate but emerge from this crisis stronger than before.”
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