Indirect spend is often seen as a “messy” or less strategic area of the business. But overlooking it is a missed opportunity, especially in today’s climate, where every percentage point of margin counts.
Here are five key reasons why Finance teams should take a closer look at indirect spend:
1. It can have a significant impact on profitability
McKinsey & Company state that indirect spend typically accounts for 15–40% of a company's total spend, and yet it’s frequently unmanaged or poorly tracked. Research shows that a 5% reduction in indirect spend can deliver up to a 2% improvement in EBITDA - a result that would require a disproportionately larger increase in sales to match.
2. Up to 25% of indirect spend may be wasted without proper controls
When indirect procurement processes are fragmented, organisations face maverick spending, redundant purchases and inefficient supplier contracts. A Deloitte Global CPO Survey in 2023 identified that optimising these processes can help organisations avoid 20 – 25% of unnecessary costs.
3. It’s easier to manage than cutting costs elsewhere
Cost-cutting in core operations, staffing or customer-facing functions can be painful and disruptive. In contrast, optimising indirect spend is a low-risk, high-reward lever that requires no sacrifice in business performance, just smarter decision-making and better governance.
4. It can unlock supplier savings
By analysing where the money flows, Procurement teams can uncover opportunities for cost savings. A strategic review of supplier contracts and spend patterns enables organisations to negotiate better terms, consolidate purchases and guide internal teams towards preferred suppliers - delivering savings without compromising on quality.
5. You may be duplicating spend without realising it
Lack of visibility across teams often leads to duplicate subscriptions, unused licenses and decentralised purchasing. Implementing spend analytics and digital procurement platforms helps Finance and Procurement teams identify overlaps and consolidate spend effectively.
In a time of economic uncertainty and ongoing margin pressure, indirect spend shouldn’t be an afterthought. For Finance teams looking to drive value without disruptive change, indirect spend offers a meaningful and manageable way to do more with less.
Ready to take control of your indirect spend? Contact us today to find out how.
Here are five key reasons why Finance teams should take a closer look at indirect spend:
1. It can have a significant impact on profitability
McKinsey & Company state that indirect spend typically accounts for 15–40% of a company's total spend, and yet it’s frequently unmanaged or poorly tracked. Research shows that a 5% reduction in indirect spend can deliver up to a 2% improvement in EBITDA - a result that would require a disproportionately larger increase in sales to match.
2. Up to 25% of indirect spend may be wasted without proper controls
When indirect procurement processes are fragmented, organisations face maverick spending, redundant purchases and inefficient supplier contracts. A Deloitte Global CPO Survey in 2023 identified that optimising these processes can help organisations avoid 20 – 25% of unnecessary costs.
3. It’s easier to manage than cutting costs elsewhere
Cost-cutting in core operations, staffing or customer-facing functions can be painful and disruptive. In contrast, optimising indirect spend is a low-risk, high-reward lever that requires no sacrifice in business performance, just smarter decision-making and better governance.
4. It can unlock supplier savings
By analysing where the money flows, Procurement teams can uncover opportunities for cost savings. A strategic review of supplier contracts and spend patterns enables organisations to negotiate better terms, consolidate purchases and guide internal teams towards preferred suppliers - delivering savings without compromising on quality.
5. You may be duplicating spend without realising it
Lack of visibility across teams often leads to duplicate subscriptions, unused licenses and decentralised purchasing. Implementing spend analytics and digital procurement platforms helps Finance and Procurement teams identify overlaps and consolidate spend effectively.
In a time of economic uncertainty and ongoing margin pressure, indirect spend shouldn’t be an afterthought. For Finance teams looking to drive value without disruptive change, indirect spend offers a meaningful and manageable way to do more with less.
Ready to take control of your indirect spend? Contact us today to find out how.