What is spend under management?
Spend under management is the portion of a company's total spend that goes through managed channels: negotiated suppliers, a purchasing process and a record. It is usually quoted as a percentage of all spend.
Example
Alder Health spends $8.0M a year. $5.6M goes through contracted suppliers with POs and approvals. $2.4M is card spend, expenses and one-off buys with no PO.
Spend under management is 5.6 / 8.0 = 70%. Raising it to 80% means bringing another $0.8M into the process, which in practice means catching the small purchases.
In Atta
Every purchase made through Atta has a request, an approval trail, a reservation against a budget, the payment method and the order on one row. Anything bought this way is under management by definition, including the small orders that normally escape it.
The budget is reserved at checkout and counted as spent when the store confirms payment, so what finance sees is money that was approved and money that has moved, not a guess. A project budget is a plan measured against spend, and it never blocks a purchase by itself.
Purchases made outside Atta stay outside it.
What counts as managed
Definitions vary. Some companies count anything with a PO, others only spend with contracted suppliers. Pick one definition and keep it. In the Alder example, if $0.64M of the card spend had an approval trail and counted as managed, the figure would be 78%.
Questions
What is a good spend under management figure?
It depends on the company and how it counts. Compare the same company over time, using one definition.
Related
- What is maverick spend?Maverick spend is buying outside the approved process or suppliers. Definition, why it happens, and a worked example with figures.
- What is tail spend?Tail spend is the many small, infrequent purchases that add up to a fifth of spend but get no procurement attention. Definition with a worked example.
- Spend management softwareA budget reserves money at checkout and settles it on payment. Released if the order is cancelled or abandoned. One currency per budget, no double counting.