A Guide to Procurement Spend Analysis for Indirect Spending

Analyzing indirect spending with expenses trickling in from various teams, vendors, and departments creates a scattered web of data points. This fragmentation leaves procurement teams overwhelmed by unexpected purchases, incomplete records, and little to no visibility into spending patterns.

Many procurement spend analysis tools cash in exactly on this challenge by cleaning and organizing data, offering sleek dashboards as a solution. However, without actionable insights or proactive processes, these tools merely shift the burden back onto teams to fill in the gaps manually.

Centralized systems, on the other hand, appear to offer a foolproof solution by consolidating data. Yet, rigid workflows sacrifice the shared autonomy teams need. While these systems keep processes tightly controlled, they introduce delays and inadvertently signal a lack of trust in employees’ ability to manage their spending.

So, how can you consolidate indirect spending into a reliable single source of truth—one that preserves autonomy while forming a solid foundation for confident spend analysis?

In this blog post, we will look at how to create a reliable single source of truth for indirect spending, making procurement spend analysis easier and more accurate. 

Blind Spots in Indirect Spending: Risks and Consequences

Indirect spending data lies scattered across multiple sources—paper trails, ERPs, invoices, and card statements. 

For procurement teams, this creates a monumental challenge of consolidating these data points, ensuring expenses are approved, and making payments on time, all before the data can be used for analysis.

"We wouldn’t know until the statement turned up at the end of the month what had been spent and where."

~ Christopher Anthony, Global Business Controller at Platinum Heritage

These issues don’t just strain resources—they also impact compliance, visibility, and cost management. Without accurate data, the procurement team can’t negotiate better deals or analyze spending trends.

So, for instance, if three teams independently purchase the same SaaS product using their corporate cards, the procurement team:

• Loses the opportunity to negotiate a bulk deal
• Faces duplicate spending, raising overall costs
• Has no clear visibility into these purchases, further complicating the analysis

Thus, a fragmented system burdens procurement with manual work, increases the risk of rogue spending, and leaves little room for accurate procurement spend analysis.

How to Build a Reliable Single Source of Truth for Managing Indirect Spend Data

To manage indirect spending effectively, you need a system that consolidates all data without disrupting decentralized processes. 

While ERPs excel at centralizing data, they struggle to adapt to the complexities of modern workflows. Teams are forced to rely on manual processes and external communication channels, making it harder to maintain visibility and control. 

So, even though centralized systems bring all the data together, they fail to provide the flexibility, granular control, and collaborative environment required for seamless spending. 

For example, if an employee buys supplies from a preferred vendor but exceeds the approved threshold, the procurement team won't catch it until after the invoice arrives. 

Hence, relying solely on a centralized system without real-time checks and balances means missing critical opportunities for early intervention, leading to overspending and complications down the line.

What Makes a System Reliable for Managing Indirect Spending

To address such challenges, a system should allow for the following:

• Custom workflows tailored to different scenarios, such as purchases over AED 5000, need approval from the department head and finance head. 
• Collaborative channel that allows stakeholders to discuss without having to rely on external communication channels. 
• Complete visibility for all stakeholders with detailed audit trails so teams aren’t left hanging for weeks for approvals.

For instance, if an employee makes a high-value purchase, the system should notify relevant stakeholders immediately, ensuring compliance and visibility without unnecessary bottlenecks.

By capturing all the stages of indirect spending into a unified platform, teams gain a single source of truth—a system where all transactions, approvals, and communications are recorded with a complete audit trail. 

Such a platform bridges the gap between control and speed, creating a unified system that supports decentralized spending.

With Pluto, teams get an end-to-end solution that simplifies indirect spending, creates a reliable single source of truth, and keeps all stakeholders happy.

• Employees can make necessary purchases without unnecessary approval delays.
• Managers get visibility into spending without being buried under endless emails or requests.
• Procurement teams benefit from real-time visibility without worrying about rogue spending.
• Finance teams enjoy timely and accurate expense records, reducing reconciliation delays and improving cash flow management.

“We haven’t had a single transaction that when it’s received and gone through the approval process that we’ve said, oh my god, that shouldn’t have been spent.”

~ Christopher Anthony, Global Business Controller at Platinum Heritage

This is how Pluto simplifies the indirect spending to ensure seamless process, complete control, visibility, and reliable data. 

1. Purchase Request

With Pluto, employees no longer need to chase managers across offices for approvals. A centralized dashboard enables them to raise requests and specify their requirements easily.

You can create customizable trigger-based workflows to enforce internal policies tailored to dedicated expense amounts, categories, or departments. This allows the implementation of even the most intricate hierarchies with minimal friction.

So, with Pluto, not only do you get granular control but also a unified platform for all purchase requests, approvals and complete visibility.

2. Purchase Order

Once a purchase request is approved, Pluto allows you to convert it into a purchase order seamlessly. The platform integrates with ERPs to centralize vendor databases, facilitate preferred vendor lists, and enable punchout systems, speeding up purchase order creation.

This enhances purchase order accuracy and improves supplier management. While ERPs handle vendor evaluation, selection, and negotiation, Pluto consolidates purchase requests and orders into a single platform.

3. Invoice Management

Vendors send invoices in various formats and through multiple channels—some via email to finance, others to different points of contact, or even manually. Pluto provides a dedicated dashboard for managing all invoices/ receipts in one place.

Pluto uses optical character recognition (OCR) technology to capture and extract key details from invoices, eliminating manual data entry and simplifying three-way matching by bringing together purchase orders, goods received notes and invoice data onto a single platform with a complete audit trail.

Pluto further eliminates manual data entry and accelerates reconciliation by adding general ledger and tax codes.

4. Payment Processing

After invoices are approved, Pluto offers a dedicated dashboard for payment processing. With a single click, you can make bulk payments or schedule them for later, ensuring effective cash flow management.

Pluto allows you to pay vendors worldwide with zero international wire transfer fees and access better Forex rates than banks, saving both time and money.

5. Reconciliation

Pluto integrates seamlessly with various ERPs and accounting platforms like MS Dynamics, Oracle Netsuite, and QuickBooks to simplify reconciliation and sync data across systems. This helps you close books up to 10X faster.

It also lets you lock approved and reconciled transactions to prevent data changes while enabling view-only access for external audits. This ensures a smooth, error-free reconciliation process and simplifies compliance.

How to Take Control of Corporate Card Spending

Corporate card spending is among the most challenging areas to manage within indirect expenses. 

This difficulty stems from its fragmented nature, where employees across departments use cards for various purchases, but the data for these transactions is hanging upon month-end statements. By the time finance teams access this information, it’s usually too late to flag unapproved purchases or identify spending trends.

This lack of visibility not only impacts spend analysis but also leaves businesses vulnerable to overspending, non-compliance, and rogue purchases. 

Even with ERP systems in place, you’re left with a reactive approach—dealing with the aftermath of scattered and unapproved transactions rather than preventing them in the first place.

How Budget-Controlled Corporate Cards Improve Indirect Spend Management

Pluto bridges the gap between decentralized spending and spend visibility by offering budget-controlled corporate cards that integrate seamlessly with its platform. You can issue unlimited virtual and physical cards to your employees, which have the following features:

• Predefined rules and budgets: Set limits for each card based on transaction amount, vendor, or category. This ensures employees stay within predefined budgets and eliminates surprises at the end of the month.
• Approval flows: Create trigger-based approval workflows to meet your internal controls and intricate hierarchies, allowing managers and finance teams to review and approve expenses before they’re processed.
• Real-time visibility: Track all transactions in real time, providing procurement and finance teams instant access to spending data. This eliminates the lag associated with waiting for monthly statements.

By replacing manual intervention with automated workflows and real-time visibility, Pluto’s budget-controlled cards allow teams to analyze spending as it happens, reducing the risk of unapproved purchases and improving overall spend management. 

This proactive approach not only simplifies tracking but also actively enforces spending policies, facilitates collaboration, and provides procurement and finance teams with the tools they need to make informed decisions and maintain compliance.

Confidently Assess and Control Indirect Spend

With Pluto, the responsibility of recording spending shifts to those who make the purchases, but without burdening team members. It makes procurement workflow easy to follow, providing each stakeholder with the visibility and control needed, leaving procurement teams free to concentrate on more strategic, value-adding tasks.

When your data is organized and easily accessible, analyzing procurement spend becomes much simpler and more effective. 

Pluto ensures that all spend data is captured in real-time, making it easy for procurement teams to get a complete picture of indirect spending. This means procurement teams can make confident, informed decisions without getting caught up in manual data entry.

If you want to control your indirect spending and streamline your procurement processes, check out our blog on procurement audits. It discusses analyzing your internal processes and improving your spending management.