You should be afraid of the dark

Jan. 23, 2018
The term “dark purchasing” has been coined of describe the shadowy area where items are purchased outside of standardized processes.

You probably think you have a pretty good handle on what your company spends. The reality is that there is a rather large discrepancy between what business owners think they are spending and what they actually spend.

The term “dark purchasing” has been coined of describe the shadowy area where items are purchased outside of standardized processes and can’t be easily tracked to capital outlay or material inventory.

Most dark purchasing takes place in the indirect spend category — that category of goods and services that are necessary to support a fleet’s operation. Think things like office supplies, cleaning products, etc.

It occurs because all too often employees don’t know the best way to make a purchase. They are unaware of the policies and procedures you have in place governing purchasing. And that’s assuming, of course, that you do have policies and procedures in place that cover all purchases, not just those over a certain dollar amount or that fall into specific categories, like capital equipment.

Results of last year’s AmeriQuest Procurement Survey found that 40% of survey respondents reported that they either don't have a procurement process in place, are not sure if they do, or have one but it’s not being followed.

If you don't think this is a big problem, think again. It is estimated that 15% to 40% of a company’s overall operating costs fall into the indirect spend bucket.

The first step you can take to bring purchasing out of the dark is to clearly identify and assign procurement responsibilities within the organization. Next, educate all employees about your procurement process to eliminate uncertainties and give you more control over the purchasing process. Finally, replace manual procurement processes with an end-to-end payables automation solution to bring all purchasing into the light so you can start saving money.

I will talk in more detail about ways to defeat dark purchasing in upcoming blogs later this year.

For more information on dark purchasing.

About the Author

Matt Clark | Chief Operating Officer

Matt Clark is the Chief Operating Officer for Corcentric, a procurement and finance company that helps companies reduce expenses and improve working capital by optimizing how they purchase, pay, and get paid. He is responsible for setting and steering Corcentric’s strategic vision, which has experienced record growth since its founding. Matt has been with the company since 2004.

Matt is an adviser and guest lecturer for the University of Maryland’s Entrepreneurship and Innovation Program, and is an active member of Vistage Chief Executive Group, which provides peer-to-peer mentoring for DC area business leaders. He earned his bachelor’s degree from the University of Maryland.

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