[{"data":1,"prerenderedAt":2335},["ShallowReactive",2],{"en-blog/direct-indirect-spend":3,"en-global-content":578,"en-article-global-content":1797,"en-blog-article-more-articles-213437475":2058},{"name":4,"created_at":5,"published_at":6,"updated_at":7,"id":8,"uuid":9,"content":10,"slug":566,"full_slug":567,"sort_by_date":53,"position":568,"tag_list":569,"is_startpage":27,"parent_id":570,"meta_data":53,"group_id":571,"first_published_at":572,"release_id":53,"lang":71,"path":53,"alternates":573,"default_full_slug":567,"translated_slugs":574},"Direct vs indirect spend: Key differences & how they’re managed","2022-11-02T18:03:38.184Z","2026-11-03T12:04:51.587Z","2026-11-03T12:04:51.611Z",213437475,"b78cccb9-0403-41f6-b948-514d887b57b8",{"_uid":11,"roles":12,"title":13,"author":14,"topics":80,"content":112,"noIndex":27,"category":456,"language":481,"component":469,"heroMedia":484,"sidebarCta":493,"publishedAt":494,"readingTime":495,"redirectUrl":25,"listingImage":496,"metaDescription":497,"componentsAfterTheArticle":498},"06f6ccc0-19d5-48d8-8512-67cdf7991eb1",[],"Direct vs indirect spend: Essential guide for 2025",{"name":15,"created_at":16,"published_at":17,"updated_at":18,"id":19,"uuid":20,"content":21,"slug":64,"full_slug":65,"sort_by_date":53,"position":66,"tag_list":67,"is_startpage":27,"parent_id":68,"meta_data":53,"group_id":69,"first_published_at":70,"release_id":53,"lang":71,"path":53,"alternates":72,"default_full_slug":65,"translated_slugs":73,"_stopResolving":39},"Chris Dunne","2024-11-25T19:47:17.907Z","2026-03-12T10:47:18.012Z","2026-03-12T10:48:04.132Z",584506034,"ced1d806-6e64-42d6-8b0f-d708ebbdbbfa",{"_uid":22,"links":23,"picture":40,"lastName":44,"component":45,"firstName":46,"description":47},"88e4340f-e2bc-42fe-a8f0-79dafdd55f97",[24],{"tag":25,"_uid":26,"hide":27,"icon":28,"link":33,"type":25,"label":25,"style":37,"component":38,"mobileLabel":25,"onClickEvent":25,"openInANewTab":39,"horizontalFill":27},"","74ed5df6-6607-44c9-8870-23a2db0b8f4a",false,{"id":29,"alt":25,"name":25,"focus":25,"title":25,"source":25,"filename":30,"copyright":25,"fieldtype":31,"meta_data":32,"is_external_url":27},4129791,"https://a.storyblok.com/f/146026/x/315bd7d0c7/ic_linkedin.svg","asset",{},{"id":25,"url":34,"linktype":35,"fieldtype":36,"cached_url":34},"https://www.linkedin.com/in/chrisdunne4/","url","multilink","primary","cta",true,{"id":41,"alt":25,"name":25,"focus":25,"title":25,"source":25,"filename":42,"copyright":25,"fieldtype":31,"meta_data":43,"is_external_url":27},18695910,"https://a.storyblok.com/f/146026/349x349/9150c24a43/chris-dunne.jpg",{},"Dunne","author","Chris",{"type":48,"content":49},"doc",[50],{"type":51,"attrs":52,"content":55},"paragraph",{"textAlign":53,"key":54},null,"p-0",[56],{"text":57,"type":58,"marks":59},"Chris Dunne is our Senior Content Marketing Manager. Based in Derry, he brings over 15 years of marketing experience to our content strategy. Outside of work, Chris loves spending time with his two young children, playing football, and exploring Ireland. ","text",[60],{"type":61,"attrs":62},"textStyle",{"color":63},"#3D3929","chris-dunne","blog/author/chris-dunne",-1170,[],176408854,"62a23d5f-cd56-4dee-91e3-5642f66fa78c","2024-11-25T20:08:58.249Z","default",[],[74,76,78],{"path":65,"name":53,"lang":75,"published":53},"fr",{"path":65,"name":53,"lang":77,"published":53},"de",{"path":65,"name":53,"lang":79,"published":53},"es",[81],{"name":82,"created_at":83,"published_at":84,"updated_at":85,"id":86,"uuid":87,"content":88,"slug":100,"full_slug":101,"sort_by_date":53,"position":102,"tag_list":103,"is_startpage":27,"parent_id":104,"meta_data":53,"group_id":105,"first_published_at":106,"release_id":53,"lang":71,"path":53,"alternates":107,"default_full_slug":101,"translated_slugs":108,"_stopResolving":39},"Procurement","2024-12-19T16:41:09.743Z","2026-09-29T09:13:52.777Z","2026-09-29T09:13:52.797Z",598883015,"723f48e1-c82a-4f81-b89d-7b6479b01afa",{"seo":89,"_uid":98,"name":82,"component":99},[90],{"_uid":91,"noIndex":27,"component":92,"metaFields":93},"6f663d63-726c-4a32-ac80-770157b0b76f","seo",{"_uid":94,"title":95,"plugin":96,"description":97},"677c831b-42c5-4b75-8274-69e4d862fc90","Procurement | Spendesk Blog","meta-fields","Practical guidance on procurement: purchase requests, vendor management, approval workflows, and how finance teams control spending from order to payment.","99d01a06-19c6-4691-8dff-bc42384bbbdb","tag","procurement","blog/topic/procurement",-560,[],176456153,"b6c1a8bb-bd57-4eb5-9475-82a6d6b550f8","2024-12-19T16:42:49.452Z",[],[109,110,111],{"path":101,"name":53,"lang":75,"published":53},{"path":101,"name":53,"lang":77,"published":53},{"path":101,"name":53,"lang":79,"published":53},{"type":48,"content":113},[114,125,129,144,148,152,159,163,167,171,175,193,198,216,220,224,229,242,254,258,264,286,292,312,317,321,325,331,335,345,359,364,374,384,388,393,397,401,405,410,414,418,436,448],{"type":51,"content":115},[116,118,123],{"text":117,"type":58},"Most company expenses fall under two categories: direct or indirect spend. Also known as ",{"text":119,"type":58,"marks":120},"direct and indirect procurement,",[121],{"type":122},"bold",{"text":124,"type":58}," each is distinct yet closely related.",{"type":51,"content":126},[127],{"text":128,"type":58},"Common business expenses include everything from SaaS tools and marketing campaigns to employee wages and office rent. For organisations big and small, strategic sourcing is a significant business expenditure which directly affects growth and profitability.",{"type":51,"content":130},[131,133,142],{"text":132,"type":58},"In most companies, the ",{"text":100,"type":58,"marks":134},[135],{"type":136,"attrs":137},"link",{"href":138,"uuid":139,"anchor":53,"target":140,"linktype":141},"/platform/procure-to-pay","f77dd8b1-8d41-4544-ac6a-c6f16b40172d","_self","story",{"text":143,"type":58}," and supply chain teams categorise and track direct versus indirect spend. This helps finance teams optimise budget allocations and greater spending behaviours.",{"type":51,"content":145},[146],{"text":147,"type":58},"Whether or not companies have dedicated roles for managing direct and indirect spend, effective purchasing strategies require a full understanding of both types of procurement costs.",{"type":51,"content":149},[150],{"text":151,"type":58},"In this article, we’ll dig into the key differences between these two kinds of spending, and take a deeper look at how each is managed.",{"type":153,"attrs":154,"content":156},"heading",{"level":155},2,[157],{"text":158,"type":58},"What is direct spend?",{"type":51,"content":160},[161],{"text":162,"type":58},"Also known as direct procurement or direct cost, direct spend sources the raw materials or supplies needed to manufacture or assemble the end product sold to customers. This cost is considered part of the cost of goods sold, or COGS, in the company’s financial reporting.",{"type":51,"content":164},[165],{"text":166,"type":58},"D2C (direct-to-consumer) brands and companies that sell physical products often have high volumes of direct spend.",{"type":51,"content":168},[169],{"text":170,"type":58},"Take for example, a brand that sells water bottles both online and in stores. Direct costs would include all materials and services that make up different components of the bottle, its design, product labelling and packaging, and transporting these elements to the manufacturing warehouse for assembly.",{"type":51,"content":172},[173],{"text":174,"type":58},"This type of procurement directly impacts a business’s top-line revenue and sales. Case in point: if there are shipping delays on these commodities, the business is unable to move forward with timely production and delivery of their final products to customers.",{"type":51,"content":176},[177,179,191],{"text":178,"type":58},"Supply chain logistics have a major part in direct ",{"text":180,"type":58,"marks":181},"spend management",[182],{"type":136,"attrs":183},{"href":184,"uuid":185,"anchor":53,"target":140,"linktype":141,"story":186},"/blog/spend-management-software","a3acaca7-80c8-4a56-b8db-3b1da7d9e324",{"name":187,"id":188,"uuid":185,"slug":189,"url":190,"full_slug":190,"_stopResolving":39},"10 top spend management software solutions",208736523,"spend-management-software","blog/spend-management-software",{"text":192,"type":58},", as well as identifying and building relationships with key suppliers on a long-term basis. The goal is to achieve smooth operations and protect the brand’s reputation by collaborating with vendors that ensure consistent and reliable delivery and service.",{"type":153,"attrs":194,"content":195},{"level":155},[196],{"text":197,"type":58},"What is indirect spend?",{"type":51,"content":199},[200,202,214],{"text":201,"type":58},"Indirect spend, or indirect cost, refers to expenses that keep the business running “behind the scenes”. Indirect ",{"text":203,"type":58,"marks":204},"procurement ",[205],{"type":136,"attrs":206},{"href":207,"uuid":208,"anchor":53,"target":140,"linktype":141,"story":209},"/blog/procurement-strategy","2a689e50-dea2-43d9-a264-97e534bac799",{"name":210,"id":211,"uuid":208,"slug":212,"url":213,"full_slug":213,"_stopResolving":39},"How to develop an effective procurement strategy",627647480,"procurement-strategy","blog/procurement-strategy",{"text":215,"type":58},"focuses on internal resources like office supplies and equipment, shipping fees, wages, and other costs that support daily operations, team processes, and workflows within the company.",{"type":51,"content":217},[218],{"text":219,"type":58},"Using the same water bottle brand example, indirect spend would include rent for the retail store, POS systems, SaaS tools for managing multiple streams of business operations, hosting and server fees for the brand website, and much more.",{"type":51,"content":221},[222],{"text":223,"type":58},"Without essential goods and services that help employees and business owners do their jobs effectively, a company would struggle to grow. Quite simply, a company’s workforce cannot function without indirect spend.",{"type":153,"attrs":225,"content":226},{"level":155},[227],{"text":228,"type":58},"The different priorities of direct vs indirect spend",{"type":230,"attrs":231},"blok",{"id":232,"body":233},"3404b417-b101-4d77-85c7-f6e4f2f29d3f",[234],{"_uid":235,"type":25,"asset":236,"caption":25,"overlay":240,"component":241},"i-a19da487-d15e-4ed8-ade0-405863abbcef",{"id":237,"alt":25,"name":25,"focus":25,"title":25,"source":25,"filename":238,"copyright":25,"fieldtype":31,"meta_data":239,"is_external_url":27},21988056,"https://a.storyblok.com/f/146026/1200x800/3736b26748/direct-vs-indirect-spend.jpg",{},[],"image",{"type":51,"content":243},[244,246,252],{"text":245,"type":58},"Direct and indirect spend are equally important in successful business ventures, yet how they’re managed and executed can vary greatly. A company’s industry, size, funding, and even its stakeholders can influence its ",{"text":247,"type":58,"marks":248},"procurement strategy",[249],{"type":136,"attrs":250},{"href":207,"uuid":208,"anchor":53,"target":140,"linktype":141,"story":251},{"name":210,"id":211,"uuid":208,"slug":212,"url":213,"full_slug":213,"_stopResolving":39},{"text":253,"type":58}," and subsequent processes.",{"type":51,"content":255},[256],{"text":257,"type":58},"A key difference between direct and indirect procurement is how supplier relationships are managed and prioritised. This determines how teams interact with their key suppliers and what goals they set for the collaboration.",{"type":51,"content":259},[260],{"text":261,"type":58,"marks":262},"Direct procurement focuses more on:",[263],{"type":122},{"type":265,"content":266},"bullet_list",[267,274,280],{"type":268,"content":269},"list_item",[270],{"type":51,"content":271},[272],{"text":273,"type":58},"Building and nurturing strong long-term partnerships",{"type":268,"content":275},[276],{"type":51,"content":277},[278],{"text":279,"type":58},"Creating a stable, consistent supply chain and production process",{"type":268,"content":281},[282],{"type":51,"content":283},[284],{"text":285,"type":58},"Collaborating with the highest quality suppliers possible",{"type":51,"content":287},[288],{"text":289,"type":58,"marks":290},"Indirect procurement focuses more on:",[291],{"type":122},{"type":265,"content":293},[294,300,306],{"type":268,"content":295},[296],{"type":51,"content":297},[298],{"text":299,"type":58},"Effective spend management and spend analysis",{"type":268,"content":301},[302],{"type":51,"content":303},[304],{"text":305,"type":58},"Identifying opportunities for cost savings without sacrificing quality",{"type":268,"content":307},[308],{"type":51,"content":309},[310],{"text":311,"type":58},"Consolidating and optimising indirect spend categories",{"type":153,"attrs":313,"content":314},{"level":155},[315],{"text":316,"type":58},"How procurement teams manage direct vs indirect spend",{"type":51,"content":318},[319],{"text":320,"type":58},"Strong supply chain management and clear expense policies help ensure better product quality, protect the brand’s reputation, and prevent maverick spend.",{"type":51,"content":322},[323],{"text":324,"type":58},"Well-designed procurement strategies also help other departments in the company operate more smoothly. These are several functions that benefit from targeted strategies for direct versus indirect spending.",{"type":153,"attrs":326,"content":328},{"level":327},3,[329],{"text":330,"type":58},"1. Better inventory management",{"type":51,"content":332},[333],{"text":334,"type":58},"Inventory management keeps track of the quantity and type of materials and goods a company has in stock, and which need to be replenished throughout the year.",{"type":51,"content":336},[337,339,343],{"text":338,"type":58},"Strong inventory management takes a ",{"text":340,"type":58,"marks":341},"proactive approach to direct spend",[342],{"type":122},{"text":344,"type":58}," by ensuring the company always has enough supplies to support and execute a timely production process. Maintaining backup inventory volumes helps teams avoid major delays in the event of supply chain issues.",{"type":51,"content":346},[347,351,353,357],{"text":348,"type":58,"marks":349},"Indirect spend",[350],{"type":122},{"text":352,"type":58}," in inventory management is ",{"text":354,"type":58,"marks":355},"more reactive",[356],{"type":122},{"text":358,"type":58}," in execution. Supplies and goods are only ordered as necessary. Regular assessment of indirect costs can help companies determine when and what are the essential minimum levels of supplies needed. This reduces excess or redundant expenses and identifies new cost-saving opportunities throughout the year.",{"type":153,"attrs":360,"content":361},{"level":327},[362],{"text":363,"type":58},"2. Effective cost management",{"type":51,"content":365},[366,368,372],{"text":367,"type":58},"In cost management, direct procurement experts frequently use strategies like ",{"text":369,"type":58,"marks":370},"should-cost analysis",[371],{"type":122},{"text":373,"type":58}," to negotiate vendor pricing. This strategy estimates the supplier’s final pricing by estimating the total costs the supplier needs to spend to produce or deliver the final goods.",{"type":51,"content":375},[376,378,382],{"text":377,"type":58},"Conversely, many indirect procurement teams prefer starting each new budgeting period from scratch using ",{"text":379,"type":58,"marks":380},"zero-based budgeting",[381],{"type":122},{"text":383,"type":58},". Here every dollar counts, and each expense needs to be reassessed and justified for the next fiscal period to be approved. This helps eliminate redundant spend and prevents companies from wasting budget on expenses that aren’t actively supporting growth in the business.",{"type":51,"content":385},[386],{"text":387,"type":58},"For example, this could be subscriptions to multiple software that provide the same features or excess supplies that weren’t used in the previous quarter.",{"type":153,"attrs":389,"content":390},{"level":327},[391],{"text":392,"type":58},"3. Centralised e-procurement solutions",{"type":51,"content":394},[395],{"text":396,"type":58},"Indirect spend professionals frequently work with and receive requests from non-procurement teams. And traditionally, manual procurement requests can be slow to process in high volumes. This makes it highly beneficial to implement an intuitive e-procurement solution that is easily accessible to all employees who often need to outsource goods and services in their role.",{"type":51,"content":398},[399],{"text":400,"type":58},"Direct spend teams also benefit from process automation and digitalisation. Using a specialised platform for direct procurement optimises everyday supply chain logistics and communications while reducing the risk of human error. For example, comprehensive ERP systems can automatically notify when new purchase orders are needed for production materials from key suppliers.",{"type":51,"content":402},[403],{"text":404,"type":58},"To maximise operational efficiency and accuracy, some companies can aim for automation tools that can streamline both direct and indirect procurement processes within the same platform.",{"type":153,"attrs":406,"content":407},{"level":155},[408],{"text":409,"type":58},"Smarter procurement starts with smarter spend management",{"type":51,"content":411},[412],{"text":413,"type":58},"To wrap it up, there are clear distinctions between direct and indirect spend–and the company’s business model determines how big the differences are between these two procurement categories.",{"type":51,"content":415},[416],{"text":417,"type":58},"In manufacturing, distribution, and direct-to-consumer industries especially, direct procurement strategies should be managed with special care to guarantee the quality of materials and the end product. On the other hand, indirect spend often prioritises getting the best price and optimising budgets.",{"type":51,"content":419},[420,422,434],{"text":421,"type":58},"Spend management software like ",{"text":423,"type":58,"marks":424},"Spendesk",[425],{"type":136,"attrs":426},{"href":427,"uuid":428,"anchor":53,"target":140,"linktype":141,"story":429},"/platform/","4b39d188-071f-4f1b-9670-76374dd671b8",{"name":430,"id":431,"uuid":428,"slug":432,"url":433,"full_slug":433,"_stopResolving":39},"Platform",511195522,"platform","platform/",{"text":435,"type":58}," enables businesses to track all company purchases in real-time, giving finance teams more visibility and control. In-depth spend data helps businesses identify new opportunities for cost savings in procurement, employee expenses, and more.",{"type":51,"content":437},[438,440,446],{"text":439,"type":58},"Want to see how it works? Take Spendesk for a spin ",{"text":441,"type":58,"marks":442},"right now",[443],{"type":136,"attrs":444},{"href":445,"uuid":53,"anchor":53,"target":53,"linktype":35},"/platform-tour/",{"text":447,"type":58},".",{"type":230,"attrs":449},{"id":450,"body":451},"12767294-b262-4e3c-b09b-e55767644a8e",[452],{"_uid":453,"html":454,"component":455},"i-785b823d-5991-4c2f-8de7-60a11c22fc28","\u003C!--HubSpot Call-to-Action Code -->\u003Cspan class=\"hs-cta-wrapper\" id=\"hs-cta-wrapper-463d61fb-e72a-43c9-a0a5-f3024bd71034\">\u003Cspan class=\"hs-cta-node hs-cta-463d61fb-e72a-43c9-a0a5-f3024bd71034\" id=\"hs-cta-463d61fb-e72a-43c9-a0a5-f3024bd71034\">\u003C!--[if lte IE 8]>\u003Cdiv id=\"hs-cta-ie-element\">\u003C/div>\u003C![endif]-->\u003Ca href=\"https://cta-redirect.hubspot.com/cta/redirect/2694209/463d61fb-e72a-43c9-a0a5-f3024bd71034\" >\u003Cimg class=\"hs-cta-img\" id=\"hs-cta-img-463d61fb-e72a-43c9-a0a5-f3024bd71034\" style=\"border-width:0px;\" src=\"https://no-cache.hubspot.com/cta/default/2694209/463d61fb-e72a-43c9-a0a5-f3024bd71034.png\"  alt=\"Spendesk procurement\"/>\u003C/a>\u003C/span>\u003Cscript charset=\"utf-8\" src=\"https://js.hscta.net/cta/current.js\">\u003C/script>\u003Cscript type=\"text/javascript\"> hbspt.cta.load(2694209, '463d61fb-e72a-43c9-a0a5-f3024bd71034', {\"useNewLoader\":\"true\",\"region\":\"na1\"}); \u003C/script>\u003C/span>\u003C!-- end HubSpot Call-to-Action Code -->","embed",{"name":457,"created_at":458,"published_at":17,"updated_at":459,"id":460,"uuid":461,"content":462,"slug":469,"full_slug":470,"sort_by_date":53,"position":471,"tag_list":472,"is_startpage":27,"parent_id":473,"meta_data":53,"group_id":474,"first_published_at":475,"release_id":53,"lang":71,"path":53,"alternates":476,"default_full_slug":470,"translated_slugs":477,"_stopResolving":39},"Article","2022-08-16T21:22:30.004Z","2026-03-12T10:47:19.141Z",176457684,"8247dae6-c25f-40a0-a55e-abc94cf94989",{"_uid":463,"icon":464,"name":457,"component":468},"407a665a-29cb-4d52-87ff-12de3e192c58",{"id":465,"alt":466,"name":25,"focus":25,"title":25,"filename":467,"copyright":25,"fieldtype":31,"is_external_url":27},5859474,"edit-img","https://a.storyblok.com/f/146026/x/fd72101ce9/edit.svg","category","article","blog/category/article",0,[],176456151,"124984e3-bd16-480f-bdda-d9b6ec869fc7","2022-11-02T15:25:23.777Z",[],[478,479,480],{"path":470,"name":53,"lang":75,"published":53},{"path":470,"name":53,"lang":77,"published":53},{"path":470,"name":53,"lang":79,"published":53},[71,482,483],"en-us","en-eu",[485],{"_uid":486,"asset":487,"shadow":27,"caption":25,"overlay":492,"component":241},"83e824c9-e0ee-49c9-8e2f-163916c4db1b",{"id":488,"alt":489,"name":25,"focus":25,"title":25,"source":25,"filename":490,"copyright":25,"fieldtype":31,"meta_data":491,"is_external_url":27},21987769,"Direct vs indirect spend","https://a.storyblok.com/f/146026/1020x680/c2d4770a5a/direct-indirect-spend.png",{"alt":489,"title":25,"source":25,"copyright":25},[],[],"2022-09-08 11:57",5,[],"Discover the key differences between direct and indirect spend and how to manage both effectively to optimise your procurement strategy and control costs.",[499],{"_uid":500,"items":501,"heading":539,"reverse":27,"component":557,"sectionSettings":558},"2579102e-ac1b-46db-bdad-51a27c7370a8",[502,512,521,530],{"_uid":503,"title":504,"component":505,"description":506},"c46e7673-8187-439c-85ff-50720669406f","What is the difference between direct and indirect spend?","faqItem",{"type":48,"content":507},[508],{"type":51,"content":509},[510],{"text":511,"type":58},"Direct spend covers purchases tied directly to products or services used in production, while indirect spend covers operational expenses like marketing, travel, and office supplies. Spendesk's spend analytics, custom tagging, and ERP integrations let finance teams classify transactions, reconcile categories, and produce accurate direct versus indirect reports for budgeting and audit purposes.",{"_uid":513,"title":514,"component":505,"description":515},"8778d869-4eb1-4aad-9a42-1913723f57a3","How can a company manage indirect spend more effectively?",{"type":48,"content":516},[517],{"type":51,"content":518},[519],{"text":520,"type":58},"Companies manage indirect spend by centralizing purchase approvals, enforcing budgets, and tracking supplier and category performance across teams. Spendesk's approval workflows, departmental budgets, virtual cards, and vendor controls provide real-time visibility and enforcement, preventing maverick spend and simplifying month-end reconciliation with automated expense reports and exportable spend data.",{"_uid":522,"title":523,"component":505,"description":524},"357a98fc-9abc-4261-acf9-72edb0b183b7","How does Spendesk help finance teams track and report direct and indirect spend?",{"type":48,"content":525},[526],{"type":51,"content":527},[528],{"text":529,"type":58},"Spendesk provides unified spend visibility and reporting across direct and indirect categories to streamline accounting and forecasting. 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