Try it now, capture a real invoice
Free plan · No credit card · Your data stays yours
Spend under management (SUM) is the percentage of a company's total spend that is actively controlled through approved suppliers, contracts, and purchasing channels. The formula is simple: managed spend divided by total addressable spend, times 100. If you manage $800,000 of a $1 million spend base, your SUM is 80%. A higher SUM means more visibility, more negotiating leverage, and more of your spend protected from waste.
How to calculate spend under management
Use the standard formula:
Spend under management (%) = (Managed spend / Total addressable spend) x 100
Managed spend is every purchase that flows through an approved contract, a negotiated supplier agreement, or a centralized procurement and AP process. Total addressable spend is all the spend procurement could influence. Exclude items you cannot control through procurement, such as payroll and taxes. A second way to reach the same number is to subtract maverick spend (off-contract, unapproved buying) from total addressable spend; what remains is managed spend.
| Input | Example |
|---|---|
| Total addressable spend | $1,000,000 |
| Managed spend | $800,000 |
| Maverick spend | $200,000 |
| Spend under management | 80% |
What counts as managed spend
Spend is managed when it goes through a controlled path: an approved supplier, a signed contract or negotiated rate, and a purchasing channel with visibility and approval. That usually means a purchase order raised against a contract, an invoice matched to that order, and a payment approved through a defined workflow. Spend is unmanaged, or maverick, when someone buys off contract, from an unapproved vendor, or outside the normal process. Maverick spend is the gap between what you could control and what you actually do.
Why spend under management matters
SUM is one of the clearest measures of procurement performance because it links directly to savings. Every dollar you move under management can yield roughly 6 to 12% in savings through negotiated pricing, consolidated suppliers, and fewer errors. Beyond price, higher SUM gives you cleaner data for forecasting, better compliance, stronger supplier relationships, and less exposure to fraud and duplicate payments. Low SUM signals leakage: spend happening where no one negotiated the price or checked the invoice.
How to increase spend under management
Raising SUM is about closing the maverick-spend gap. A few levers work consistently:
- Route buying through approved channels. Make it easier to buy on contract than off it, so requisitions and purchase orders capture spend before it happens.
- Consolidate suppliers. Fewer, better-negotiated vendors pull more spend onto contracts with leverage behind them.
- Close the AP side. Match every invoice to a purchase order and receipt so off-contract spend is visible and cannot slip through unchecked.
- Measure and report SUM regularly. Track it by category and business unit, and target the areas with the most maverick spend first.
Automating the invoice side is a direct lever. When every bill is captured, coded, and matched against a purchase order, off-contract spend surfaces immediately and your managed-spend figure reflects reality. See how automated invoice matching and end-to-end accounts payable software tighten control over what actually gets paid.
Direct vs indirect spend under management
SUM applies to both direct and indirect spend, and the two behave differently. Direct spend covers goods and materials that go into what you sell, and it is usually already on contract because it is high value and predictable, so it tends to show high SUM. Indirect spend covers everything else the business buys to operate, from software and office supplies to travel, marketing, and professional services. Indirect categories are where maverick spend hides, because many small purchases happen fast and off contract. When you break SUM out by category, you almost always find the biggest gap and the fastest savings on the indirect side. Tackling one indirect category at a time, starting with the largest uncontrolled bucket, is a practical way to lift the overall number. A common mistake is to measure SUM only in dollars and ignore the number of transactions: a category can look small by value but generate hundreds of tiny off-contract orders that consume staff time and hide risk. Track both the dollars and the transaction count so you fix the categories leaking effort as well as money.
Frequently asked questions
What is spend under management?
Spend under management is the share of a company's total spend that is actively controlled through approved suppliers, contracts, and purchasing channels. It is usually expressed as a percentage of total addressable spend. Higher SUM means more of your spending is negotiated, visible, and governed, which drives savings and reduces risk. The rest, called maverick spend, happens off contract and outside procurement's control.
How do you calculate spend under management?
Divide managed spend by total addressable spend and multiply by 100. Managed spend is every purchase under an approved contract, negotiated agreement, or centralized process; addressable spend is all the spend procurement can influence, excluding items like payroll and taxes. For example, $800,000 managed out of $1,000,000 addressable is 80% SUM. You can also subtract maverick spend from addressable spend to find managed spend.
What is a good spend under management percentage?
Many organizations target 80% or higher, though the right number varies by industry and maturity. What matters more than a single benchmark is the trend: a rising SUM shows procurement is pulling more spend onto contracts and closing the maverick-spend gap. Very high SUM in a well-run function is common, while a low figure points to leakage and untapped savings. Measure it consistently to see progress.
What is the difference between managed spend and maverick spend?
Managed spend flows through approved suppliers, contracts, and purchasing channels with visibility and approval. Maverick spend is off-contract or unapproved buying that skips that process, so no one negotiated the price or verified the purchase. Spend under management is the ratio of managed spend to total addressable spend, so reducing maverick spend directly raises SUM and unlocks the savings tied to negotiated pricing.
Why does spend under management matter?
SUM matters because it ties directly to savings and control. Every dollar moved under management can yield roughly 6 to 12% in savings through better pricing and fewer errors, and higher SUM improves forecasting, compliance, and fraud prevention. It is a core procurement metric because it shows, in one number, how much of the company's spending is actually being governed rather than leaking out through uncontrolled purchases.