How the budget leakage calculator works
Budget leakage is expensive precisely because it is invisible. Money drains out in small amounts across thousands of transactions — a slightly higher price here because someone bought off-contract, a duplicate payment there because an invoice slipped through unmatched. Individually the amounts look trivial; in aggregate, across a large and fragmented spend base, they add up to a meaningful share of the budget.
This calculator estimates two of the biggest sources. It applies the price premium that off-contract buying typically carries to the share of spend that happens outside contracts, then adds an estimate of invoice and duplicate-payment errors. It combines them into a total leakage figure and applies a recoverable share so you can see the realistic prize. The numbers are directional — a starting point for a business case, not a guarantee — and the biggest lever is simply making on-contract buying the easy default.
Common questions
What is budget leakage in procurement?
Budget leakage is the money that quietly drains out of your procurement budget without delivering value — typically through off-contract or 'maverick' buying at higher prices, and through invoice errors, duplicate payments and price discrepancies. It rarely shows up as a single line item, which is exactly why it goes unnoticed and unmanaged.
How does the budget leakage calculator work?
You enter your annual procurement spend, the share of it that happens off-contract, the price premium those off-contract purchases typically carry, and your invoice or duplicate-payment error rate. The calculator combines these into an estimated annual leakage figure, then applies a recoverable share to show how much you could realistically claw back.
How much procurement budget typically leaks?
It varies by organisation, but off-contract buying commonly carries a price premium of 5–15% versus negotiated rates, and invoice or duplicate-payment errors add a further slice. On a large, fragmented spend base the combined leakage can run into a meaningful percentage of total budget — most of which is avoidable with tighter contract compliance and controls.
How do you stop budget leakage?
The biggest levers are moving spend on-contract through catalogues and preferred suppliers, tightening approvals so off-contract buying needs justification, and automating invoice matching to catch errors and duplicates. Consolidating a fragmented supplier base onto a single marketplace makes on-contract buying the path of least resistance.
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