A typical SME has between 15 and 30 active supplier contracts. Cleaning, IT, insurance, vehicle leases, office supplies, software subscriptions, catering, security. The list grows every year. But ask a business owner to name exactly what they pay, to whom, and until when, and the room goes quiet.
The numbers tell the story. Research by World Commerce & Contracting shows that poor contract management leaks an average of 9.2 percent of annual revenue. And 95 percent of organisations have no full visibility into their contractual obligations (Weshare, 2025). More data: SME Contract Management Statistics 2026.
That is not a failure. It is the reality at virtually every company without a dedicated procurement manager. Contracts get signed when a need arises, then disappear into a drawer, a shared folder or an inbox. Until the invoice arrives or the contract has already silently renewed.
Three ways poor procurement costs you money
1. Automatic renewals
The most well-known problem. A contract expires, nobody cancels, and the supplier automatically extends it for another term. With a three-month notice period and a December end date, you need to act before 1 September. Miss that date and you are locked in for a full year. It happens more often than you think, especially when you manage twenty contracts at once.
Read also: What do silent contract renewals cost your SME?
2. Maverick buying
Maverick buying is purchasing outside agreed channels or contracts. A branch manager orders directly from a supplier, a colleague signs up for a software subscription without checking whether a contract already exists. The result: duplicate contracts, missed volume discounts and no overview of total spending. According to the Hackett Group, 10 to 20 percent of targeted procurement savings are lost to this kind of uncontrolled buying.
3. Unchecked price indexation
Suppliers increase prices annually based on a price indexation clause. That is contractually permitted and often reasonable, but only if you monitor it. Without oversight, increases stack up. After three years you pay 15 to 20 percent more than at contract signing, without anyone having consciously agreed.
Why spreadsheets do not work
Most businesses start with an Excel file. That works as long as you have ten contracts and one person maintaining it. Once the number grows, or that person goes on holiday, the system breaks down.
A spreadsheet does not send reminders. It does not show which contracts expire next month. It does not combine data from different departments. And it does not tell you whether your supplier is more expensive than the market.
Contract management is not an administrative task. It is the difference between paying what you should and structurally overpaying.
What contract portfolio management looks like
Contract portfolio management starts with a simple inventory: which contracts do you have, with whom, what do they cost, and when do they expire? Those five data points per contract are enough to shift from reactive to proactive.
With that overview you can run a spend analysis: where does the money go? Are you paying three suppliers for similar services? Can you bundle volume through procurement synergy?
The next step is supplier relationship management: reviewing performance, renegotiating contracts at the right moment, and consciously deciding whether to renew or go to market.
Five things you can do this week
Collect all contracts in one place. Search your inbox, your accounting system and your shared drive. You will find contracts you had forgotten about.
Record the final notice date for each contract. Not the end date, but the end date minus the notice period. That is when you need to act.
Set reminders. At least 90 days before the final notice date. Use your calendar, your task list, or software that does it automatically.
Assign each contract to an owner. Not "the team", but a named individual who is responsible for monitoring and reviewing.
Review your five largest suppliers. What are you paying, what does the supplier deliver, and is that price still competitive? A one-off investment of an hour can save thousands per year.
Optimising procurement does not have to be a big project
Procurement process optimization sounds like something for large enterprises with a procurement department. But the core is simple: know what you spend, with whom, and make sure you can renegotiate or cancel at the right time.
Contract management software helps with that. Not as a replacement for your own judgement, but as a system that handles the administration and reminders so you can focus on the decisions that matter: renew, renegotiate or switch.
Read also: 5 tips for smart contract management in SMEs
Sources
- KVK — Procurement and suppliers — practical procurement tips for SME owners (Dutch Chamber of Commerce)
- Bain & Company — Procurement Excellence — research on cost savings through structured procurement strategies
- Gartner — Market Guide for SaaS Management Platforms — report on unmonitored SaaS spending and maverick buying
- World Commerce & Contracting — Benchmark Report — data on contract leakage and spend analysis across organisations