Contracts and pricing
It pays to keep control of contracts and purchasing
Christopher Solberg2 min read
Translated from Swedish. First published in Swedish on 27 September 2023. Read in Swedish
The whole idea of a contract is that it should be kept. Marie Wasserman, contract controller at Refero, describes how reality unfortunately does not always look that way.
A contract is not protection in itself
It is easy to lean back in the belief that you are protected against unexpected discrepancies simply because the organisation has contracts with its suppliers.
It is never possible to fully safeguard against mistakes and misunderstandings in a supplier relationship. But the risk can be reduced substantially by following up continuously.
Analyse down to item level
To begin with, it is important to know how the suppliers are doing. Often the picture can look good in an overall check. But if the analysis goes deeper, that is, down to item level, the picture can look different. Only then can we see how compliance works in existing contracts.
According to Marie Wasserman, a deeper analysis can for example show that the supplier has several price levels per item. It is not entirely unusual for the price of one and the same item to vary from month to month despite an agreed price.
Common discrepancies
Another common source of discrepancies is that after a central procurement there are often several different buyers who then make the purchases. It sometimes happens that agreed discounts suddenly “drop out”, or that freight prices differ greatly between similar deliveries. This is not always clear to the person who approves the invoices. The cause is often too great an internal distance between the current contract on the one hand and everyday routines on the other, with coding, approval and accounting in larger organisations often being handled by several people.
In general, analyses of this kind are carried out far too seldom, in Swedish companies as well as in regions and municipalities.
Three tips for keeping control of purchasing
- Make sure you know how your suppliers are doing.
- Having control of compliance pays.
- The more units there are in an organisation, the greater the risk of errors and discrepancies.
Would you like proof of the work you have done, a contract check or a basis for developing further? Start a conversation.