How to cut tail spend with effective management strategies

Last updated: 20 August 2026

The term ‘tail spend’ is typically used to refer to hard-to-track, high-volume, and low-value transactions that occur within an organisation and across multiple suppliers, significantly impacting your bottom line. While most UK companies will be aware of tail spend, many could be unaware exactly how much is being lost until they actively engage with comprehensive tail-end spend management.

According to research from McKinsey, organisations that actively manage their tail spend typically uncover 5% to 15% in savings. You can use our spend management ROI calculator to see how much your business could save.

By adopting an effective tail spend management framework, spend can be reduced significantly without loss of performance. Plus, a more efficient process can reduce pressure on teams and alleviate unnecessary shadow work, giving time back for more important tasks. Data from Perk’s Cost of Shadow Work report indicates that employees spend an average of 7 hours a week on these tasks, costing UK businesses roughly £95.1 billion every year. 

The issues with manual tail spend management

While many smaller individual transactions may seem negligible, managing them manually puts an additional burden on finance teams. 

The Pareto Principle, or 80/20 rule, states that 80% of spend is made with just 20% of suppliers, which leaves the remaining one-fifth of spend fragmented across the majority of your supplier base. This is a significant number of transactions that can easily become unmanageable, cause avoidable expenses, and could eventually lead to the following liabilities:

Maverick spend

Without clear channels for guided purchases, employees are likely to choose the path of least resistance to complete their tasks. This can create a large amount of maverick spending outside of approved channels.

Not only is this type of spending hard to track, but it can also bypass approval workflows and budget oversight because legacy systems fail to record it.

Poor data visibility

Employees frequently fail to record or classify ad-hoc purchases, creating massive confusion in procurement systems. The lack of visibility impacts the ability to accurately forecast and doesn’t allow for vetting of suppliers to ensure they meet standards for compliance, cybersecurity, and supplier diversity goals. Crucially, this lack of oversight creates a blind spot for sustainability teams trying to accurately track Scope 3 emissions.

Unmanaged tail spend creates issues with financial reporting, making it difficult to assemble the paper trail needed to meet HMRC requirements for annual tax returns and VAT reclaim.

Higher costs due to fragmentation

The decentralised nature of tail spend often means that different departments or individuals are responsible for these purchases. This fragmented approach makes it difficult to enforce standard procurement procedures, negotiate better deals with suppliers, and consolidate purchases for cost savings.

Examples of modern tail spend

Traditionally, procurement teams categorised tail spend as Maintenance, Repair, and Operations (MRO) or petty cash transactions.

While low-value essentials like keyboards and replacement cables are still needed today, a trend towards decentralised technology purchases heavily drives unmanaged tail spend, creating significant potential for financial leakage and corporate vulnerabilities:

• SaaS subscriptions and AI tools. Ad-hoc software licences for tools like Canva, Notion, or AI platforms are easily purchased on individual corporate cards. Because these transactions bypass formal procurement channels, finance leaders struggle to track how many individuals are purchasing fragmented licences for the exact same software across different departments.

• The auto-renewal trap. Digital assets, API credits, and cloud software user licences are notoriously easy to purchase and forget. A decentralised approach leads to multiple unmonitored subscriptions on auto-renewal that quietly drain corporate capital for months or years.

• Shadow IT and compliance risks. Digital tail spend represents a major security threat. When employees download unapproved software to process company data, they bypass standard IT vetting procedures and create massive vulnerabilities around cybersecurity and data privacy.

Key tail spend management strategies

The key to managing the tail is moving away from manual intervention and utilising structured frameworks to manage processes.

Spend management software plays a pivotal role by streamlining processes, enhancing visibility, and promoting cost-effective procurement practices.

1. Analysis and spend segmentation

Take the time to identify your tail spend based on historical data. Identify the unclassified expenditures, flag purchases that are redundant, and begin to group this previously unmonitored spend into three distinct tail spend categories.

2. Supplier consolidation

Once you categorise your spend data, shift your focus to consolidating suppliers. For example, if your tail audit identifies that five departments have separate software licences, look into replacing them with a single enterprise licence to simplify management and potentially reduce spend.

Working with a smaller group of preferred partners will help to drive down costs while also reducing the logistical demands of managing a large supplier pool.

A simple starting point would be to establish a preferred suppliers list for recurring low-value needs, as this will help to eliminate the accumulation of uncategorised one-off purchases and the overhead associated with manual management.

3. Making compliant purchasing easier

To manage future tail spend, it is important to make sure that compliant purchases are an easier option than maverick spend methods, such as paying with a personal card and submitting out-of-pocket expense reports.

Employees need to have easy access to the pre-approved items agreed with suppliers and available within your procurement system. Blocking purchases alone leaves them nowhere to turn. Tools should instead instantly prompt them with the company’s pre-approved options.

Employee buy-in ensures that budget checks, compliance, and data tracking of purchases can all be completed automatically and without the need for manual oversight.

Tail spend reduction tools and tactics

Procurement teams cannot reduce tail spend effectively using a manual approach. Trying to track thousands of transactions via a spreadsheet is only going to consume more time and potentially create input errors.

By deploying an automated tail spend management system, organisations can shift from being reactive to proactive in managing their tail spend strategy.

Improve categorisation

Automating analysis and monitoring spend management helps to reduce the number of uncategorised expense claims being submitted. In the past, these might have been considered low priority due to their small value, but it is the accumulation and grouping of these payments that will identify where otherwise unmonitored spend has been going.

Once they have been categorised, costs for ad-hoc tail spend will be integrated into an automatically managed spend process and monitored for optimisation opportunities.

Bulk negotiations

Perk’s intelligent spend platform helps to aggregate small, fragmented purchases across different departments and identifies opportunities to integrate them into new or existing bulk negotiations.  

Not only does this reduce the number of suppliers to deal with, but helps to build relationships and simplify procurements, while also increasing the chances of discounts and cost savings.

Continuous monitoring

Moving to an integrated, all-in-one system means that monitoring can become continuous, with live dashboards tracking compliance and the volume of spend following through preferred suppliers.

As well as making reporting instant, this approach also means that purchases that do not comply can be rapidly flagged and investigated.

Enforce compliance

While technology is key, it must be used to support a stringent and carefully developed policy. Larger purchases and payments should not be made without a PO, while lower-value (sub-£500) routine purchases should be managed through the use of corporate cards. These can be set with spending limits and restrictions to give employees agility and control within the established financial framework.

Spend management software can then ensure that tail spend transactions adhere to regulatory standards, reducing the risk of non-compliance.

Providing employees with a pre-approved vendor catalogue makes it easier to purchase from a range of partner suppliers with already agreed costs, rather than risking unauthorised overspend.

Real-time analytics

Effective procurement software automates spend analytics, providing a fully rounded view of the spend landscape in real-time.

This can include automatic classification of data, applying policy to individual spend, monitoring allowances and flagging when unapproved suppliers are used.

With greater visibility and a comprehensive overview, you can closely monitor tail spend and identify clear optimisation opportunities, while also creating positive new spend habits for the team.

Tail spend management checklist

• Investigate and determine your tail spend using the 80/20 rule to make the case for centralising spend management.

• Use spend management tools to automate data capture and provide real-time visibility.

• Review spend data to spot unfamiliar suppliers and small repeat purchases. This will provide a granular view of the scale of your tail spend.

• Consolidate your suppliers. Move more volume to preferred partners to reduce costs.

• Make the new workflow simple for employees by creating a simple way to purchase approved items, or provide corporate cards to manage out-of-scope spend.

• Regular monitoring to sustain improvements and quickly spot new forms of tail spend as they emerge.

Case study

Breitling is a prime example of how taking control of fragmented purchases can enhance business efficiency and the bottom line. Before overhauling its approach, Breitling dealt with highly visible shadow work in every report, which left employees frustrated and obscured true spend data from the finance team.

By adopting Perk’s platform for travel and spend, Breitling was able to eliminate manual, ad-hoc processes and increase the finance team's efficiency by 180%, based on the reduction in time spent managing expenses manually. 

As Breitling CFO Dr. Lars Kästle explained: "We have a single source of truth with unmatched data quality for the audit trail. With Perk, we've found exactly the level of transparency we need for future-oriented business planning and forecasting."

Breitling’s success story demonstrates how utilising the right spend management solutions can turn a fragmented purchasing process into a streamlined, highly transparent operation.

Take control of your tail spend strategy with Perk

Tail spend should not be ignored as an accepted leak, but an opportunity to boost efficiency and sharpen existing spend processes. 

By deploying the right combination of spend management software solutions and buying guidance, and by consolidating suppliers, maverick spend and third-party risks can be minimised while also making bottom-line savings.

If you’d like to see Perk’s spend management platform in practice, book a demo today.