A practical review of what you buy, what you use and what arrives on the invoice can give an SME a clearer basis for its next supplier conversation.

A supplier offers a discount at renewal. Before accepting, ask what the new price actually covers. A lower rate is of limited use if the business is still paying for software accounts nobody needs, deliveries it could combine or a service level that no longer fits.

For a small business without a dedicated buyer, a manageable starting point is one recurring cost category. Choose something you can investigate with the people who use it, such as packaging, telecoms or office software. The aim is to arrive at the renewal discussion knowing what should stay, what could change and how you will check the result.

Establish what you are buying

Pull together a year of invoices and purchasing records for the category. Group spending by supplier and type of purchase, checking whether different names refer to the same business. Include relevant card payments so small subscriptions do not disappear from the review. Caventis’s spend analysis guide explains how supplier and category views help organise this work.

Use that history to ask questions. Has the unit price changed, or are you buying more? Does an invoice include delivery or support charges that were absent from the original quotation? Pick a few lines and trace them back to the agreed terms. Keep a note of anything that needs the supplier’s explanation.

Then speak to whoever uses the product or service. An apparently spare software account might support occasional work, while a routinely purchased item might no longer be needed. For software, compare paid licences with actual usage and check what happens to stored information before removing access. Caventis identifies unused capacity and overlapping tools among the areas it reviews in IT cost reduction.

Give suppliers a comparable brief

Write down the requirement before asking for prices. For packaging, that might mean the dimensions, material, expected order quantities and delivery pattern. For a support contract, specify the hours of cover and response you need. Ask each supplier to identify exclusions and extra charges so you can compare offers on the same basis.

Public business guidance from nibusinessinfo.co.uk recommends reviewing purchasing expenditure and supply arrangements when looking for savings. Its guidance on supplier negotiations also covers delivery, payment terms and quality. Those details belong in the conversation alongside price.

Ask your existing supplier whether a change in how you order would reduce its cost to serve you. Could planned deliveries replace urgent ones? Would a clearer forecast help? Keep commitments within what the business can reasonably use. Buying a larger quantity solely to secure a discount deserves a second look if it leaves you storing surplus stock.

Compare the cost of using the arrangement, including any setup, training or exit charges. The Cabinet Office’s Sourcing Playbook describes this whole-life approach for public procurement; the same comparison is useful when an SME weighs supplier offers. A cheaper contract may require work that has to be paid for elsewhere.

Before switching a service you depend on, agree how you will check that the replacement works. For a physical product, that could be a sample and a small initial order. For a service, establish who handles problems during the handover. Record the quality and delivery requirements with the commercial terms.

Check what changed on the invoice

Keep the original price and the agreed replacement together, with the effective date. When the first invoice arrives, check it against the agreement. Ask finance to review the calculation before recording a saving. Caventis describes a similar approach on its website, tracking agreed prices, applicable volumes and realised results.

For illustration, reducing a unit price from £10 to £9 on 200 units saves £200 at that volume, before any other changes or charges. If the next order is smaller, separate the effect of buying fewer units from the price reduction. Otherwise, the purchasing result is difficult to judge.

Finish the review by giving one person responsibility for the next decision date. Record any notice deadline in the agreement, allowing time to gather usage information and consider alternatives. Start with one category, resolve the questions it raises and check the invoices afterwards. That gives the next supplier conversation a useful starting point.

About the author: Matt Buckley is the founder of Caventis, a UK procurement and cost reduction consultancy.