Procurement Strategy

Contract leakage: most savings die after signature

Contracts lose 8–12% of negotiated value after signing. Unclaimed rebates and missed price caps drain millions — checking what you bought against what was delivered recovers the gap.

8–12%

Negotiated value lost after contract signing

For every $100 saved at the table, only $88–92 shows up on the bottom line

60%

Contracts with unclaimed rebates or credits

Like buying a gift card and forgetting to spend it — the money stays with the supplier

57%

CPOs say siloed teams are the #1 barrier

Procurement negotiates, finance pays — and nobody connects the two

The four silent drains on contract value

Price escalation caps go unchecked — Suppliers raise prices above the negotiated cap. AP pays the invoice as-is because the PO authorizes the line item, not the cap. Like a landlord raising rent above the lease limit — if no one checks, you pay the extra.

Volume rebates never get claimed — Spend crosses the tier threshold but nobody files the claim. Most rebate clauses require the buyer to request payment — they are not automatic. Think of it like a mail-in rebate that expires because no one mailed the form.

Service level credits expire — Uptime drops below the SLA. The credit requires tracking performance and filing within 30 days. No one does either. Like having insurance that covers a flight delay but forgetting to file the claim before the deadline.

Early-payment discounts slip away — 2/10 net 30 terms expire because invoice approval takes 15 days. Only 27% of companies fully capture these discounts. Like leaving a 2% cash-back offer on the table because you paid a day too late.

Risk

The signature-to-invoice gap is where value dies. A contract has 40 pages of commercial terms. An invoice has four fields: amount, date, PO number, supplier name. AP matches the invoice to the PO, not to the contract. Every clause that requires someone to check, calculate, or enforce is a clause that will not be enforced — like a security camera that records everything but nobody ever watches the footage.

What contract governance looks like, in practice

Build a living tracker, not a PDF in a drawer. Map active contracts to their commercial terms — price caps, rebate thresholds, SLA credits — and review quarterly against actual spend to catch leaks before they compound.

Flip the rebate clause: make the supplier do the work. Replace "buyer may claim rebates within 60 days" with "supplier shall calculate and pay rebates quarterly." The party with the data should carry the burden.

Give AP a one-page cheat sheet per supplier. Not the full 40-page contract — just the commercial terms that affect payment: price caps, discount windows, rebate triggers. The things AP needs before hitting "pay."

Jargon Decoder

Contract leakage The gap between what you negotiated and what you actually received — savings that evaporate because no one tracked contract terms after signing.

Price escalation cap A ceiling on how much a supplier can raise prices each year. Without checking invoices, the cap is a suggestion, not a rule.

Volume rebate A partial refund the supplier owes when you buy enough. Most require the buyer to claim — they are not automatic refunds.

SLA credit Service Level Agreement credit — money back when the supplier fails to meet uptime or performance targets. Usually expires if not claimed within 30 days.

2/10 net 30 A payment term: 2% discount if paid within 10 days, full amount due in 30 days. Like a "pay early, save 2%" coupon on every invoice.

Post-signature governance Checking what you actually bought against what was delivered — comparing invoices to contract terms instead of just paying what the supplier asks.

Sources: Deloitte Global CPO Survey 2025, Centime Working Capital Management 2026, Phoenix Strategy Group, Rzzro Intelligence analysis

Rzzro

Procurement, quantified.