If you’re a CFO who suspects your indirect costs are higher than they should be, but can’t quickly prove it, you’re not alone. Most Australian organisations have spent the last two years doing what was required: absorbing supplier price increases, managing wage pressure and defending EBITDA through discipline alone. Cost control became a survival reflex, and for a period, that was enough.
The environment has shifted with competitors reinvesting in capability, customer experience and growth. Your organisation, however, may still be carrying a quiet drag in your cost base that hasn't been examined in years. That drag is indirect spend, and it didn't happen overnight.
It happened through small annual uplifts, surcharges introduced as temporary measures that were never unwound, contracts renewed on legacy scopes and service levels that drifted while pricing continued to climb. Across insurance, facilities, logistics, waste, IT, labour hire and professional services, the pattern is consistent: pricing moves faster than governance.
That matters because indirect costs sit directly below your EBITDA line, are rarely revenue-generating and are genuinely difficult to see without the right data. Left unmanaged, they erode margin and reduce the flexibility your business needs when growth opportunities reappear.
Indirect spend doesn't blow out overnight, it creeps, and by the time it's visible on your P&L it's already expensive.
Most internal cost reviews stall not because your team lacks capability, but because they lack the category-specific intelligence needed to challenge suppliers with confidence.
Your team knows what you're paying, but probably not:
That gap is where value quietly disappears. Having run cost programs under board pressure, the ceiling becomes clear quickly: without benchmark data and genuine supplier-side insight, it's difficult to push back with conviction. Commercial conversations change entirely once your team understands how supplier markets actually move - pricing cycles, margin tactics and category-specific behaviour. That shift is what consistently unlocks 20 to 38% reductions across indirect categories, without compromising service or quality.
The following framework is what Australia's top-performing organisations use to identify and recover trapped cash in indirect spend, typically in 12 weeks and without touching your headcount.
Start with data, not assumptions. That means reviewing 12 to 24 months of your invoices, contract indexation clauses, surcharges and any rebates or service credits that were owed but not claimed. In today's market, where repeated price increases have become routine, this step alone regularly surfaces material misalignment between what's contracted and what's actually being charged.
This work requires people with genuine category depth, specialists who understand the economics, pricing cycles and commercial tactics of the suppliers your business relies on. If that capability doesn't exist internally (and in most mid-market organisations it doesn't) you need external expertise.
Your contracts were likely negotiated on the basis of what your business needed two or three years ago. This step requires an honest assessment of your current requirements: service levels, delivery models, compliance obligations, technology capability and commercial terms.
With that clarity, it becomes straightforward to identify which of your suppliers are genuinely fit-for-purpose and which are simply “clipping the ticket”. Across a range of sectors, the same patterns appear regularly: suppliers subcontracting core services, bundling components you no longer require or charging for capability your business stopped using long ago.
This is where value is either locked in or quietly leaked back. Once your preferred suppliers and commercial terms are confirmed, implementation needs to be treated as a commercial project in its own right, not a procurement handover.
That means updated pricing and indexation terms properly embedded, SLAs and KPIs reset, rebates and credits documented and tracked, and your internal stakeholders properly briefed. Organisations that negotiate well but implement loosely give back a meaningful share of what they secured at the table. The discipline applied at this stage determines how much of the benefit actually reaches your EBITDA line.
Savings don't sustain themselves. Without structured monitoring of agreed pricing, service-level compliance, rebates owed and supplier-initiated scope changes, costs creep back into your business. Many organisations experienced exactly this over the past 18 months as suppliers adjusted terms through the inflation cycle, not through bad intent, but through weak visibility on the buyer's side.
Top-quartile performers don't rely on goodwill. They rely on data, clear accountability and governance that is systemised and doesn't depend on memory.
Your business doesn't need to rely on annual reviews or goodwill. Maintaining ongoing visibility and holding suppliers to agreed terms as a matter of routine, not exception, is what separates organisations that sustain margin improvement from those that give it back within two years.
When all four steps are executed properly, the outcome is clear: suppliers that are genuinely fit-for-purpose, commercial arrangements benchmarked to current market rates, a cost base your executive peers and board can see and trust, and cash that flows back into growth rather than disappearing into supplier margin.
I see around 10% of organisations sustain this consistently. It’s not because the methodology is complex, but because it requires the right focus, structure and category expertise applied together over time. The ones that do get there treat indirect spend governance not as a project, but as a commercial discipline that runs alongside everything else your business is already doing well.