Expense
Definition:
An expense is a cost incurred by an organization in the course of its business operations. Expenses can include costs related to goods or services purchased, salaries and wages, rent, utilities, and other overhead costs.
Example:
Acme Corporation incurs various expenses, such as the cost of raw materials purchased for production, salaries paid to employees, rent for office and warehouse space, and marketing costs for promoting its products. These expenses are recorded and categorized in the company's financial statements to track and manage its overall costs.
What about Expenses are important to Procurement?
Understanding and managing expenses is important for procurement teams, as they are responsible for controlling and optimizing a significant portion of an organization's spend. By working closely with finance and other departments, procurement teams can help to identify cost-saving opportunities, negotiate better prices and terms with suppliers, and ensure that expenses align with the organization's budget and financial goals. Effective expense management can involve techniques such as spend analysis, category management, and supplier relationship management.