Vendor Spend Review: A Practical Guide to Cutting Costs and Protecting Margins

Vendor spend has a sneaky way of creeping up. A tool you signed up for “just for this quarter” becomes a permanent line item. A service that used to feel essential turns into background noise. And before you know it, you’re spending more on vendors than you realize—without seeing a clear return.

A vendor spend review isn’t about cutting for the sake of cutting. It’s about protecting your margins by making sure every recurring cost earns its spot. Done well, this is one of the fastest ways to improve profitability without touching your pricing or sales pipeline.

Start with the real number (not the vibe)

Most businesses underestimate vendor spend because it’s spread across categories and payment methods.

Pull a list of vendor payments from the last 90–180 days and group them by vendor (not by category). You’re trying to answer one simple question: what are we paying, how often, and why?

Include everything: subscriptions, contractors, agencies, software, tools, shipping providers, payment processors, IT support, and any “miscellaneous” recurring charges.

You’re not judging yet. You’re just getting visibility.

Separate “mission-critical” from “nice-to-have”

When you review vendors, don’t start with “cut.” Start with “keep.”

A good rule: if removing this vendor would break revenue collection, operations, compliance, or customer delivery, it’s likely a keep (for now). If removing it would be inconvenient but not business-threatening, it belongs in the “evaluate” pile.

Think in tiers:

Core operations (payroll, banking, accounting, core systems)

Revenue support (CRM, marketing tools, sales enablement)

Productivity/comfort (note tools, extra dashboards, add-ons)

Most savings hide in the third tier.

Find the “silent spend”: duplicates, overlaps, and forgotten tools

This is where the money usually is.

Look for:

Two tools doing the same job (multiple project management platforms, multiple analytics tools, multiple communication tools)

Add-ons that no one uses anymore

Seats/licenses for former employees

Subscriptions paid annually that got renewed automatically

Tools that were purchased by different teams without coordination

If you find overlap, don’t just cut randomly. Pick the tool that’s best adopted, best integrated, and most defensible for your workflows—and consolidate.

Check ROI using behavior, not intention

Many vendors sound useful. Fewer are actually used.

Instead of asking “Do we like this tool?” ask:

Do we use it weekly?

Is it tied to revenue, delivery, or customer retention?

Would removing it create measurable friction?

Is there a cheaper plan that fits our actual usage?

If a vendor can’t show impact, it shouldn’t be protected just because it’s familiar.

Renegotiate before you cancel

You’d be surprised how many vendors will discount to keep you—especially if you’ve been a customer for a while.

Simple levers:

Ask for a better rate in exchange for annual billing (only if you’re sure you’ll keep it)

Reduce seats to match headcount

Switch to a lower tier

Bundle services where it makes sense

Get rid of premium support if you’re not using it

The goal is margin protection, not inconvenience.

Treat contractors and agencies differently than software

Software is easy to cut. Service vendors are more nuanced.

Before you reduce an agency or contractor, ask:

Are they replacing a role you’d otherwise need to hire for?

Is the output measurable and tied to outcomes?

Is the scope clearly defined—or has it grown into “everything”?

If the scope is fuzzy, tighten it first. You can often save money by refining deliverables, setting clear timelines, and agreeing on what “done” looks like. If the work still isn’t tied to outcomes after that, it’s a strong signal to pause, replace, or cut.

Build a simple “keep / change / cut” decision list

As you review, avoid vague decisions like “we’ll revisit later.” Make a call and document it.

Keep: high-use, high-impact, hard to replace, directly tied to revenue or compliance

Change: downgrade, renegotiate, reduce seats, consolidate, or tighten scope

Cut: low-use, duplicate, unclear ROI, legacy subscriptions, or “nice-to-have” spend

This list becomes your action plan, not just an audit.

Make vendor review a recurring habit

The easiest way to stop vendor creep is to review it regularly. A quarterly vendor review is usually enough for most businesses; monthly is ideal if you’re scaling fast.

When vendor spend is monitored consistently, it stops being a surprise and starts being a lever you can control.

Where Decimal fits in

Vendor spend review gets much easier when your books are clean and your data is reliable. Decimal helps businesses categorize spending correctly, build clean reporting, and create systems that make recurring cost reviews simple.

When you know exactly what you’re paying, to whom, and why, cost control stops being stressful. It becomes strategic.

If your vendor costs have quietly climbed over the year, now is the perfect time to reset. Protect your margins by keeping what’s essential, optimizing what’s overpriced, and cutting what no longer serves the business.