eProcureAI / Glossary
GlossaryThirty terms that come up constantly in procurement and finance, written the way somebody would explain them to a new starter rather than the way a standards body would define them.
Useful for onboarding. Also for the moment a stakeholder asks what committed spend actually means.
Two people can discuss committed spend for twenty minutes before discovering they mean different things by it.
Finance often means money that has been invoiced but not paid. Procurement usually means money promised on an approved order that has not been invoiced at all. Both are reasonable readings and they produce very different numbers.
The same happens with sole source and single source, with requisition and order, and with anything involving the word spend. None of it is complicated, but it is rarely written down anywhere a new starter can find it.
So this is that page. Thirty terms grouped by where you meet them, each explained in a sentence or two, with a note on why the distinction matters where it genuinely does.
Ten terms covering everything from the first request to the order going out.
An internal request asking for permission to buy something. It names what is needed, which department needs it, which budget it draws on and when it is wanted. It commits nothing to a supplier and can be changed or refused freely.
The commitment sent to a supplier once a request has been approved, listing items, quantities, agreed prices and terms. Unlike a requisition it is contractually meaningful, which is why changes to it are versioned rather than overwritten.
A single order covering repeat purchases from one supplier across a period, with individual releases drawn against a master value. Useful for predictable spend where raising a fresh order each time adds nothing.
A list of products and services at pre agreed prices that requesters choose from instead of describing what they want in free text. The single most effective way to keep buying inside negotiated rates.
A catalog arrangement where a requester is taken to a supplier's own site to shop, with negotiated pricing applied, and returns with the basket attached to their request.
A supplier your organisation has negotiated with and approved. The list only produces savings if it is enforced at the moment of purchase rather than published in a policy document.
Buying that happens outside the agreed process. Almost always a symptom of the compliant path being slower than the alternative rather than deliberate rule breaking.
Purchases from a supplier you hold an agreement with, but at prices outside that agreement. Easy to miss because the supplier name looks correct on the report.
The share of company spend flowing through approved procurement processes. Most other savings depend on this number rising first.
The long tail of low value, high volume purchases spread across many suppliers. Typically a small share of spend across most of the transactions, and where catalogs help most.
Six terms that come up whenever a purchase is large enough to be worth competing.
A request for quotation. You have written the specification and want suppliers to price it, so price is the main variable and comparison is straightforward.
A request for proposal. Used where you need suppliers to propose an approach rather than only a price, and responses are evaluated against criteria.
A sourcing event where pre qualified suppliers bid downward in real time. Suppliers usually see their rank rather than each other's prices, which keeps competition genuine without a race to the bottom.
What you currently pay, calculated from actual historical transactions rather than memory. Savings claimed against a guessed baseline rarely survive their second quarter.
The decision to give the business to a supplier at the end of an event. Worth recording with its reasoning, because the question of why that supplier was chosen always arrives eventually.
A category with only one capable supplier. Not the same as sole source, which is choosing one supplier when others exist and usually needs justification.
Ten terms, and the group where the same word most often means two different things to two people.
The budget line a purchase is charged against, usually mirroring the account structure finance already reports on. Every request carries one, which is what connects a purchase to a budget.
Money promised to a supplier on an approved purchase order that has not been invoiced yet. Reporting that counts only invoices leaves this out, which is why budgets that look healthy sometimes are not.
What is genuinely left on a budget after both spent and committed are deducted. The only figure that answers whether somebody can buy the thing they need.
The accounting term for recording a commitment against a budget at the point of approval rather than at invoice. Common in public sector finance and increasingly expected elsewhere.
Moving available budget from one charge code to another. Worth treating as a recorded action with an approver rather than an edit, so the trail explains itself later.
Recognising an expense for goods or services received but not yet invoiced. Calculating these from open commitments and goods receipts removes most of the manual work at month end.
Comparing the purchase order, the goods receipt and the supplier invoice before releasing payment. The oldest control in accounts payable and still the most effective.
An invoice that matches cleanly and posts without human review. The share of invoices achieving this is the headline measure of accounts payable automation.
A document reducing what you owe a supplier, usually issued after a short delivery or a pricing correction. Should stay linked to the order it relates to so the net position stays accurate.
The agreed period before an invoice is due, such as net thirty. Terms run from a defined trigger, often invoice date or goods receipt, and the difference matters more than people expect.
Six terms covering the supplier relationship and the controls around it.
Collecting and verifying everything needed before a supplier can be paid, including tax forms, insurance, banking details and any certifications your industry requires.
The record of what physically arrived against a purchase order, covering quantities, condition and any variance. It is the third document in a three way match.
The authoritative list of suppliers and their details. Duplicates and stale records here cause payment errors and hide opportunities to consolidate spend.
Ensuring the person who requests, the person who approves and the person who pays are not the same. Best enforced by the system rather than by policy, including through delegation chains.
The rules deciding who approves what, usually by amount, category or department. Most useful when procurement can change it directly rather than raising a request to have it changed.
Temporarily passing approval authority to somebody else, normally during leave. Should be scoped and time boxed, with both names kept on the record.
These are the ones that cause real confusion in meetings, usually without anybody noticing.
| Pair | The difference | Why it matters |
|---|---|---|
| Requisition and order | A requisition is internal and commits nothing. An order goes to a supplier and is a real commitment. | Approving a requisition is not the same as being on the hook for the money |
| Committed and spent | Committed is promised on an approved order. Spent has been invoiced and posted. | A budget report showing only spent is weeks out of date at any moment |
| Sole source and single source | Single source means only one supplier can do it. Sole source means you chose one when others existed. | The second usually needs a written justification, the first does not |
| RFQ and RFP | An RFQ prices a specification you wrote. An RFP asks suppliers to propose the approach as well. | Sending an RFQ when you needed an RFP produces confident quotes for the wrong thing |
| Goods receipt and delivery note | The delivery note comes from the supplier. The goods receipt is what you recorded after counting. | Only one of them is evidence you can match an invoice against |
Thirty minutes with a procurement specialist, using your thresholds, your charge codes and your vocabulary.
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