Indirect Spend

The cost of resources or activities such as operation costs and overhead that cannot be directly traced to a final cost object since no direct or repeatable cause-and-effect relationship exists. An indirect cost uses an assignment or allocation to transfer cost. These are goods and services typically handled through the Sourcing organization and cover everything from pens and paper to snow removal services to training services to employee benefits. After an organization classifies the money they spend into direct or indirect spend, they then further classify into spend categories. Although there is no formal taxonomy for classifying spend, many organizations will use the UNSPSC to help classify spend. It is also sometimes referred to as Indirect Costs. See Spend Category below.