1. Review categories regularly
- Audit mappings quarterly to ensure accuracy
- Update categories as your business evolves
- Train users on which categories to use for common purchases
2. Keep categories consistent
- Establish guidelines for category selection
- Document which categories to use for ambiguous items
- Ensure all users follow the same categorisation logic
3. Use categories for analytics
- Run reports by category to identify trends
- Compare category spending across sites or departments
- Set category-level budgets and alerts
4. Don’t over-customise
- Start with the pre-configured categories
- Only add custom categories when truly necessary
- Too many categories can make reporting more complex
5. Align with your team
- Involve both operations and finance in category reviews
- Ensure category names make sense to end users
- Balance detail with simplicity
Common use cases
Scenario 1: IT spending analysis
Challenge: You know your IT costs are high, but where exactly is the money going?
Solution: Review all purchases mapped to GL 463 (IT Software and Consumables), then drill down by category:
- Cloud software subscriptions
- Hardware peripherals
- Software licenses
- IT support services
- Cybersecurity tools
Result: Discover that cloud subscriptions have grown 40% year-over-year, prompting a review of unused licenses.
Scenario 2: Multi-site comparison
Challenge: Compare spending efficiency across multiple locations.
Solution: Run category reports filtered by site:
- See which locations spend more on cleaning
- Identify sites with higher utility costs
- Compare travel expenses across regions
Result: Identify best practices from efficient sites and apply them to others.
Scenario 3: Supplier consolidation
Challenge: Too many suppliers for similar items driving up costs.
Solution: Review supplier spending by category:
- List all suppliers providing “Office Supplies”
- Compare pricing and terms
- Identify consolidation opportunities
Result: Reduce from 8 office supply vendors to 2, achieving better pricing through volume.
Reporting benefits
With proper category management, you can generate reports that show:
- Spending by category (not just GL code)
- Category trends over time
- Supplier performance by category
- Budget vs. actual by category
- Category spending by site, department or user
- Year-over-year category comparisons
All while maintaining perfect alignment with your accounting system’s GL structure.