When a business is small, informal works. Someone needs a new tool, they ask the founder, the founder says yes, and it’s done. But as the headcount grows and the number of software subscriptions, suppliers and service contracts stacks up, that same informality starts to cost money and create risk.
Most growing businesses hit a point where procurement quietly becomes a problem. Tools get signed up for without finance knowing. Suppliers get onboarded without legal or IT reviewing the contract. Duplicate subscriptions sit quietly on the company card for months.
What “Informal” Actually Looks Like in Practice
Informal vendor processes don’t always look chaotic. Often they’re just gaps. A sales manager signs up for a prospecting tool on a company card. A developer brings in a new SaaS product to solve a specific problem. A team lead agrees terms with a supplier over email, then files the contract in their own inbox.
Each of these decisions might be entirely reasonable on its own. The problem is that no one has a complete picture. Finance can’t reconcile expenses they don’t know about. IT can’t assess tools that bypass their review. Legal can’t flag contract risks they’ve never seen. Without a shared process, every department ends up operating with partial information.
The Risks That Build Up Over Time
The risks here aren’t abstract. Businesses that don’t manage vendor requests properly tend to end up with a few specific problems:
Duplicate tools doing the same job, each with their own licence costs
Shadow IT, where unapproved software sits outside any security or compliance review
Missed renewal windows, where contracts auto-renew before anyone realises
Compliance exposure, particularly where vendors handle sensitive data and no due diligence was ever done
The longer these go unaddressed, the harder they are to untangle. A business with 200 employees and no vendor process can easily end up with dozens of active SaaS subscriptions that no one has a full list of.
What a Formal Process Actually Requires
This doesn’t have to be complicated. The core of any vendor request process is a clear intake point. When an employee wants to bring in a new tool or supplier, they submit a request. That request goes to the right people, finance, IT, legal, or procurement, depending on what’s needed. A decision gets made, documented, and stored somewhere central.
The key is consistency. It’s not about slowing things down or adding bureaucracy for its own sake. A well-designed intake process can be faster than the informal route, because everyone knows what’s needed and the right people are involved from the start instead of being looped in after the fact.
Platforms built to help businesses manage vendor requests typically combine intake forms, approval workflows, and a centralised vendor directory so that every new supplier goes through a consistent process before being onboarded.
Where Structure Pays Off
The most immediate benefit is visibility. When all vendor requests go through a single process, finance can see what’s being spent and where. IT can maintain an accurate picture of what software is in use. Procurement can compare vendors, benchmark pricing and negotiate better terms.
There’s also a compounding benefit as the business grows. A company of 50 people can get away with an informal approach for a while. At 150, the same approach creates serious blind spots. Building the process early means you’re not trying to retrofit structure onto an already complicated spend base.
It’s worth noting that formalising requests also makes it easier to say yes. When employees know there’s a clear, quick route to getting new tools approved, they’re less likely to go around the process. The process becomes something that supports the business instead of something people try to avoid.
Closing Remarks
Scaling businesses often focus on sales, hiring and product. Procurement process tends to get left until something goes wrong. But a vendor request process is one of the few operational fixes that pays off quickly, reduces risk and gets easier to maintain the earlier you put it in place.
If your current approach is a mix of Slack messages, email chains and company card statements, it’s worth asking what you’re missing. The answer is usually more than you’d expect.