Contract leakage
Contract leakage is the value a company loses when what it pays or bills does not match what its contracts say.
Leakage happens on both sides of a contract. Buyers overpay or miss credits and discounts they negotiated, and suppliers underbill by missing escalations, usage, or fees they are entitled to charge.
Worked example
A company has a $500,000 annual services contract with a 3% cap on annual uplifts and service credits for missed targets. The vendor applied a 6% uplift, and $9,000 of credits were never claimed.
Uplift above the cap: $500,000 × (6% − 3%) = $15,000
Unclaimed service credits: $9,000
Total leakage: $15,000 + $9,000 = $24,000, or 4.8% of the contract
The company lost $24,000 of value it had already negotiated.
Illustrative example with sample figures.
How it shows up in finance and procurement
Leakage rarely appears as a line in the accounts. Finance sees it as costs running slightly high or revenue slightly low, and procurement sees negotiated savings that never reach the bottom line.
Where AllCaps fits
AllCaps finds contract leakage by checking invoices you pay and invoices you send against their governing contracts. Hidden fee detection