The 2025-2026 tax year presents a challenge for UK employers, with impending increases in employer National Insurance contributions (NICs) threatening to inflate operational costs. For many organisations, these increases could reduce profitability, strain budgets, or necessitate workforce adjustments. However, a thorough review of a company’s “Goods Not For Resale” (GNFR) procurement strategy offers a valuable opportunity to mitigate these impacts. By optimising GNFR spending, businesses can unlock savings and operational efficiencies, redirecting resources to absorb increased NIC costs.
Understanding GNFR Procurement
GNFR encompasses all goods and services an organisation procures that do not directly contribute to the production of saleable goods or services. Examples include facilities management, IT hardware and software, marketing, professional services, and utilities. While GNFR is often overlooked compared to core procurement, it can represent a substantial portion of an organisation’s operating expenditure.
Optimising GNFR procurement involves more than cost-cutting; it includes streamlining processes, renegotiating supplier contracts, leveraging economies of scale, and implementing technology to enhance transparency and control. These strategies enable organisations to unlock hidden savings while maintaining quality and service levels.
The Employer NIC Increase: A Looming Challenge
The projected rise in employer NICs in 2025-2026 will increase the financial burden on businesses. With NICs calculated as a percentage of employee earnings, organisations with larger workforces will feel the impact most acutely. This increase could also exacerbate recruitment and retention challenges, as employers may struggle to offer competitive compensation without significantly affecting profitability.
In this context, reviewing GNFR procurement strategies provides a proactive means of offsetting these additional costs. By achieving significant savings in non-core spending, organisations can shield themselves from the financial strain imposed by rising NICs.
Key Steps in Reviewing a GNFR Procurement Strategy
1. Conduct a Comprehensive Spend Analysis
The first step in optimising GNFR procurement is to understand current spending patterns. Conducting a detailed spend analysis helps organisations identify high-cost areas, fragmented supplier relationships, and opportunities for consolidation.
Data from accounts payable, procurement systems, and expense reports can be analysed to classify GNFR spending by category, supplier, and cost centre. This analysis reveals trends such as duplicated spend, excessive reliance on non-contracted suppliers, and inefficiencies in procurement processes.
2. Segment and Prioritise GNFR Categories
Once spending patterns are understood, GNFR categories should be segmented and prioritised based on their impact on the organisation’s overall budget. Categories such as facilities management, IT, and utilities often present significant cost-saving opportunities due to their high spend volume.
For each category, evaluate whether current suppliers and contracts align with organisational goals. For example, facilities management contracts may include unnecessary services, or IT suppliers may be offering outdated solutions at premium prices. Prioritising high-impact categories ensures that the review process delivers maximum financial benefit.
3. Supplier Rationalisation and Consolidation
Many organisations maintain relationships with an excessive number of suppliers, leading to fragmented spending and reduced bargaining power. Rationalising the supplier base can deliver immediate cost savings while streamlining procurement processes.
By consolidating spending with fewer, strategically chosen suppliers, organisations can negotiate better terms, including volume discounts and improved payment terms. Supplier rationalisation also fosters stronger partnerships, encouraging suppliers to invest in innovation and service improvements.
4. Renegotiate Contracts
Existing contracts may offer opportunities for renegotiation, particularly if the organisation has achieved significant growth or undergone structural changes since the contracts were signed. Engaging suppliers in constructive renegotiations can yield improved pricing, more favourable terms, and enhanced service levels.
For instance, organisations could negotiate fixed pricing agreements to protect against inflationary pressures, or introduce performance-based incentives to align supplier objectives with organisational goals.
5. Implement Procurement Technology
Modern procurement technologies, such as e-procurement platforms and spend management tools, enable organisations to enhance transparency, automate processes, and improve decision-making. These tools provide centralised visibility into GNFR spending, allowing procurement teams to monitor compliance, track savings, and identify further opportunities for optimisation.
E-procurement platforms also facilitate competitive tendering processes, ensuring that suppliers compete on price, quality, and service delivery. Additionally, spend analytics tools can continuously assess performance, enabling organisations to adapt strategies in real time.
6. Focus on Sustainable Procurement
Sustainability is an increasingly important consideration in GNFR procurement. Adopting sustainable procurement practices not only aligns with organisational values but can also unlock cost savings.
For example, investing in energy-efficient lighting and HVAC systems can reduce utility costs, while sourcing sustainable office supplies can lower long-term expenses. Additionally, organisations may benefit from tax incentives or government grants aimed at promoting sustainability, further offsetting NIC increases.
7. Engage Stakeholders Across the Organisation
Optimising GNFR procurement requires collaboration across departments, including finance, operations, and HR. Engaging stakeholders ensures that procurement strategies align with organisational priorities and gain the necessary buy-in for successful implementation.
Cross-functional teams can provide insights into category-specific requirements, identify pain points, and contribute to the development of tailored procurement strategies. This collaborative approach ensures that cost-saving initiatives do not compromise quality or service delivery.
Quantifying the Impact of GNFR Optimisation
A well-executed GNFR procurement strategy review can yield substantial financial benefits. Organisations often achieve savings of 10-20% in targeted categories, depending on the level of inefficiency and fragmentation in their existing processes.
For example:
- Facilities Management: Renegotiating contracts for cleaning, maintenance, and security services can yield significant savings while maintaining service levels.
- IT: Consolidating software licenses, transitioning to cloud-based solutions, and renegotiating hardware contracts can reduce costs and improve scalability.
- Utilities: Implementing energy efficiency measures and switching to competitive utility providers can lower operational costs.
By reinvesting these savings into the organisation, employers can offset the additional NIC costs without compromising workforce stability or service quality.
Challenges and Mitigation Strategies
While reviewing and optimising GNFR procurement offers substantial benefits, it is not without challenges. Potential obstacles include resistance to change, lack of visibility into spending, and limited procurement expertise.
To overcome these challenges:
- Invest in Change Management: Communicate the benefits of GNFR optimisation to stakeholders and provide training to ensure successful adoption.
- Leverage Technology: Use spend analysis tools to enhance visibility and identify opportunities for savings.
- Engage Procurement Experts: Consider partnering with external consultants to access specialised knowledge and accelerate the optimisation process.
In Conclusion
The impending employer NIC increases for the 2025-2026 tax year pose a significant challenge for UK businesses. However, a strategic review of GNFR procurement offers a powerful means of offsetting these additional costs. By optimising GNFR spending, organisations can achieve substantial savings, enhance operational efficiency, and maintain financial resilience.
Through spend analysis, supplier rationalisation, contract renegotiation, and the adoption of procurement technologies, businesses can unlock the hidden value in their non-core spending. This proactive approach ensures that employers remain competitive, even in the face of rising financial pressures, while continuing to invest in their workforce and future growth.
