Understanding the Core Entities of the Spend Cube

Entities Overview

Every transaction contains several core entities that provide structure for analysis, reporting, compliance, and insight generation. These entities describe the fundamental questions of spend: who, what, where, when, why, and how.

Jump to a Section

• Supplier — Where the money was spent
• Line Item — What was purchased
• Allocation — How the purchase was funded or charged
• Buyer — Who initiated the purchase
• Date — When the transaction occurred
• Location — Where geographically
• Purpose — Why the purchase occurred

Each of these is complex and nuanced, and each supports different types of analysis.

Supplier

Also known as a vendor, merchant, or payee, the supplier is the person or organization that provided the goods or services you purchased.

What Supplier Represents

The supplier tells you where the money was spent and plays a central role in spend analysis, vendor management, and fraud detection.

• McDonald’s
• Amazon Web Services
• Office Depot
• Local contractor or freelancer

Supplier Normalization / Supplier Merging

Raw transaction data often includes variations of the same supplier:

• “McDonald’s #578”
• “McDonalds – Ogden UT”
• “MCDONALDS 00312”

These may represent different locations but belong to the same parent company. Supplier normalization maps each child to its parent (e.g., “McDonald’s Corporation”), enabling:

• Total spend across the entire organization
• Detailed analysis at individual locations

This supports reporting, budgeting, negotiations, and compliance efforts.

Line Item

A line item describes what you actually purchased. It also determines how the expense is categorized, analyzed, budgeted, and audited.

Line Item Components

• Item Description — A raw or human-readable description such as “Laptop docking station” or “Consulting hours.”
• Spend Category — A broader taxonomy classification, such as:
  • Office Supplies
  • Software
  • Consulting Services
  • IT Equipment
  • Facilities
• Commodity Code / UNSPSC Code — Standardized classification used across vendors.
• Expense Type — Internal accounting structures such as:
  • Office Supplies
  • Software Subscription
  • Travel – Lodging
  • Travel – Meals
  • Professional Services

Allocation

Allocation describes how the purchase was paid for and identifies the budget, account, or business unit responsible.

Simple Allocations (Small Businesses)

• Checking account
• Credit card
• Petty cash

Complex Allocations (Larger Organizations)

• Business Units / Cost Centers
  • Human Resources
  • Marketing
  • Engineering
  • IT
  • Operations
• Account Codes — Numeric accounting identifiers such as “123 – Training Expenses.”

Multi-Dimensional Allocations

Allocations may combine multiple dimensions: Checking account → Marketing → Account code 123

• Total department spend
• Spend by account code
• Spend by funding source
• Cross-functional breakdowns (e.g., Engineering expenses paid via credit card)

Buyer

The buyer is the person who made or initiated the purchase—not necessarily the person who received or used the item.

Why Buyer Matters

• Who authorized the purchase?
• Who initiated the spend?
• How do spending patterns differ across individuals?

For example, a vice president may purchase supplies for a project, while the engineering team uses them.

Approval Processes and Organizational Differences

• Larger organizations often use formal workflows:
  • Requisitions
  • Purchase orders (POs)
  • Manager or finance approvals
  • Multi-stage authorization processes
  • Procurement systems
• Smaller organizations may allow authorized staff to buy what is needed with little or no formal process.

Buyer data supports responsibility tracking, policy compliance, behavioral analysis, and anomaly detection.

Date

The transaction date is when the purchase occurred. The posting date is when the bank records it. These may differ due to processing delays.

Ways to Break Down Dates

• Year
• Quarter
• Month
• Week
• Day
• Fiscal periods
• Custom windows (e.g., last 30 days)

Common Comparisons

• MoM — Month over Month
• YoY — Year over Year
• QoQ — Quarter over Quarter
• WoW — Week over Week

Location

Location seems simple but can quickly become complicated—especially for online purchases or suppliers with multiple sites.

Ambiguity in Location

• Store where the purchase occurred
• Corporate headquarters
• Website server location
• Departure or arrival airport

Geocoding

Geocoding converts an address into geographic coordinates such as latitude and longitude:

1600 Pennsylvania Ave NW, Washington, DC → (38.8977, -77.0365)

• Mapping purchases
• Regional grouping
• Distance calculations
• Geographic trend analysis

Latitude and Longitude

• Latitude – north–south position
• Longitude – east–west position

Zoning

• Commercial
• Residential
• Industrial
• Mixed use

Multiple Addresses

Businesses may have:

• Headquarters
• Billing address
• Fulfillment center
• Retail locations
• Registered legal address

Use the address that matches your analytical question.

Purpose

Purpose answers a critical question: Why was this product or service purchased?

Multiple Valid Purposes

• Eating food
• Employee event supplies
• Improving team morale
• Supporting a team-building activity
• Reducing cleanup work

The Challenge of Capturing Purpose

• Employees write short or vague explanations
• Descriptions are inconsistent
• Freeform text is hard to group or analyze
• Different departments describe identical purchases differently

Purpose and Strategic Alignment

Purpose becomes powerful when tied to organizational goals. It helps answer:

• Which goals does this support?
• Is this spend aligned with strategy?
• Does the purchase help drive growth, compliance, or innovation?

Clear purpose data strengthens budgeting, accountability, and decision-making.