Procurement Under Pressure: How New FDs Lose Millions in Year One
Step into a new finance director role and the clock starts ticking. The board wants savings. The CEO wants clarity. Procurement wants direction. Meanwhile, dozens of contracts—from energy to logistics to insurance – land on your desk, each with renewal traps and supplier spin. Energy alone can drain seven figures if mishandled. This page is a playbook for avoiding the rookie mistakes that make new FDs leak millions before they’ve even settled into the chair.
The Pressure Cooker Environment
Most new FDs walk into chaos: scattered sites, multiple suppliers, legacy contracts signed without governance, and renewal dates buried in inboxes. Procurement feels tactical, not strategic. You don’t yet know the players or the pitfalls. Suppliers sense it. They’ve seen this movie before, and they know exactly how to profit from the confusion.
The brutal reality: suppliers will test you before your second board meeting. They’ll exploit your learning curve, bury you in data, and win rollover contracts before you’ve even got the full picture. By the time you realize, the damage is locked in for years.
The Top 5 Mistakes New FDs Make in Energy Procurement
- Delegating blindly: Trusting legacy procurement staff or site managers without verifying supplier relationships or hidden commissions.
- Missing renewal windows: Rolling over at punitive terms because you didn’t know a contract expired in 30 days.
- Chasing headline rates: Ignoring non-commodity charges that make up 40–60% of the bill.
- Accepting supplier complexity: Believing energy markets are too complex to challenge, and signing “fixed” deals that are anything but fixed.
- No benchmark data: Making six-figure commitments with zero visibility into whether the rate is market-competitive.
These mistakes aren’t minor. They’re multimillion-dollar holes in your first-year P&L – and they shape the board’s perception of you as either a cost leader or a liability.
Case Examples: How New FDs Lost Control
Case 1: The rollover trap. A new FD at a mid-market distributor inherited 20 electricity contracts. Nobody flagged three sites expiring in Q1. The supplier rolled them over at 20% above market. Over three years, the FD’s inattention cost $1.2M – and his credibility with the board.
Case 2: The “fixed” deal illusion. A finance director signed what was sold as a “fixed” gas contract. Twelve months later, transmission charges doubled, and the supplier passed them through. Annual overrun: $600k. The FD had no recourse, only embarrassment.
Case 3: The lost benchmark. A regional FD compared supplier quotes but never benchmarked them against market indices. He chose the “cheapest.” Six months later, an independent audit showed he’d overpaid by 14%. Leakage: $380k – money the CFO asked him to explain in front of the board.
Why These Mistakes Happen
They don’t happen because FDs are incompetent. They happen because the system is designed to trip you up:
- Suppliers bury clauses in 20-page contracts.
- Procurement staff are often incentivized to maintain relationships, not challenge them.
- Energy markets move daily, while board packs report quarterly – lagging reality.
- Multiple sites mean multiple silos, each with its own renewal calendar.
- Leadership teams underestimate energy’s financial weight compared to other risks.
The result? You enter the job with a stacked deck against you. Unless you reset the game, you’ll be another FD suppliers celebrate for three years straight.
The Counterplay: How to Take Control Fast
You don’t have to master the energy market in your first year. You do need a framework that blocks the obvious traps and gets you into control. That framework looks like this:
- Audit day one: Demand a full list of contracts, renewal dates, rates, and clauses. If procurement can’t deliver, you’ve already found your first red flag.
- Centralize renewals: Consolidate expiries into fewer, bigger events. Suppliers hate it; that’s why it works.
- Independent benchmarks: Never sign without market context. Demand peer-comparative pricing, not supplier promises.
- Govern like debt: Treat energy commitments like bond maturities. Missing a renewal is as negligent as missing a loan payment.
- Leverage external experts: The cost of independent audit is negligible compared to leakage you’ll never recover.
Follow this process, and you’ll not only avoid losses, you’ll deliver wins the board didn’t expect in your first 12 months.
The Leadership Mindset: From Rookie to Risk Manager
The board doesn’t care if the market moved against you. They care whether you had governance to prevent avoidable losses. New FDs must reframe energy not as a back-office utility but as a financial risk on par with FX, debt, and tax exposure. The job is not to know every detail – it’s to ensure no detail is left unchecked.
That’s what separates FDs who survive year one from those who stumble. The survivors demonstrate control, governance, and foresight. The strugglers hand suppliers free rein and spend the next three years explaining margin erosion.
Get Control Before Suppliers Take It From You
If you’re new in role – or about to inherit multi-site procurement – don’t wait for the first rollover to prove the point. Get an independent benchmark today. The Energy Consultant will dissect your current contracts, map renewal risks, and give you a board-ready view of where you’re exposed. One call now can save millions over the next three years.