What is level 2 and 3 data?

Decoding Level 2 and Level 3 Data: Unlocking Deeper Insights into Business Spending

For businesses, governments, and other organizations, simply knowing what was purchased isn't enough. Effective spending management requires a granular understanding of why and how purchases are made. This is where Level 2 and Level 3 data come into play, offering a wealth of information beyond the basic transaction details captured in Level 1 data. While a standard transaction might tell you that $100 was spent at a hardware store, Level 2 and 3 data can tell you which department made the purchase, what specific items were bought, and even which project the purchase was for.

Level 2 Data: Enhancing Transaction Detail

Level 2 data adds a layer of context to transactions, primarily focusing on the purchasing organization. Think of it as the "who" and "why" behind the purchase. Typically, Level 2 data includes:

• Purchase Order (PO) Number: Links the transaction to a specific purchase order within the organization's system.
• Tax Amount and Type: Provides a breakdown of applicable taxes, aiding in accurate tax reporting.
• Customer Code: Identifies the specific department or cost center within the organization making the purchase.
• Merchant Tax ID: Confirms the merchant's tax identification number.

By capturing this information, Level 2 data allows organizations to streamline reconciliation, improve budgeting accuracy, and gain better control over spending. It also helps prevent fraud by providing more points of verification.

Level 3 Data: Granular Item Detail

Level 3 data takes transaction detail to the next level, providing item-specific information. This is the "what" of the purchase, breaking down the transaction into individual line items. Typical Level 3 data points include:

• Item Description: Provides a detailed description of each item purchased.
• Quantity: Specifies the number of units of each item.
• Unit Price: Indicates the price of each individual item.
• Unit of Measure: Defines the unit of measurement for each item (e.g., each, box, case).
• Commodity Codes: Uses standardized codes to categorize the purchased items, facilitating spend analysis and reporting.
• Shipping Information: May include details like shipping cost and destination.

Level 3 data is particularly valuable for organizations looking to analyze spending patterns, negotiate better pricing with suppliers based on volume, and optimize inventory management. It provides the granular insights needed to identify cost-saving opportunities and improve procurement processes.

Benefits of Leveraging Level 2 and 3 Data:

• Improved Spend Visibility: Gain a comprehensive understanding of where and how money is being spent.
• Enhanced Reconciliation: Streamline the reconciliation process and reduce manual effort.
• Increased Efficiency: Automate data entry and reporting, freeing up valuable time.
• Better Cost Control: Identify cost-saving opportunities and negotiate favorable pricing with suppliers.
• Reduced Fraud Risk: Enhance security and prevent fraudulent transactions through increased data points.
• Simplified Tax Reporting: Facilitate accurate and efficient tax reporting.

Unlocking the Potential:

While capturing Level 2 and 3 data requires some initial setup and coordination with your payment processor, the benefits far outweigh the effort. By leveraging the rich insights provided by these enhanced data sets, organizations can gain a competitive edge, improve financial management, and drive operational efficiency.