Maverick spending represents a significant challenge to organizational efficiency and cost control. This expenditure occurs when employees make unauthorized purchases of goods or services, bypassing established corporate procurement channels. Although the purchases may be legitimate business needs, the unauthorized acquisition method undermines financial strategies. Addressing this issue is important for businesses aiming to maximize savings, maintain vendor relationships, and ensure compliance across the organization.
Defining Maverick Spending
Maverick spending involves any transaction that does not adhere to a company’s predefined spending policies and supplier agreements. This typically involves non-procurement staff making purchases without using approved systems, purchase orders, or obtaining necessary authorization. The purchase is made outside the formal process, often utilizing company credit cards or submitting non-compliant invoices for reimbursement.
Understanding the distinction between maverick spending and related terms like “tail spend” is helpful. Tail spend generally refers to the large volume of low-value, infrequent purchases that make up a small portion of total organizational expenditure. Maverick spending is specifically defined by the non-adherence to policy, meaning a purchase only becomes maverick spending if it skips the approved procedural steps. The intent is rarely malicious, as employees are usually focused on fulfilling a specific need, but the purchasing method is unauthorized.
Common Causes of Maverick Spending
A primary cause of maverick spending is an employee’s lack of knowledge regarding established procurement policies and preferred supplier lists. When training is insufficient or policies are not clearly communicated, employees often revert to the most convenient purchasing method, unaware they are violating compliance standards. This issue is compounded when organizations fail to communicate the specifics of existing contracts, including available discounts and approved vendors.
Another factor is the complexity and friction within the formal procurement process itself. If the Procure-to-Pay workflow is slow, involves too many steps, or utilizes cumbersome legacy software, employees seek faster, simpler external solutions to meet urgent needs. This convenience often overrides adherence to policy, especially when the need is immediate and cannot wait for a multi-day approval process. Furthermore, if preferred vendors do not adequately meet a user’s specific requirements, employees are driven to look elsewhere.
The Hidden Costs and Risks
Maverick spending directly impacts financial health by eroding cost savings secured through strategic sourcing and negotiation. When purchases are fragmented and made outside of contract, the company loses the ability to realize pre-negotiated volume discounts, resulting in higher spot prices. Procurement analysts estimate that companies can lose anywhere from 5% to 20% of their potential savings due to this non-compliant behavior.
Beyond the immediate financial loss, maverick spending introduces significant administrative and organizational risks. Finance teams face increased administrative costs processing non-standard invoices and reconciling purchases that lack proper documentation. Organizations also expose themselves to compliance and legal risks by purchasing from non-vetted suppliers who may not meet required regulatory or security standards. The fragmented spending pattern weakens the company’s negotiating leverage with preferred suppliers by failing to meet committed volume targets.
Identifying and Measuring Maverick Spending
Organizations must quantify the extent of unauthorized purchasing to understand its true impact. The standard approach involves calculating the percentage of total organizational spend that occurs outside of established purchase order (PO) systems or approved vendor contracts. This metric provides a clear picture of the control gap within the procurement function.
Spend analysis software plays a role by consolidating and categorizing all expenditure data from various sources. Analysts review accounts payable data for frequent, small invoices that lack an associated PO, and purchases made using company credit cards (P-Cards) outside of pre-set limits. Tracking these patterns helps pinpoint specific departments, product categories, or individual employees driving non-compliant behavior.
Strategies for Controlling Maverick Spending
Controlling unauthorized purchasing requires a multi-faceted approach balancing policy enforcement with user-friendly process improvement. One effective strategy is implementing centralized e-procurement systems that make compliance easier than non-compliance. These guided buying platforms funnel users toward approved catalogs and suppliers, automating adherence to policy.
Mandating clear, simple purchasing policies and providing continuous employee education are necessary components of a control strategy. Training sessions should outline the proper workflow and explain the financial and risk implications of bypassing procedures. Organizations should also consolidate their vendor base and clearly communicate preferred supplier lists across all business units. Ensuring preferred vendors adequately meet users’ needs reduces the incentive to look elsewhere. Finally, implementing clear approval workflows and internal auditing procedures, such as a “no purchase order, no pay” policy, establishes monitoring and enforcement mechanisms.