What Is Maverick Spending and How Can Procurement Teams Eliminate It?

Key Takeaways

• Maverick spending occurs when employees buy goods and services outside approved suppliers, contracts or procurement processes. 

• Repeated maverick spending can indicate gaps in the purchasing process, supplier visibility or user experience.

• Procurement teams can reduce it by making compliant purchasing easier, more visible and appropriately controlled.

• Spend patterns and policy exceptions can help Procurement identify where the purchasing process needs improvement.

Quick Answer

Maverick spending refers to any purchase made outside of an organisation’s authorised procurement processes, contracts or suppliers. It happens when employees feel the need to circumvent procurement due to a lengthy approval process, difficulty in locating approved suppliers or in case of an urgent purchase.

Maverick spending can silently erode procurement savings, supplier agreements and spend visibility. However, repeat maverick spending is not necessarily an indication of poor compliance. If employees continue to go around procurement, procurement should look into why the approved route may not by the easiest to follow.

The secret is to add process friction to the buying controls. Procurement teams need to understand where maverick spending is coming from, the financial impact to the organisation and how to make compliant purchasing easier.

What Is Maverick Spending?

An employee buys software directly from a vendor without a request to purchase. A department purchases office supplies from a local vendor instead of a preferred supplier. A service is acquired by a team without the corresponding PO.

These might be legitimate business purchases. The problem, however, is that it happens outside the organisation’s existing procurement process. When the purchase also falls outside an existing supplier agreement or contract, it becomes off-contract spending. 

So, procurement is unable to aggregate demand, leverage negotiated contracts and maintain visibility into the organisation’s total spend. Thus, maverick spending is a spend control issue as well as a process issue.

Maverick Spending vs Rogue Spending

Sometimes maverick spending and rogue spending are used interchangeably, but the underlying behavior can be different. For the current context, the difference is based on the reason behind the purchase.

The distinction matters because the response must be proportional to the cause. Tightening the policies will not help if employees bypass procurement because it is hard to find approved vendors. If they are deliberately circumventing controls where a simple purchasing route exists, then it may be necessary to introduce more stringent controls.

Common Examples of Maverick Spending

Common examples include:

• Buying software directly instead of using the authorised procurement process

• Purchasing from a non-preferred vendor

• Ordering goods without the required PO

• Buying products outside negotiated contract rates

• Renewing subscriptions without reviewing existing contracts or making urgent purchases outside the normal approval process

One transaction doesn’t indicate a problem. Repeated instances are what to watch out for. Making multiple purchases outside of established contracts may cause the organisation to lose sight of its overall demand if more than one department is involved. This may impact future negotiations, supplier consolidation and pricing.

How Does Maverick Spending Happen?

There are usually many reasons for maverick spending. Procurement should view these as indicators of areas where the purchasing process needs to be improved.

• Employees Ignore Policies

If employees are habitually going straight to suppliers, procurement should examine the purchasing journey. Can employees choose the right supplier? Can they see the status of the request? Are they able to make low-value purchases without additional procedures? If not, the process itself might be encouraging bypassing.

• Approved Supplier Visibility Is Poor

Having a list of approved suppliers is not enough. Employees should not have to search across multiple systems or contact different teams to figure out where they are allowed to buy. If employees cannot easily identify which supplier to use, they might fall back on prior experience or do their own searches. This friction can be removed by making preferred suppliers easy to identify at the point of purchase.

• Procurement Processes Are Too Complex

Compliant purchasing can seem like a huge challenge with all the forms, manual approvals and vague processes. This is especially true for low-value, repeat purchases. Employees are encouraged to seek alternative approaches if the formal process requires a substantial amount of effort. 

• User Experience Is Poor

While process complexity refers to the number of steps involved, user experience is about how easy those steps are to navigate. Employees should be able to find the items they need, request them and understand what happens next. Another reason to avoid the process is a lack of visibility into approvals.

• Purchases Are Urgent

Weak procurement workflows are often exposed when the standard process cannot meet an urgent requirement. In these cases, employees would rather use a recognised supplier and then resolve the compliance issue later. A controlled exception route may be a better solution. 

• Buying Is Decentralised

When purchasing decisions are spread across departments, supplier relationships can become fragmented and enterprise-wide spend becomes harder to see. The organisation, as a whole, has enough demand to negotiate better terms, but individual departments may make small purchases. This requires a review of the overall process. 

• Spend Visibility Is Limited

Procurement can’t manage what it can’t see. When buying is spread across suppliers, departments and channels, it’s more difficult to see price variances, duplicate suppliers and recurring off-contract purchases.

• Policy Enforcement Is Weak

Policies require supporting controls. If an employee can make a purchase without proper authorisation or a PO, an organisation is heavily relying on its employees to enforce its policy. The answer is not to remove controls, but to combine clear policies with good processes, visibility and proportionate controls.

Why Is Maverick Spending a Problem?

Maverick spending has broader impacts than procurement compliance. It could make it more difficult to track and reconcile spending, fragment the supplier base and raise costs. The main consequences include:

• Lost Negotiated Savings

The price difference on a single transaction does not always represent the greatest costs. A single procurement team that manages the combined requirement has more negotiating power than five departments that each buy from the same category on their own.

• Higher Purchase Prices

Off-contract purchases may result in employees paying different rates than the negotiated prices. This also makes it difficult to know whether the organisation is getting full value from its existing contracts.

• Compliance Risks

Purchases made outside the scope of approved processes may bypass required approvals, supplier checks or documentation. This can create risks around financial controls, contracts and internal policies.

• Supplier Fragmentation

Maverick spending can lead to more vendors than necessary for the same category. A fragmented supplier base requires more management and can make it more difficult to develop strategic relationships.

• Poor Spend Visibility

Procurement’s expected spend data may not include off-contract transactions, making it harder to see how much money the organisation spends, where it spends it and who gets the money.

• Reconciliation is Difficult

When buying without POs or supporting documentation, finance may need to investigate transactions manually before invoices can be reconciled and processed for payment. This can add delays to invoice processing and settlement.

Identifying Maverick Spending

It’s not just about finding transactions without POs. Procurement teams should analyse spend patterns across suppliers, categories, departments and locations. Look for:

• Acquisitions without POs

• Procurement from non-preferred vendors

• Invoices that cannot be matched to approved purchase orders

• Non-contract purchases

• Recurring policy exceptions

• Departments with abnormally high off-contract spend

• Fragmented supplier bases within the same category

• Frequent emergency purchases outside the standard process

These patterns can also be indicative of the underlying problem. Where there is a large amount of off-contract spend in one category, it may indicate that the current contract is not fit for business needs. Low preferred supplier utilisation can indicate a lack of supplier visibility or the presence of unsuitable suppliers. If you see a high rate of exceptions, the standard workflow might be set too restrictively.

How Can Procurement Teams Reduce Maverick Spending?

The goal is to make compliant purchasing easier, more visible and appropriately controlled. maverick spending is about structuring and streamlining. These 10 steps can help. 

1. Simplify Procurement Processes

Cut out unnecessary steps in the buying process. Employees should be able to place requests and understand approval requirements without having to be a procurement expert.

2. Create Preferred Supplier and Catalogue Systems

Let employees have clear access to approved suppliers and products. Catalogues should ideally show approved products, suppliers and pricing at the time of purchase. 

3. Establish Clear Purchasing Policies

Policies should define:

• What purchases require approval

• When a purchase request is submitted 

• Which suppliers employees may use 

• When exceptions are allowed and the correct course of action 

• Who has the power to approve different categories/values

Policies should work alongside systems and workflows that make the required process easy to follow.

4. Digitise Requisition and Approval Workflows

Digital workflows can help funnel requests to the appropriate approvers and provide visibility into their status. They can also improve PO compliance by ensuring purchases follow defined approval routes before a PO is issued. Apply configurable approval rules on the system to align with different requirements for different departments. 

5. Combine Finance and Procurement

By linking purchase requests, POs, receipts, invoices and payments, it is easier to trace the origin of spending and find the exceptions. This creates greater visibility across the purchasing-to-payment process.

6. Give Teams Controlled Purchasing Options

Workflows for urgent or exceptional requirements should be subject to appropriate controls. This provides room for employee discretion without creating an uncontrolled purchasing channel.

7. Monitor Spend in Real Time

Timely visibility allows Procurement to identify policy exceptions, supplier concentration and unusual purchases before they become recurring problems.

8. Leverage Analytical Tools to Detect Patterns

Analytics can identify where maverick spend is concentrated and reveal patterns across departments, categories or suppliers. Procurement might look at the buying journey of a department that consistently spends large amounts off contract. The solution may not be stricter enforcement but a better supplier, catalogue or workflow.

9. Track Policy Exceptions

Maintain a record of the count, department, category and reason for exceptions. This helps identify recurring process gaps that analytics alone may not explain. Repeated exceptions might require you to redesign the process.

10. Assess Supplier and Category Spend

Regular reviews can help spot fragmented suppliers and categories with high off-contract spend. They can also reveal opportunities to consolidate suppliers or renegotiate category-level requirements. The objective is to find out why employees do not use the procurement process and to take away any unnecessary obstacles hindering compliant buying.

KPIs to Monitor Maverick Spending

Where possible, measure the following key performance indicators by supplier, location, category and department to identify where the underlying procurement process may be breaking down:

Conclusion

Maverick spending doesn’t always happen because employees are ignoring procurement policies. Procurement has to know whether friction is coming from the process causing employees to consistently buy items outside of approved channels. Simplifying the search for approved suppliers, driving purchases through defined workflows and linking procurement and finance can facilitate compliant buying. It will also improve visibility and control from purchase request to payment.

Zaggle’s Procure-to-Pay platform provides this connected approach, helping enterprises centralise supplier information, route purchases through approved workflows and improve PO compliance. It also provides visibility across the P2P process. Zaggle has helped brands like Subway, SHRM East and Blinkit to gain operational efficiency, visibility and control.

Zaggle's platform also has helped enterprises cut down procurement-related transaction errors by more than 50%. Book a demo today to see how Zaggle can help you simplify compliant purchasing, gain visibility into your spend and strengthen control from requisition to payment.

Frequently Asked Questions

What is maverick spending?

Maverick spending refers to purchases made outside approved procurement processes, contracts or suppliers. Examples include buying from unapproved suppliers, purchasing without a PO and making off-contract purchases.

How can companies reduce maverick spending?

Companies can reduce maverick spend by simplifying purchasing, improving supplier visibility, digitising approvals and using spend data to identify recurring exceptions.

Why does maverick spending happen?

Maverick spending can occur when procurement processes are complex, approved suppliers are difficult to find, approvals are slow, purchasing is decentralised or employees need to make urgent purchases.

How to identify maverick spending?

Review purchase and invoice data across suppliers, categories, departments and locations to identify non-contract transactions, non-PO spend, non-preferred suppliers, recurring exceptions and fragmented supplier bases. 

What are the Key Performance Indicators (KPIs) that procurement teams should be tracking?

Primary KPIs include off-contract spend, PO compliance, preferred supplier utilisation, contract utilisation, spend under management and exception rate.

Can technology help reduce maverick spending?

Yes. Procurement technology can help make approved suppliers easier to access, route purchase requests through defined workflows, improve PO compliance and connect procurement activity to finance.