How to Eliminate Maverick Spending in Procurement

How to Eliminate Maverick Spending in Procurement

It is important for businesses to control spending and eliminate maverick spending wherever possible.

Maverick spending can not only leave your business with less cashflow, but it can undermine previous work that created savings and budgetary advantages by the procurement team.

Maverick spending can cause a reduction in quality control if the goods or suppliers have not been properly vetted. Such activity can also cause a loss of trust with valued vendors and may even be breaches of contract. Such irresponsible spending risks non-compliance with regulations and can severely waste the time of accounting departments who must perform additional work in order to understand the spending and budgetary alterations.

The complete elimination of maverick spending should be a high priority for every procurement department, so here is some helpful advice to find the problem and solve it.


Conduct a Review of the Entire Procurement Process

A full review will allow you to identify maverick spend and determine why it is happening. A thorough review will provide visibility into the problem so you can solve the problems that are occurring. The issue might simply be that whoever is responsible for the maverick spending may not fully understand the correct protocols.

Likewise, if the procurement system in place is complicated to use then the complexity might be the problem. Conducting a full review will allow you to hold staff accountable for their expenses and ensure responsible managers are held accountable for their department spending.


Plug the Holes and Close the Gaps

A full review should highlight how and why the maverick spending is happening, which gives you the opportunity to implement the suitable solutions.

Potential solutions may include placing limitations on the use of the credit card used for purchasing, or P-card. You might also want to place limits on who can set up new vendors on the system itself, as well as conduct basic reviews of non-contract or outside supplier spending. 

Another common issue is one-off expenses, which do not seem so much on their own but can add up to a lot over time, especially with multiple departments. It is often a significant source of savings leakage. New regulations and protocols regarding who can spend and on what can usually solve this issue.


Benefits of Eliminating Maverick Spending

The process by which you eliminate maverick spending will simultaneously help you create efficient and easy-to-understand procurement processes.

Eliminating the maverick spend also encourages stakeholder buy-in, meaning all levels of the business are buying into the strategy as they know everybody is being held accountable.

Businesses that eliminate maverick spend also see a rise in general organisational accountability. This is once again because it is clear that everyone is being held responsible for their spending activity. By establishing and enforcing policies to tackle maverick spending, you will create more visibility and transparency in your operations.


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