In the world of procurement, the term ‘Maverick Spend’ refers to the expenditure that occurs outside of, and in violation of, the established procurement policies of a company. This form of spending, often undertaken by employees who bypass the rules for procurement, can lead to a variety of issues, including increased costs, lack of visibility into spending, and potential non-compliance with regulations.

For small companies without dedicated procurement departments, managing and controlling maverick spend can be a significant challenge. This article aims to provide a comprehensive understanding of the term ‘Maverick Spend’, its implications, and strategies to manage it effectively.

Understanding Maverick Spend

Maverick Spend, also known as rogue or uncontrolled spend, is a term used in procurement to describe spending that happens outside of established procurement policies and procedures. This can occur when employees make purchases without following the approved purchasing process, or when they buy from suppliers that are not on the approved supplier list.

While on the surface, these purchases may seem harmless or even efficient, they can lead to a host of problems. Maverick Spend can result in higher costs, as purchases made outside of negotiated contracts often do not benefit from volume discounts or preferred pricing. It can also lead to a lack of visibility into company spending, making budgeting and financial planning more difficult.

Causes of Maverick Spend

There are several reasons why Maverick Spend occurs. One of the most common is a lack of awareness or understanding of procurement policies. Employees may not be aware of the correct procedures to follow when making a purchase, or they may not understand the importance of these procedures.

Another common cause of Maverick Spend is convenience. If the procurement process is seen as cumbersome or time-consuming, employees may choose to bypass it in favor of a quicker, easier route. This is particularly common in small companies without dedicated procurement departments, where employees may be juggling multiple roles and responsibilities.

Implications of Maverick Spend

The implications of Maverick Spend can be far-reaching. From a financial perspective, it can lead to increased costs, as purchases made outside of negotiated contracts often do not benefit from volume discounts or preferred pricing. This can have a significant impact on a company’s bottom line, particularly for small businesses where every penny counts.

From a compliance perspective, Maverick Spend can lead to potential non-compliance with regulations. This is because purchases made outside of the approved process may not meet the necessary regulatory requirements, putting the company at risk of fines or penalties.

Managing Maverick Spend

Managing Maverick Spend effectively requires a combination of education, process improvement, and technology. By educating employees about the importance of following procurement policies, improving the procurement process to make it more user-friendly, and implementing technology solutions to track and control spending, companies can significantly reduce the occurrence of Maverick Spend.

It’s important to note that managing Maverick Spend is not about eliminating all non-compliant spending. Rather, it’s about creating a culture of responsible spending where employees understand the importance of following procurement policies and procedures.

Education and Training

One of the most effective ways to manage Maverick Spend is through education and training. By educating employees about the importance of following procurement policies and procedures, companies can significantly reduce the occurrence of Maverick Spend.

Training should be tailored to the specific needs of the company and should cover topics such as the importance of procurement policies, the implications of Maverick Spend, and the correct procedures to follow when making a purchase. It should also include practical examples and scenarios to help employees understand how to apply the policies in real-world situations.

Process Improvement

Another key strategy for managing Maverick Spend is process improvement. If the procurement process is seen as cumbersome or time-consuming, employees are more likely to bypass it in favor of a quicker, easier route. By improving the procurement process to make it more user-friendly, companies can encourage compliance and reduce the occurrence of Maverick Spend.

Process improvement might involve simplifying the purchasing process, reducing the amount of paperwork required, or implementing a more streamlined approval process. The goal is to make the procurement process as easy and efficient as possible, without compromising on control or compliance.

Technology Solutions

Technology can play a crucial role in managing Maverick Spend. By implementing technology solutions to track and control spending, companies can gain greater visibility into their spending, identify areas of non-compliance, and take corrective action.

There are a variety of technology solutions available, from procurement software that automates the purchasing process, to expense management systems that track and categorize spending. The key is to choose a solution that fits the needs of the company and supports its procurement policies and procedures.

Conclusion

Maverick Spend is a common challenge for many companies, particularly small businesses without dedicated procurement departments. However, with the right strategies and tools, it is a challenge that can be effectively managed.

By understanding the causes and implications of Maverick Spend, and implementing strategies to manage it, companies can reduce costs, improve compliance, and create a culture of responsible spending. The key is to educate employees, improve processes, and leverage technology to track and control spending.