The Business Impact of Maverick Buying

Corporate purchasing processes are often managed with clear objectives, defined procedures, and well-intentioned teams. However, amid the pressures of day-to-day operations, seemingly minor deviations can gradually turn into significant budgetary disorder. This situation, commonly referred to in the literature as “maverick buying,” is rarely the result of deliberate non-compliance. More often, it arises from the need for speed, gaps in processes, or difficulties in accessing the right suppliers.

In many organisations, the real challenge to spending discipline is not a lack of awareness of procurement rules, but how difficult those rules are to apply in practice. When alternative routes are faster, approval processes take too long, or contracted suppliers are hard to access, employees naturally start to find their own ways of getting work done. In such cases, the issue lies less with individual decisions and more with the design of the system itself.

In this article, Promena examines the underlying causes of maverick buying, where internal purchasing discipline begins to weaken, and explains how digital process design can help restore balance and control within fragmented procurement structures.

What is maverick buying and why does it occur?

Maverick buying, or maverick spending, refers to employees making purchases outside the organisation’s established procurement procedures and contracted supplier framework. However, this definition does not fully capture the nature of the issue, as such behaviour often arises from operational necessity rather than a conscious decision to bypass the rules.

The causes of uncontrolled spending within organisations can be summarised as follows:

▪ Lack of awareness or training: In many cases, employees are not fully aware of the company’s procurement processes or have not received sufficient training to follow them effectively.
▪ Deadline pressure: Employees may feel under pressure to complete purchases quickly. This can result in unsuitable choices being made or established procedures being overlooked.
▪ Poorly designed remuneration and reward models: When incentives and rewards are linked solely to financial outcomes, employees may be indirectly encouraged to take shortcuts or bypass procedures in order to achieve results.
▪ Process-related difficulties: If procurement processes are overly complex, time-consuming, or bureaucratic, employees may choose to avoid them to save time or reduce friction.
▪ Lack of oversight or monitoring: Where adequate controls to monitor purchasing and spending are not in place, the risk of unauthorised expenditure increases.

To address these issues, companies need to identify the primary drivers of unauthorised purchasing within their operations and take appropriate steps to prevent them.

What are the main problems caused by uncontrolled spending?

Operational risks

Uncontrolled spending can create a range of operational risks for organisations:

▪ Failures in internal control mechanisms
▪ Loss of efficiency
▪ Misuse of funds
▪ Compliance issues
▪ Financial losses
▪ Reputational damage

Increased cost of procurement processes

Purchases made outside the company’s standard processes and channels may result in higher-than-expected prices for products or services, or in the acquisition of items that are not actually needed. This can lead to higher average costs and inefficiencies across the company’s procurement processes.

When employees make purchases or incur expenditures outside established procedures, these transactions often take longer to complete. The resulting efficiency losses reduce productivity and increase the time required to finalise procurement activities, ultimately generating additional costs.

Another factor contributing to higher costs is the lack of supplier negotiation. When purchases are made outside standard processes, employees may not have access to previously agreed supplier terms or negotiated pricing. This can result in higher prices and missed cost-saving opportunities.

Compliance risk

Uncontrolled spending creates significant compliance risk, particularly in relation to contract breaches, for the following reasons:

▪ Violation of internal policy: Purchases made outside the company’s official channels may constitute a breach of internal policies.
▪ Non-compliance with regulations: Unauthorised or non-contractual expenditures may lead to purchases that fail to comply with applicable laws or regulatory requirements, potentially resulting in fines, sanctions, or more serious penalties.
▪ Fraud: Uncontrolled spending can facilitate fraudulent activity, as employees may purchase unnecessary, excessively large, or overpriced goods or services, leading to misuse of funds.
▪ Internal control failures: When purchases are made outside official channels, internal controls are weakened and the organisation loses oversight of its spending, increasing the risk of negligence and abuse.
▪ Lack of transparency: Uncontrolled purchasing reduces transparency in procurement decisions, making it more difficult to identify issues and implement corrective actions.

Prevent uncontrolled spending in 7 steps

To prevent uncontrolled spending, appropriate policies and processes need to be put in place. The following recommendations outline key steps organisations can take:

1. Establish clear and transparent purchasing policies

Companies should have clearly defined purchasing policies that set out official purchasing channels, spending limits, and approval procedures.

2. Make purchasing policies visible on a regular basis

Procurement policies should be communicated to employees regularly, ensuring they understand the procedures they are expected to follow and the consequences of non-compliance.

3. Ensure employee participation and provide training

Training on purchasing policies should be planned and delivered systematically. Encouraging compliance, recognising good practices, and involving employees in the process help ensure that procedures are followed consistently.

4. Establish a policy for low-value

Low-value purchases are often not subject to the same controls as higher-value transactions, which can increase the risk of uncontrolled spending. By defining a specific policy for low-value purchases, organisations can ensure that such spending remains efficient and within predefined limits. This approach also helps reduce risks such as unnecessary purchases, non-standard pricing, or poor-quality products and services by ensuring that purchases are made only when needed, meet appropriate technical and quality standards, and are sourced from approved and audited suppliers.

5. Monitor corporate expenditure and establish control and oversight mechanisms

Organisations should regularly monitor employee expenses to identify inconsistencies or signs of uncontrolled spending and implement control and audit mechanisms to ensure purchasing policies are applied effectively.

6. Manage contracts effectively

Contract management helps reduce the risk of unauthorised or off-budget purchases by ensuring that procurement activities are planned, controlled, and structured. Effective contract management also supports standardised purchasing processes and enables data-driven decision-making and risk analysis, rather than ad hoc or individual decisions.

7. Make effective use of technology

A range of technologies can support the prevention of uncontrolled spending, including:

▪ Expense management software: These systems allow organisations to track and control employee expenses through features such as real-time approvals, spending analysis, and detailed reporting. This helps prevent unauthorised purchases and excessive spending.

▪ Automated purchasing systems (e-procurement): These systems enable control over the entire procurement process, from requisition to final invoice. AI-powered platforms such as Promena, which provide end-to-end digital and self-service capabilities, help ensure purchases comply with established policies and procedures.

▪ Spending analysis tools: These tools allow organisations to analyse expenditure and identify savings opportunities, such as supplier consolidation or contract renegotiation. They also support the detection of anomalies or unusual spending patterns that may indicate uncontrolled spending, helping to reduce the risk of financial loss.

▪ Supplier management platforms: These platforms enable purchasing from approved and audited suppliers under agreed terms and prices, supported by ongoing performance evaluation. By restricting purchasing to approved suppliers, they help prevent unauthorised transactions and reduce supply chain risks.

Discipline in corporate spending is achieved not only through rules, but through well-designed digital workflows. Reducing fragmented spending requires systems that are accessible and practical for all users. Organisations seeking more balanced, traceable, and contract-compliant spending processes can explore Promena’s E-Procurement, Supplier Management, and Contract Management solutions. For further information, please contact us or visit our website.