How to Reduce Maverick Spend Without Slowing Everyone Down

Maverick spend is money spent outside the buying process a company has agreed on: no requisition, no PO, a vendor nobody approved, or a price nobody checked. Every company has some. What matters is how much, and whether it's going down.

The usual advice is to tighten the policy. That helps a little. But most maverick spend happens because the proper route is slower or harder than the shortcut, and people have work to get done. So the fixes below lean towards making the right way easier, not only making the wrong way harder.

First, find out how much you have

You don't need a spend analytics project to get a rough number. Pull last year's paid invoices from accounts and look for:

• Invoices with no PO number, or with a PO dated after the invoice.
• Vendors paid only once or twice in the year.
• Several POs to the same vendor in the same week, each just under an approval limit.
• The same item bought from different vendors at noticeably different prices.

Add these up and compare the total with your addressable spend. If it's a small slice, you're in decent shape. If it's a quarter or more, it's probably the biggest procurement problem you have.

Why it happens

When you talk to the people behind those invoices, the reasons are rarely sinister:

• The approval took a week and the site needed the part that day.
• The approved vendor was out of stock or didn't answer the phone.
• Nobody knew there was a rate contract for that item.
• The amount seemed too small to bother with a PO.
• A senior person has always bought from a particular supplier.

Only the last one is really about behaviour. The rest are process problems.

Fixes, roughly in the order to try them

1. Make the approved route faster

Measure how long a requisition takes today, from raised to PO. If it's five days for a ₹15,000 purchase, that's your main cause. Set approval workflows by amount so small requests need one approval, not three. For low values you can often drop a whole approval level without adding any real risk.

2. Put repeat items on rate contracts

Find the 30 to 50 items you buy most often and agree annual prices for them, through an RFQ or a reverse auction. Then let people order those items against the contract without a fresh quote every time. That removes the most common excuse ('I didn't know who to buy from'), and the price has already been checked.

3. No PO, no pay

Tell vendors in writing that invoices without a valid PO number will be returned. Give a start date a month out and keep a short list of exceptions like utilities, rent and statutory payments. This is the most effective single rule, but only after steps 1 and 2. Enforce it while the PO process is still slow and you'll get angry vendors and a pile of backdated POs.

4. Show each department its own number

A monthly one-page report for each department, with spend on PO, spend off PO and the top three off-PO vendors, changes behaviour more than any policy email. Nobody wants to be the department at the top of that list.

5. Watch for split orders

Have the system flag several POs to one vendor within a few days that together cross an approval limit. You don't have to block them. Making them visible is usually enough.

6. Accept some of it

Tea and snacks for a site meeting don't need three quotes. Set a small value below which a card or petty cash is fine, and stop counting it as a problem. Chasing every rupee costs more than it saves and makes people resent the process.

What you get from bringing it down

The obvious gain is price. Off-contract purchases tend to cost more, simply because nobody compared. The other gains are less obvious but often matter more to finance:

• Budgets you can trust, because spend is visible when the PO is raised, not when the invoice turns up.
• Easier audits, with every payment traceable to an approval.
• Fewer vendors, which means less onboarding, fewer GST mismatches and better terms with the ones you keep.
• Less fraud risk. Fake or related-party vendors are much harder to slip in when every vendor has to be onboarded and every payment needs a PO.

A realistic target

Zero maverick spend isn't a sensible goal. Bringing it down steadily, quarter by quarter, is. Track it as a share of addressable spend, publish it, and treat a rising number as a sign that the process has got too slow somewhere, not just that people are misbehaving.