6 Ways to Reduce Maverick Spend Among Your Employees

Ways to Reduce Employees Maverick Spend

Maverick spend refers to spending that doesn’t follow the prescribed company procurement policy. Critically, it can cause your company to lose money and increase costs. This is particularly worrying for finance teams these days given the uncertain economic climate when most are trying to reduce operating costs as much as possible. Maverick spend can also damage relationships, and negate preferred supplier discounts that you’ve worked hard to negotiate.

Maverick spend is different from tail spend, which refers to unplanned non-strategic spending. Tail spend transactions are usually low in value, and might be defined based on a specific threshold.

The negative consequences of maverick spend are real and measurable. These costs can quickly escalate and affect cash flow, and may not be easy to identify. You can minimize the associated risks by following the steps below.

1. Identify Maverick Spenders by Conducting a Detailed Spend Analysis

If you want to reduce expenses that don’t support your company’s best interests, you have to know who the maverick spenders are. Using a spend manage system is the easiest way to do spend analysis, since it gives you a real-time picture of your company’s financial health without any manual work. This will show you where resources are going, who’s responsible, and the scope of the issue, so you can take the appropriate actions.

To identify maverick spenders, you’ll need effective spend classification and complete visibility. Your spend management platform should make analysis easy with reports that can either consolidate data for big-picture insights or drill down into details as needed.

2. Clearly Communicate Your Procurement Policy & Preferred Suppliers

The procurement policy, list of preferred suppliers, and any relevant contract terms should be openly shared with all staff members who have purchasing power. This makes procurement through preferred suppliers quick and easy.

When staff understand the company spending policy, they’re more likely to use resources properly and maximize value. Transparent policies and clearly outlined responsibilities and consequences will will go a long way toward reducing maverick spend.

3. Educate & Train Your Team Members

Education and training should be ongoing, so that staff members are always up to date on the latest policies. Include procurement education in the HR process and incentivize savings with company card or virtual card reward programs.

Regular training ensures that every team member has the information they need, as well as the opportunity to ask questions as they come up. If they’re well informed not only on company policies, but also on the reasoning behind them, they’ll be better equipped to make responsible spending decisions—which leads to less maverick spend.

4. Foster Collaborative Relationships With Shared Accountability

The most productive relationships have shared accountability at their core. Encourage cross-functional collaboration through virtual or in-person meetings and team-building sessions. This helps to clarify staff roles, establish shared goals, and increase transparency.

As opposed to dividing your team into silos, creating collaborative relationships fosters accountability and teamwork. Team members gain a better understanding of how their actions affect other people and business functions. Collaboration also increases oversight, which helps to identify maverick spend and find effective solutions.

5. Set Up Vendor Approvals & Block Unauthorized Charges

You can use spend controls to protect the company by setting up a system for vendor approvals and blocking unauthorized charges. Customizable features include spending limits, purchase blocks, streamlined approvals, and authorization requests. This also makes the approval process for requisitions and orders more efficient by defining approved vendors.

Fast and efficient approvals will encourage employees to shift toward using approved vendors, helping to reduce maverick spend. Placing blocks on unauthorized charges reinforces policies and holds staff accountable, while also protecting company cash flow.

6. Prevent Fraudulent Activities by Adopting Virtual Cards

Virtual cards provide temporary account numbers that protect users from data breaches and unsecured connections. They offer real-time purchasing data and integrate into your existing system. They also allow you to lock a card to a particular vendor, limit transactions over a certain threshold, type of purchase, and more.

This increases transparency and visibility throughout the month—not just at month end—and makes it easier to identify fraudulent or wasteful spending. Mesh Payments offers virtual cards that can help prevent fraud and abuse.

The Verdict

It’s essential to control maverick spend for a variety of reasons. Just to name a few, proper control prevents unnecessary losses, helps avoid breaches of contract, and mitigates reputational risk.

Mesh’s spend management software gives you the tools to identify, address, and reduce maverick spend—including virtual cards, real-time spend analysis, and customizable controls.

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