7 tips to reduce maverick spend in procurement

Maverick spend — also called off-contract spend or rogue spend — refers to purchases made outside of an organization's approved supplier contracts or procurement processes. It occurs when employees purchase goods or services without following the authorized Procure-to-Pay (P2P) workflow.

The total share of maverick spending varies widely across organizations, depending on spend under management, the implementation of purchasing policies, and the procurement function's overall maturity. Even small, frequent off-contract purchases accumulate quickly and impact the organization's bottom line.

Why is Maverick Spend a Problem?

Maverick spend creates three core problems for any organization: lost savings, contract compliance failures, and reputational risk.

• Lost Savings: Bypassing approved contracts means missing pre-negotiated prices and volume discounts.Reducing cost savings is the direct consequence — and cost savings is procurement's primary mandate. 
• Breach of Contract: Supplier contracts often include minimum purchase volume commitments. If departments buy elsewhere, your organization may fall short — triggering contract penalties or termination. For example, a commitment to purchase 200,000 units annually becomes at risk when departments source independently. 
• Reputational Risk: Purchasing from non-approved suppliers can expose your organization to ESG compliance failures. If a rogue supplier doesn't meet the standards your company has publicly committed to, the reputational damage extends beyond procurement.

According to a SDC Exec report, many companies are losing 10-20% of targeted savings due to maverick buying.  

What Causes Maverick Spending? The Top Reasons

According to the Hackett Group (2019), the leading causes of maverick spend fall into three categories: process complexity, organizational structure, and knowledge gaps.

1. Confusing Procure-to-Pay (P2P) Processes When P2P and approval workflows are too complex, employees bypass them in favor of faster alternatives. This is the most common trigger. If the compliant path takes longer than the non-compliant path, employees will take the shortcut — especially under deadline pressure.

2. Decentralized Spending Certain spend categories, particularly tail-spend areas like marketing, IT software, and professional services, often fall outside procurement's direct control. Without central oversight, off-contract purchasing becomes the default.

3. Insufficient Employee Training Employees unaware of procurement protocols make non-compliant purchases without realizing it. A critical failure point is contract handover: staff may not know the full scope of existing contracts, available discounts, or value-added services that affect total cost of ownership (TCO).

Despite the intentions, the end result remains the same for spend management – money is left on the table. See below the full list of reported causes of maverick spend according to the Hackett Group.

How to Reduce Maverick Spend: 7 Strategies That Work

The central principle for reducing maverick spend is this: establish who holds the authority to buy, and make the compliant path the easiest path. P2P processes must be transparent, accessible, and faster than the alternative.

P2P processes and policies should be transparent for all categories and easy for employees to justify and follow. Purchase orders should be placed for every purchase, commonly referenced as the "no PO, no Pay" policy.

1. How Do You Identify Maverick Spend? Start With Spend Analysis

Use spend classification data to surface non-contracted vendors and off-contract purchases across categories.

Good spend analysis data  reveals multiple vendors supplying the same product or service — a clear signal of unconsolidated, maverick purchasing. Tracking which suppliers have non-contracted spend, and in which departments, gives you the data needed to act. Spend consolidation on preferred suppliers follows naturally from this visibility. 

2. Educate and Train Employees on Procurement Policies

 Employees don't follow rules they don't understand — training on the why behind procurement policy drives voluntary compliance.

Procurement policy doesn't exist to serve procurement's interests alone. Showing employees how cost optimization, contract compliance, quality management, and ESG risk mitigation benefit them, not just the business, changes behavior. Training should specifically cover contract scope, available discounts, and TCO implications of off-contract buying.

3. Build Collaborative Relationships with Business Units

When business units are involved in supplier selection, they're more committed to using those suppliers.

Take time to understand your internal customers' priorities, market dynamics, and supply base. Collaborative supplier selection creates shared ownership of the outcome. A supplier chosen jointly is a supplier both parties are motivated to use consistently.

4. Communicate Preferred Suppliers and Contract Terms Clearly

Research from The Hackett Group shows that organizations can lose up to 16% of negotiated savings when internal stakeholders purchase from suppliers outside approved agreements.  Every employee who purchases from a supplier should know the exact terms — pricing tiers, delivery conditions, and volume thresholds — before they buy.

 An employee who orders products without knowing a preferred supplier offers free delivery above a certain order value is leaving money on the table through no fault of their own. Clear communication of contract terms at the point of purchase closes this gap.

Everyone working with the supplier should understand the terms you have agreed on for purchasing the products or services. Have a read on how to succeed in your next handover: A Complete Guide to RFP: a Guide to Successful Contract Handover. 

5. Make Purchasing from Preferred Suppliers Easy

Make it easy for employees to choose the right supplier. 

Provide a clear, accessible list of preferred suppliers for each category. Set up user-friendly catalogs that display product details, current prices, and available volume discounts. The goal is to make buying from the right supplier require less effort than finding an alternative.

6. Speed Up Approval Processes for Requisitions and Orders

 When approval workflows create days or weeks of delay, employees with genuine urgency will find ways around them. 

Procurement bottlenecks are a leading driver of rogue purchasing. Audit your requisition and purchase order approval steps to identify where delays accumulate. Eliminating unnecessary approval layers for low-risk, low-value purchases reduces the incentive to bypass the system entirely.

7. Create a Process for One-Off Purchases and Use P-Cards

P-cards (Purchasing Cards) consolidate unplanned purchases under a single, trackable label, giving procurement visibility without blocking necessary spending. 

Not all ad hoc purchases can be anticipated or run through a full P2P workflow. Define clear criteria for what qualifies as a one-off purchase, then issue P-cards to manage these transactions. This approach maintains spending visibility and control without creating a compliance burden for every small, legitimate exception.

Is Maverick Spend Always Harmful?

Not all maverick spend is bad. Maverick spend can occasionally surface genuine opportunities. 

Employees sometimes find local suppliers with better pricing or product specifications that better fit their needs than an approved vendor. This can trigger productive conversations about contract renegotiation or new supplier partnerships. In organizations with localization or supplier diversity policies, off-contract purchases may even identify candidates for the approved supplier list or emergency suppliers for supply chain disruptions.

The key is using category spend data to have transparent, evidence-based conversations about what maverick spend reveals rather than treating all instances as purely a compliance failure.

How to Track Maverick Spend?

 Effective maverick spend tracking requires spend analysis tools that categorize purchases, identify non-contracted vendors, and calculate the financial cost of non-compliance. 

• Step 1 — Pinpoint Problem Areas: Categorize spend data by department and category to identify where off-contract purchasing is concentrated. High-frequency, low-value categories (tail spend) are typically the highest-risk zones.

• Step 2 — Calculate the Cost: Measure Purchase Price Variance (PPV) — the difference between what was paid off-contract versus what would have been paid under the approved agreement. This converts maverick spend from an abstract compliance issue into a concrete dollar figure.

• Step 3 — Take Targeted Action: Use the data to prioritize corrective measures in the highest-impact areas first. Maverick spending thrives in organizations where spend data isn't shared with the wider business, making transparency a strategic tool, not just a reporting exercise.