Maverick spending: How to stop it
‘Maverick spend’ is a phrase your procurement team really doesn’t want to hear – unless you’re talking elimination.
When purchases are made outside of agreed contracts, the purchasing team has no knowledge of them. And when payments go unrecorded, it can really cost your business.
A lack of oversight and control of the spending process can lead to confusion and errors such as invoicing issues, unmatched PO numbers and unknown suppliers being paid without authorisation.
When you operate on a global scale, this lack of compliance and control can really impact your bottom line – and even put you at risk of fraudulent activity.
Which types of spend are more likely to be maverick?
Most goods or services bought by companies have a specification and a price, so it’s easy for an employee to make a purchase. But when the buyer doesn’t have sufficient information or category expertise, problems with off-contract spend can occur.
One such area is marketing agency spend. Due to the complex nature of advertising agencies and an often-convoluted quotations process, the purchase-requisitions for this type of service normally have to be manually typed into a P2P solution. This makes it very hard to monitor, significantly reduces visibility and increases the risk of error through lack of automation.
Another common maverick area of spend is marketing materials. This is particularly the case with brand-specific materials such as point of sale items, and where local marketing teams look for one-off deals with local suppliers that may be cheaper but have not been approved. These items are not typically catalogued either in the P2P solution or in a supplier Punch-Out catalogue, making them harder to police.
Finally, spend on any other products and services that cannot be catalogued by a P2P solution can also be maverick. And that could mean anything from software development to machinery maintenance, or the purchase of equipment with configurable specifications.
So what can you do about it?
Our simple 3 steps to stop maverick spend will guide you through.
1. Make it easier for business users to purchase from approved suppliers only
Encourage your approved suppliers to provide a Punch-Out catalogue. As more and more enterprises implement a P2P solution they’ll expect their suppliers to be able to integrate and trade seamlessly, so you’ll also be doing them a favour.
If your internal eProcurement solution can Punch-Out directly to your supplier’s eCatalogue, your business users will be able to find approved products quicker than ever, which will significantly reduce the time it takes to raise a purchase order.
2. Gain visibility of spend
Adopting step 1 is going to provide you with greater visibility and more meaningful purchasing data to analyse. However, it doesn’t automatically solve the problem of the complex areas of spend that don’t fit in an internal or supplier-hosted catalogue. For example, this might be the services spend that needs the expertise of a supplier to dynamically build a quote for the buyer to approve. That’s when you should consider point 3.
3. Increase the number of spend categories that automatically generate purchase- requisitions
It’s likely that there’s a belief in your business that certain types of expenditure are so complicated that the only way to buy them is to create a text-field requisition and attach a supplier quotation. This can be risky as the supplier may or may not be approved for this spend, and even if they are, you’re reliant on internal manual checks against any approved supplier rate cards.
Encourage suppliers of services to your business to use a quote-building tool which links to auditable, agreed rate cards, and can create a Punch-Out requisition once the buyer has approved the quotation. Only approved suppliers will be able to provide quotations, and your buyers will be reassured to work in this way because of the time it saves.
Ok, what’s the solution?
Our SaaS platform, Geneus, has been designed to address the issues mentioned above and to help you get a grip of your maverick spend.
For enterprises, it’s an intuitive Punch-Out eProcurement solution that enables you to buy from suppliers of complex or configurable goods and services. For your suppliers, it’s a low-cost eCommerce catalogue and quoting platform that connects to any of their customers’ P2P solutions. In short, it’s a win-win for buyers and suppliers alike.
If you’ve already taken a step towards digitising your procurement by implementing a P2P, Geneus can help you achieve 100% compliance across all spend categories. Ready to start saving the money lost in maverick spend? Now that’s something worth talking about.
Get in touch today to find out how easy it is to manage your maverick spend with Geneus.