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Why Should Schools Care about Maverick Spending?

  • Post published:May 23, 2023
  • Post category:Newsfeed
  • Reading time:6 mins read

Schools typically have tight budgets that procurement and finance teams must control to ensure staff members have what they need while not overspending. This is why procurement processes, such as reviewing at least 3 quotations or pre-approved vendor contracts, are implemented, but these workflows are also often the cause of bottlenecks and delayed purchases. This may affect curriculum or school operations which then results in maverick spending.

Maverick spending (or Rouge spending) happens when staff members purchase goods and services outside of the school’s procurement process and policies. Though individual spend may seem insignificant, cumulatively these purchases have a negative impact on your school’s financial management.

Why Should You Care about Maverick Spend?

Maverick Spending heavily affect schools’ ability to analyse and manage budgets. On top of poor visibility, here are 4 reasons why rogue spending is a cause for concern:

  • Overspending
    As maverick spending occurs outside the procurement process, this can lead to uncontrolled spending when staff bypass approval procedures and choose suppliers or products without considering competitive pricing or pre-negotiated contracts. Individual purchases also usually cost more as bulk purchases often have cheaper rates. These purchases likely then puts a strain on budgets, leaving lesser funds for other necessary products or services.
  • Wastage
    When individuals are purchasing without proper oversight, they may end up purchasing more than what they require, resulting in wastage and an ineffective use of budgets. This wastage affects allocation of funds and hinders the school’s ability to maximise funds efficiently.
  • Fraud
    By circumventing established procurement protocols, individuals may engage in unauthorised transactions, kickbacks, or collude with fraudulent vendors. These activities can drain the school’s finances, damage its reputation, and potentially lead to legal consequences. Preventing maverick spending helps safeguard the school’s financial integrity and prevents fraudulent practices.
  • Strained Vendor Relationships
    Procurement teams often establish partnerships and negotiate contracts to secure competitive pricing, favourable terms and reliable service from selected vendors. When maverick spending occurs outside of these agreements, it undermines the vendor relationships and can lead to decreased vendor cooperation and loss of negotiation leverage, negatively impacting future opportunities.

Why Does Maverick Spending Occur?

The Hackett Group’s 2019 research revealed that 75% of procurement professionals attribute maverick purchases to a lack of self-service or guided buying tools. Other factors such as a non-compliance mentality and users’ unwillingness to change their behaviour are also among the top three reasons for maverick spending.

We also share more insights about why employees engage in maverick spending here, which dives deeper into common factors that contribute to maverick spending and what are the implications

How Can Teams Prevent Maverick Spending?

It is important for organisations to implement spend management practices that work for your school. Here are some strategies that can help your school reduce maverick spending and improve overall financial management:

  1. Educate the Staff
    As your school would likely already have a procurement policy that is designed to prevent maverick spending, focus on change management to enable and educate staff on good purchasing habits. Teachers and school operators may not understand the negative implications of maverick spending, and so education is key to reducing such transactions.
  2. Create Processes for Special Purchases
    At the same time, also know that there are times when a unique or urgent purchase requires staff to circumvent current procurement workflows. To ensure that these purchases are still tracked and transacted within policy guidelines, create a process for “special purchases” so staff may find alternative approved vendors.
  3. Adopt Procurement Tools and Systems
    eProcurement systems can help to digitalise and automate the Source to Pay process, where users can raise purchase requests and have the system automatically guide it through the correct approval process. Vendor communication and pre-negotiated contracts can also be stored and tracked for easy review and retrieval. What’s more, integrations between accounting systems/ERP and procurement platforms allow for easy tracking and seamless transfer of information between departments.

The TenderBoard eProcurement Platform

TenderBoard’s procurement system has helped several schools better manage spending, guiding purchases through approval guidelines and providing an oversight to budget spend in real time.

Our comprehensive Source-to-pay capabilities digitalises and automates the procurement processes, with flexible configuration that allows schools to implement multiple workflows or approval routings based on procurement policies. Built on the cloud, the system gives users access to leverage pre-negotiated contracts and review purchases online.

If you are keen to learn more about how TenderBoard’s Procurement Platform, connect with us today.