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Why Do Employees Engage in Maverick Spending?

  • Post published:December 1, 2022
  • Post category:eProcurement
  • Reading time:3 mins read

Maverick spending, referring to the unauthorised purchases made by employees without adhering to established procedures and policies, presents a substantial risk to corporate finance. This article aims to illuminate the key reasons that drive employees to engage in maverick spending, offering valuable insights for organisations tackling this issue directly. There are several reasons why maverick spending occurs, and it is essential to understand these reasons to prevent it from happening.

  1. Staff believe they found something better
    In some cases, staff members may believe they have found better deals or suppliers outside of the established contracts or procurement channels. They may perceive these alternatives as more cost-effective and view their actions as a way to save money for the company.
  2. Approval processes are tedious and hard to remember
    Organisations that lack an efficient procurement system may have intricate approval processes in place to streamline purchases. However, if these processes are convoluted or hard to remember, employees may find it difficult to comply with them. Consequently, maverick spending becomes more probable as employees seek faster and more straightforward methods to make necessary purchases.
  3. Multiple high-mix, high-frequency purchases
    Certain industries or sectors, such as schools, often require a wide range of items at high frequencies. When specific purchases are not part of existing contracts or are needed urgently, employees may resort to maverick spending to meet their immediate needs. This can occur when the established procurement channels do not cater to the unique requirements of these high-mix, high-frequency purchases.
  4. Ignorance
    If staff members are unaware of existing contracts or unable to access information about them, they may unknowingly make purchases outside of the approved channels. Lack of visibility and communication regarding contracts can contribute to maverick spending, as employees may simply be unaware that alternative options already exist.

Conclusion

In conclusion, maverick spending is motivated by a combination of factors including a lack of awareness, lack an efficient procurement system, perceived convenience and urgency, personal gain or comfort, dissatisfaction with existing options, and inadequate enforcement. By recognising and addressing these common causes of maverick spending, It is recommended for organisations to consider using TenderBoard eProcurement system. With its user-friendly interface and robust functionalities, TenderBoard facilitates smooth communication, contract management, and approval workflows. Furthermore, its advanced analytics capabilities provide valuable insights for identifying potential instances of maverick spending and supporting proactive decision-making. With TenderBoard, organisations can effectively address maverick spending and optimise their procurement processes to achieve enhanced efficiency and cost savings.