Insights & Ideas

Controlling Maverick Spend: How Analytics Can Help

Just about every company has them. They are the folks who sometimes intentionally and sometimes not, throw a monkey wrench into the corporate spend policy by not following the guidelines. Occasionally, there is fraud involved but more often than not, that is not the case. Many refer to this spend as maverick spend and the folks who create these problems (at least in the United States) as cowboys.

Maverick spend typically results from one of the following three:

 

Purchases made from a supplier other than a preferred supplier, even if at a lower cost.

 

Purchases made without going through procurement, even though they should have.

 

Purchases made under questionable circumstances, either from a related source or at a higher price. It is this last category that is most likely to involve a fraudulent transaction.

 


Occasionally, folks from the first category who have made purchases at a lower cost are left scratching their heads wondering what they did wrong. What they fail to realize is that while the individual purchase may have been at an attractive price, it could result in a higher price for other purchases made under the preferred contract, if promised levels are not made.

 

So, what can you do to control this behavior?


  • Step1. Set up clear policies defining procurement practices.

  • Step2. Identify your maverick spend. This is where your data analytics will come in handy.

  • Step3. Immediately, notify the appropriate managers so that the maverick behavior can be stopped.


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Stopping maverick spend as soon as the cycle starts is critical.

 

In its 2012 Report to the Nations, The Association of Certified Fraud Examiners reports that on average, occupational (employee) corruption schemes run for an average of 18 months.

The economic damage that can be done in that timeframe can be severe and the money rarely recovered.

Therefore it is important that the data analytics be run on a very regular basis, either weekly or monthly.

If you only look at your data annually, say at budget time, maverick behavior may go on for a long time doing real damage to your preferred contracts or worse. Weekly or monthly is better.

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