Maverick spend—those unapproved purchases that fly under the radar—is a hidden threat in many organizations.

What seems like a few minor transactions could be costing you far more than you realize.

Maverick spend is the silent budget killer lurking around the corner, that is almost impossible to control once it spirals out of hand.

This post exposes the true impact of maverick spending by looking at data associated with it.

Explore with us these eye-opening statistics about maverick spend.

Maverick Spending is One of the Most Pressing Pain Points for 20% of Enterprises

This statistic comes from the 2019 Procurement Insight Report published by Levvel Research and Coupa.

The report’s findings are based on market research and a survey of over 350 procurement professionals in North America.

Among various procurement pain points, 20% of respondents from large enterprises (with revenues over $1 billion) identified high maverick spending as “very challenging or difficult”.

This is somewhat higher compared to other companies with less revenue, as you can see in the chart below.

Illustration: Veridion / Data: Coupa

These figures confirm that, generally, the largest companies face the biggest challenges with maverick spend.

This is not surprising, as their sheer size, combined with diverse purchasing needs and complex processes, often results in a more decentralized approach to procurement.

This decentralization increases the likelihood of purchases going unnoticed.

In comparison, mid-market companies found the issue of maverick spend somewhat less challenging.

This difference may be due to their relatively simpler procurement structures or more centralized control over purchasing decisions.

Lastly, a slightly higher number of SMEs (15%) reported maverick spending as a very pressing issue, which may be attributed to their limited resources to control spending processes.

Overall, the small percentage differences in responses indicate that no one is immune to maverick spending.

However, we could also conclude something else.

Perhaps the overall low percentages of those who reported maverick spending as a top procurement pain point means that companies are not even aware of it.

67% of Companies Believe That Disregard or Lack of Procurement Policies Is the Leading Cause of Maverick Spend

This statistic about the leading causes of maverick spend comes from Basware’s Report on Maverick Spend, which is based on a 2018 study conducted by The Hackett Group.

The said study covered a number of large U.S. companies across different industries.

After the survey, the performance of responding companies was assessed against criteria like:

• realized reduction in maverick spend,
• lower rate of missed cost-saving opportunities,
• higher rate of compliance with a procurement strategy.

Then, several high-performing companies were grouped as Experience and Compliance (E&C) leaders, while average performers were categorized as the Peer Group.

This brings us to the finding that 67% of E&C leaders believe one of the leading causes of maverick spend is employees’ lack of understanding or disregard for the procurement policy.

Here’s that figure along with two more noteworthy responses from E&C leaders vs. the peer group.

Illustration: Veridion / Data: SDC Exec

As you can see, leaders and peers are largely in agreement that maverick spending primarily occurs when employees:

• don’t understand the procurement policy, or
• don’t want to follow it for various reasons.

One of the major reasons for non-compliance with the procurement policy is that employees see small purchases as insignificant to the company’s bottom line.

Expectedly, E&C Leaders are more aware of this issue (78%) than the Peer Group (54%), suggesting they’re implementing measures to combat this, such as employee training and awareness-raising programs.

Likewise, a significantly lower percentage of E&C Leaders believe that non-formalized or too complex purchasing processes are the cause of maverick buying, likely because they’ve already addressed this issue.

Overall, these numbers show that better-performing companies recognize the impact of maverick purchases and proactively work to minimize them by addressing both technology- and culture-related challenges.

100% of Experience & Compliance Leaders Rate Reducing Maverick Spend As Important or Very Important

This straightforward statistic comes from the same Report on Maverick Spend we just referenced.

It shows that all E&C leaders believe that reducing maverick spend is an important or very important issue.

In contrast, only 72% of the peer group rated maverick spending as a critical concern.

Illustration: Veridion / Data: SDC Exec

These numbers show that, generally, most companies consider maverick spend control important.

However, the difference in responses highlights a gap in prioritizing spend management between top-performing companies and their peers.

More specifically, we can conclude that E&C leaders have established strong procurement processes and controls, and they continue to improve these areas.

This is also demonstrated by the following responses of E&C leaders versus the peer group:

Priority	E&C Leaders	Peer Group
Proven quality of suppliers	100%	72%
Best price	89%	72%
Fastest delivery	44%	28%

Again, this shows that high-performing companies manage to holistically integrate spending and supplier management into their procurement processes.

This approach helps them reduce unauthorized spending by ensuring optimal supplier performance and enhancing employee compliance.

75% of Buyers Believe That e-Sourcing Tools for Identifying a Broader Pool of Suppliers Could Help Reduce Maverick Spend

Another statistic from the above-referenced report is all about technology and process improvements that can help companies reduce maverick spend.

This specific finding shows that 3 out of 4 buyers think that e-sourcing tools could help minimize maverick spend by helping them access a broader pool of suppliers.

For clarity, it’s important to note that The Hackett Group experts conducting the survey differentiated between the responses of two groups:

• buyers/end-users, i.e., employees who regularly make purchases,
• source-to-pay (S2P) professionals who don’t purchase regularly, but make decisions on processes, policies, and technology.

This distinction is important for gaining insights into potential tension points between these two groups of people.

Now we can better understand the following findings.

Illustration: Veridion / Data: SDC Exec

As illustrated, buyers predominantly believe that e-sourcing tools could ultimately lead to a broader pool of approved suppliers, which would help control maverick spend.

While not ignoring the utility of such tools, non-buyers (regulators) find this less relevant, which could affect their decision-making on technology improvements.  

Concurrently, there is high agreement between buyers and non-buyers on utilizing tools for real-time spend analysis.

Our takeaway here is that management should take advice from practitioners and empower them with the tools that streamline everyday sourcing operations, starting with finding new suppliers.

For example, our supplier discovery service allows your procurement team to find new suppliers in minutes instead of weeks.

Source: Veridion

With Veridion, you get access to a global database of suppliers that is always up to date.

That way, your procurement team can discover and evaluate a wider range of suppliers to find those that better match the needs of internal stakeholders.

This, in turn, minimizes the likelihood of employees making off-contract purchases.

In general, the presented figures show that technology has an essential role in increasing spend visibility and reducing maverick spending.

31% of Organizations That Have Implemented an E-Procurement Solution Have Achieved Better Control Over Maverick Spending

This is another statistic found in the 2019 Procurement Insight Report by Levvel Research.

Essentially, it shows that companies that implemented e-procurement solutions reported improvements in several areas, including maverick spending control.

This relatively low percentage (31%) of companies citing these maverick-specific improvements can be explained by a variety of factors, such as:

• insufficient adoption or integration of e-procurement solutions,
• lack of procurement compliance and enforcement,
• inadequate spend analysis and reporting,
• employee resistance to change.

However, judging by the other improvements surveyed companies reported, it might be the fact they just failed to recognize their relations to maverick spending.

Here are some of those findings:

Illustration: Veridion / Data: Coupa

But the areas shown in the image above are not just isolated benefits.

Things like enhanced procurement visibility and transparency, consolidated invoicing, and reduced paper volume all play a significant role in reducing maverick spending, even if their direct impact isn’t always immediately recognized.

Moreover, other reported benefits like better procurement control, improved data security, and increased productivity are also relevant.

When all these improvements are combined, it’s clear that automated procurement solutions have a cumulative effect on reducing maverick spend that extends beyond what the survey captured.

56% of Surveyed Leaders Have Pre-Approved Suppliers for All Goods and Services

This statistic shows that significantly more high-performing companies strive to control maverick purchases by providing employees with a list of pre-approved suppliers for all goods and services.

Since the source report for this statistic is based on The Hackett Group’s 2019 User Experience and Maverick Spend Study, the same methodology as before was used.

More precisely, several best-performing companies in terms of maverick spend control were pulled into one group (study leaders) and their responses were compared to others who are average (peer group).

The image below shows the difference between how many companies in the two groups ensure buyers/end-users have a list of pre-approved suppliers for all purchases.

Illustration: Veridion / Data: Coupa

This significant difference indicates why top-performing companies are so successful—they are more proactive in controlling maverick spend by guiding employee purchasing behavior.

More precisely, by enabling easy access to a list of pre-approved suppliers, they ensure higher compliance with procurement policies, ultimately reducing the likelihood of maverick spending.

60% of Organizations With Centralized Procurement Always Cross-Check POs Against Contracts to Control Maverick Spend

This figure from Levvel’s Report we already mentioned shows that companies with a centralized procurement function tend to have more effective maverick spend control measures.

More specifically, 60% of such organizations consistently cross-check purchase orders (POs) against existing supplier contracts.

This demonstrates a strong commitment to ensuring that all purchases are made according to pre-negotiated terms with approved suppliers.

In contrast, companies with multiple decentralized procurement departments or those with no procurement departments are less diligent.

Illustration: Veridion / Data: Coupa

Expectedly, gaining spend visibility and controlling contract compliance is easier when all procurement is consolidated under one department and all data is centralized in one place.

Nevertheless, even companies with independent procurement departments can enjoy the benefits of digital centralization.

By integrating procurement solutions and business systems and establishing a single source of truth for everyone, companies can achieve greater visibility and control over their spend, thereby minimizing maverick purchases.

67% of Buyers Say That Decreased Sourcing Leverage From Fragmented Spend Is the Biggest Consequence of Maverick Buying

This statistic from the report based on The Hackett Group’s 2018 study implies that maverick buying leads to fragmented spend, which ultimately weakens an organization’s sourcing leverage.

More precisely, over two-thirds of surveyed buyers (employees who make regular purchases) list loss of negotiation power as one of the biggest consequences of maverick spend.

The other negative effects of maverick purchases they listed are also closely related to this dilution of sourcing power.

Illustration: Veridion / Data: SDC Exec

Simply put, when spending is fragmented across multiple suppliers and transactions that fall outside of established procurement processes, the above consequences ensue.

Conversely, effective spend visibility, analysis, and categorization enable organizations to manage more spend through procurement and consolidate categories and suppliers.

This minimizes maverick spending and enhances a company’s leverage to negotiate better terms with suppliers.

Finally, it’s worth noting that non-buyers who define purchasing policies largely agree with buyers on the major consequences of maverick spending.

The only significant gap in perspectives (44% buyers vs 8% non-buyers) is that they fail to recognize the scope of issues unapproved suppliers can cause.

Conclusion

We hope these maverick spend statistics and their implications shed some light on what issues companies face and how they address them.

From setting the right policies to leveraging the right tools, these figures point to a number of ways your company can take proactive action in minimizing maverick spend.

So, use these insights to your benefit. Strive for more spend visibility, and tighter procurement controls to drive cost savings within your organization.