What is maverick spend, and why is it draining your budget?

A maverick is someone who acts independently of established rules or systems. In the workplace, this behavior often shows up in spending decisions. For example, a marketing manager might sign up for a new design tool without going through the approved procurement process, or a salesperson might book a flight outside of the company travel platform because it seems more convenient.

These purchases may seem reasonable on their own. But together, they create a category of company spending that finance teams struggle to see, forecast, and control. Maverick spending can go undetected for months until finance discovers it or a department goes over budget. 

In this guide, we uncover where maverick spending comes from, and how companies can protect their budgets without forcing every small purchase through a slow and complicated approval process.

Maverick spend refers to purchases that employees make outside of a company’s approved procurement, finance, or expense management processes.

Maverick spend is also called rogue spend, off-contract spend, unauthorized spend, or noncompliant spend. It can appear in almost every department, especially when your company has a decentralized purchasing process. 

Common examples of maverick spending include:

• Making a purchase without required authorization
• Buying from a vendor that hasn’t been approved
• Using a personal card instead of an approved company card
• Failing to submit a receipt or document the business purpose
• Undocumented card transactions
• Unapproved software subscriptions
• Out-of-policy travel purchases

Employees rarely set out to undermine the company’s budget on purpose. Maverick spend usually points to friction or gaps in the purchasing process. Here are some common reasons why this happens.

Unclear spending policies

Employees can’t follow rules that they don’t know or understand. An effective employee spending policy defines eligible expenses, approval thresholds, documentation requirements, and the process employees should use to make a purchase.

Slow or complicated approvals

When a routine purchase requires several emails and multiple signatures, employees may look for a faster route. Approval processes should reflect the risk and value of the purchase. For instance, a $40 software tool shouldn’t require the same level of review as a $40,000 vendor contract.

Decentralized purchasing

Department leaders often need authority to make timely purchasing decisions. But without shared systems and clear budget ownership, decentralized spend management can make it harder to see which vendors and commitments already exist.

Poor adoption of procurement tools

Procurement tools won’t prevent maverick spend if employees find them difficult to use or don’t know when to use them. So, be sure to set up an approval process that’s an easy and practical way for your team to complete purchases.

Urgent business needs

A broken laptop, a last-minute client trip, or a time-sensitive project may require an exception to your typical approval policies. Problems can arise when a company has no defined process for handling exceptions.

Limited spend visibility

If your finance team has limited spend visibility, they may not learn about a purchase until an invoice arrives or the transaction appears on a card statement. By that point, the company may already be committed to the expense.

Maverick spending can chip away at your company’s budgets. This potentially costly problem can show in several ways, including:

• Tool and vendor sprawl: When teams make siloed decisions and pick their own solutions without any cross-company coordination, this can lead to overlap and fragmentation, more vendors than necessary, and tool sprawl. All of this can make collaboration more difficult, too.
• Weaker supplier leverage: Working with suppliers often involves negotiating terms and building relationships. But when your teams go rogue and bypass existing contracts, your company risks losing negotiated pricing and other long-term vendor advantages.
• Subscription creep: When your company doesn’t have a strategy in place for managing subscriptions, you’ll risk ending up with multiple subscriptions for similar tools, which could continue to renew without review, causing a pile-up of unnecessary costs.
• Less financial clarity: When team members make unapproved purchases, you’ll end up with incomplete data, which makes it harder to track spending and forecast accurately.
• Higher risk exposure: Unvetted purchases can introduce legal, compliance, or security issues.
• More admin work: When unauthorized purchasing goes unchecked, your finance team will end up spending extra time chasing receipts and reconciling unclear transactions.

Left unchecked, these costs will make your company’s budgets less reliable and leave finance cleaning up purchasing decisions after the money has already gone out.

Maverick spend and tail spend often get confused, but they’re different concepts:

• Maverick spend: Maverick spend refers to purchases made outside of approved policies or processes.
• Tail spend: Tail spend refers to purchasing patterns —  specifically purchases that are low-value, infrequent, or fragmented. Tail spend may still be properly approved and made through an authorized process. 

Here are a couple examples of how these concepts compare:

• An approved $75 purchase from a preferred office supplier may be tail spend, but it isn’t maverick spend. 
• A $30,000 consulting engagement signed without the required approval is maverick spend, even though it isn’t low-value.

To manage tail spend, companies can focus on consolidating vendors and simplifying the process for making low-value purchases.

To understand how much off-policy spending exists and where it’s coming from, finance and procurement teams can conduct a maverick spend analysis. Here are the steps involved.

1. Centralize spend data

Bring together card transactions, reimbursements, invoices, purchase orders, vendor contracts, and accounting data into a centralized system. 

2. Define what counts as maverick spend

Create measurable criteria based on company policy. These could include purchases from unapproved vendors, transactions above an approval threshold, off-contract purchases, missing receipts, or expenses charged to an incorrect budget.

3. Compare transactions with policies and contracts

Review purchases against preferred vendor lists, negotiated agreements, approval records, and department budgets. This process can surface purchases that were necessary, but completed through the wrong channel.

4. Categorize the results

Group maverick spend by department, employee, vendor, expense category, and cause. Look for recurring process failures, such as slow software approvals or unclear travel rules.

5. Quantify the impact on budget impact

Calculate the value of off-policy transactions, duplicate tools, missed discounts, and renewals for unnecessary tools. You can also track maverick spend as a percentage of total addressable spend.

6. Put a plan into action

Your analysis should lead to action. If most of the exceptions you’re seeing come from one category, fixing that process may produce better results than introducing stricter controls everywhere.

Looking for effective maverick spending reduction strategies? Taking the following steps can help make it easier for employees to follow approved purchasing processes.

Simplify the approval process

Set approval thresholds by amount, category, department, or vendor risk. Route requests automatically to the correct budget owner, rather than relying on employees to figure out who needs to approve them.

Ultimately, your company’s approval processes should be easy enough that employees don’t need to invent a workaround, and controlled enough that finance can see commitments before they become surprises.

Clarify the spending policy

Explain what employees can buy, which channels to use to do so, when approval is required, and what documentation they must provide. Add relevant examples for software, meals, equipment, professional services, and travel.

You can use Mercury’s customizable expense policy template as a starting point for documenting categories, limits, and workflows.

Assign clear budget owners

Every material budget should have someone responsible for monitoring commitments, reviewing exceptions, and approving changes. Establishing clear ownership will reduce ambiguity, without requiring finance to control every purchase.

Establish a preferred vendors list

Give employees an accessible list of approved suppliers and explain the benefits of using them (such as negotiated prices, faster purchasing, or already-completed security reviews).

Regularly review off-policy spending

Conducting monthly reviews can help finance catch new subscriptions, vendor proliferation, and policy gaps before these situations become recurring problems. Share trends that you spot with department leaders right away, rather than waiting until year-end.

Corporate travel creates plenty of opportunities for off-policy spending because airfare prices, for instance, can change quickly, and employees might need to make decisions away from the office.

Companies can reduce maverick spending in business travel by:

• Requiring flights and hotels to be booked through approved channels
• Setting clear limits for airfare, lodging, meals, and ground transportation
• Defining when employees can make exceptions
• Issuing company cards with travel-specific limits
• Using per-diem rules where appropriate
• Reviewing transactions and receipts in real time

To establish an effective travel and entertainment expense policy, make sure to give employees enough guidance to make decisions without having to ask finance about every meal or taxi.

By using digital procurement and expense management tools, you can apply company policy when a purchase is being requested or made, rather than identifying problems weeks later.

For example, your company could use these digital tools to:

• Automate approval workflows
• Report on exceptions and policy compliance
• Issue physical or virtual cards for employees and vendors
• Set card limits by amount, merchant, or category
• Track vendor and subscription spending
• Restrict transactions that fall outside policy

If you’re comparing platforms, you can refer to our guide to the best expense management software for startups and small businesses to evaluate features, such as automated approvals, card controls, receipt collection, and accounting integrations.

The most effective maverick spend reduction strategies address the reason employees bypass the process in the first place.

Start with these steps:

1. Define the company’s approved purchasing processes.
2. Audit spend for off-policy transactions and duplicate vendors.
3. Identify the categories associated with the most leakage.
4. Simplify approvals and clarify exception procedures.
5. Update card, vendor, and procurement controls.
6. Train employees using common spending scenarios.
7. Review exceptions with budget owners each month.
8. Report progress and adjust policies as the company changes.

Ready to give employees clearer purchasing guidance and increase your finance team’s real-time spend visibility? Mercury’s expense management tools can help. By bringing spending into one place, automating approvals, and providing real-time visibility into transactions, your teams can stay on track, without getting slowed down, as the business grows.