November 23, 2021

How to control the maverick spend wreaking havoc on your company budget


Many companies are losing 10-20 percent of targeted savings due to maverick spending, according to a report from Basware. No business-owner wants to lose money in this way, but for many it’s a problem they are unaware of. For those who know, maverick spend can seem too difficult to solve or address. But it doesn’t have to be this way! 

What is maverick spend?

Maverick spending is spending that doesn’t follow your business’s buying and procurement rules. And procurement rules are there for a reason. They make it clear that the business needs to track and record purchases and when you need to seek out more than one bid for projects.

For this reason, maverick spend can be a thorn in the side of finance managers.

But maverick spending isn’t only an expenses problem—it can cause real headaches at an operational level, because maverick spending means that suppliers and vendors have not gone through traditional vetting and screening processes.  

What causes maverick spending? 

There’s no one single root cause of maverick spending within companies. But maverick spending can happen when a company has:

  • Simple unawareness: Employees need to know how procurement works in the first place. Often, procurement policies are decentralised and ad-hoc, leading line managers and supervisors to use their judgement and ‘bend’ the policy rules on a case-by-case basis. And when that happens, out-of-policy spending becomes normalized through repetition. Good procurement policies are living documents that are regularly updated and widely communicated.  
  • Paper-based purchasing: The business may be relying too heavily on paper-based processes to buy goods and procure services. Having paper-based processes makes it difficult to gather and analyze spend data—and nearly impossible to root out wider instances of maverick spending. 
  • The procurement process: This is a significant problem in large organizations, with many departments. If the process is too difficult to follow—or too time-consuming—then even high-performing employees might take shortcuts to get important work done. 

How to control maverick spending 

We understand. Maverick spend sounds a little ominous. Small business expense management in particular is hard enough. The idea of losing money you shouldn’t be—and not knowing it’s happening—is enough to give you sleepless nights.

You can control maverick spend by setting up a healthy vendor procurement and vendor management system and using tools that give you real-time visibility into spend as well as enable you to set spend controls and limits for certain categories.

With that said, here are five ways to bring maverick spending under control.

1. Keep a database of vendors

Use a spreadsheet or automate tracking with a vendor management tool. Spend management software often includes vendor tracking features as well. Check if your corporate card comes with this kind of software—and if it doesn’t, consider switching.

Teams should upload their vendor contracts to spend management software to help centralize vendor management. Beyond helping you keep tabs on your vendors, spend management software can analyze your spending and alert you to saving opportunities. 

2. Set up vendor approvals

Prevent SaaS spending creep by making it as easy as possible for your team to request spend—but with appropriate oversight as a guardrail.

  • Make line managers responsible for approving requests up to $1,000. 
  • Have managers pre-vet requests for higher spend amounts, which are then routed to the finance team for final approval. 

Your spend management software should provide integrations that let team members easily request, review, and issue approvals directly in everyday tools like Slack.

3. Incentivize saving with spend analysis

Corporate card programs claim loyalty rewards offer savings you can reinvest

into your business, unlike ACH and other payment methods. But look closer.

Many corporate cards reward spending, not saving. Instead, look for card programs that give straightforward cashback versus complicated points systems with confusing multipliers and limited redemption options. Consider using spend analysis software to not only monitor expenses, but alert you to simple ways to save too.

4. Block unauthorized vendor charges

It’s also a good idea to make sure you’re only allowing purchases from the right kinds of vendors. You should restrict payment cards to individual merchants and expense categories, preventing out-of-policy spend. 

  • Specify a spend cap that’s in line with the amount of budget that’s been approved. 
  • Generate a virtual card for each vendor (most card companies now allow this).
  • Set auto-lock dates on these cards to prevent unapproved charges like automatic trial conversions and subscription renewals.

5. Use virtual cards to prevent fraud

Virtual cards, with their auto-generated card numbers, eliminate the threat of physical card theft and reduce the risk of rogue vendors and fraudsters stealing your funds. You can quickly disable virtual cards and even set them up for single-use only.

If you create individual cards for vendors, you eliminate the risk of having your financials compromised—since you only have a single vendor tied to that card. Safeguards like this are important, because 74% of organizations suffered payment fraud in 2020, according to an AFP Payments Fraud and Control Survey

How Red Antler solved maverick spend

Brand marketing agency Red Antler was tracking expenses manually, which meant that producers were spending hours each month reconciling spreadsheets and verifying hundreds of transactions line-by-line against hard-to-read card statements.

Unauthorized expenses often went undetected—that’s maverick spend in action—and employees frequently spent hundreds of their own dollars due to lost receipts or forgotten charges.

By working with Ramp, the agency solved this problem. Using Ramp, they decentralized team spend via individual employee corporate cards, while centralizing control over those individual cards. This has helped the creative production team reclaim more than 80 hours a month that they used to spend on burdensome expense reimbursement.

Get maverick spend under control with Ramp

Ramp offers real-time visibility and spend controls, so you always know where spend is happening and you can even prevent it from occurring in the first place. For example, poor visibility into expenses can be solved with digitized receipt and invoice matching, while spend control can be improved by empowering employees with their own corporate cards. 

Maverick spend is part of our Ramp Finance Glossary.

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Streamline approvals.
Review requests, pre-approve expenses, and issue general expense cards in a few clicks – or directly in Slack. Delegate approvals and empower your team leads to spend on the things they need and control their team’s expenses.
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Issue instant cards.
Unlimited virtual and physical cards with built-in spend limits, instantly available for everyone in your team. Define spend rules and let your smart cards enforce your policies automatically. No more surprises or under-the-radar spending.
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See spend as it happens.
Stop waiting on monthly statements or manual spreadsheets. Find, browse, and download real-time transactions from any employee, department, or merchant – on any device.
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Close your books 5x faster.
An accounting experience by finance teams, built for speed and efficiency. Automate manual processes and start enjoying instant reconciliation – Ramp does all the heavy lifting.
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Trim wasteful spend.
Ramp analyses every transaction and identifies hundreds of actionable ways your company can cut expenses and alerts your team via email, SMS, or Slack. It’s like having a second finance team, laser-focused on cutting costs.
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Consolidate reimbursements.
Ramp makes it easy to reimburse your employees for any incidental out-of-pocket expenses. Review, approve, and pay employees back for anything that didn’t make it onto a card with the rest of your Ramp transactions.
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