How to Control Maverick Spend: A Practical Guide for CPOs in LATAM

1. What Is Maverick Spend?

Maverick spend (also known as rogue spend or unmanaged spend) refers to all purchases made outside approved contracts, suppliers, and channels established by the procurement department.

In practice, maverick spend manifests in multiple forms:

• Direct departmental purchases: A marketing manager hires an agency directly, without going through procurement or checking for existing framework contracts
• Unauthorized corporate card: A director purchases software licenses with their card without a formal requisition
• Non-qualified suppliers: A plant manager contracts maintenance with a supplier not registered in the system
• Automatic renewals: Service contracts that renew by inertia without condition review or market comparison

Key data: According to industry studies, between 20% and 40% of indirect spend in large LATAM enterprises is maverick. In some organizations without digital controls, it can reach 50%.

2. How Much Does Maverick Spend Cost Your Enterprise?

The cost of maverick spend isn't just direct overcharges. It's a multidimensional problem affecting profitability, compliance, and negotiating power:

• Direct overcharge (10-25%): Off-contract prices are systematically higher than procurement-negotiated ones. Without negotiating leverage or consolidated volumes, each maverick purchase pays a "disorganization premium."
• Lost negotiating power: Every purchase outside approved channels reduces the consolidated volume procurement can leverage with strategic suppliers.
• Compliance risk: Non-qualified suppliers haven't passed tax, labor, ESG, or restricted-list validations, exposing the company to regulatory fines and sanctions.
• Lack of visibility: Maverick spend doesn't appear in procurement reports, distorting spend-by-category analysis and making strategic planning impossible.
• Operational risk: Non-evaluated suppliers may fail on delivery, quality, or service, affecting critical operations.

Real example: A manufacturing company in Colombia with USD 80M in annual spend discovered 35% of its indirect spend was maverick. By channeling it through the procurement platform, they achieved USD 2.4M in savings in the first year.

3. The 5 Root Causes of Maverick Spend

Maverick spend is rarely intentional. In most cases, it's a consequence of procurement processes that don't work for the internal user:

1. Procurement process too slow: If ordering through procurement takes 3 weeks, departments find shortcuts. Speed kills maverick.
2. No pre-approved catalogs: Without e-catalogs, every purchase is a new process. Users prefer to solve it themselves.
3. Lack of communication: Departments don't know negotiated contracts with better conditions exist. Procurement doesn't communicate its agreements.
4. Weak controls: If you can buy with a corporate card without approval or registration, the system allows it. It's not the user's fault.
5. Genuine urgencies: Some purchases are genuinely urgent and the formal process has no fast-track for emergencies.

Fundamental principle: You don't control maverick spend by prohibiting—you control it by making the formal process easier and faster than the shortcut.

4. Step 1: Diagnose and Measure Maverick Spend

You can't control what you don't measure. The first step is to quantify the current level of maverick spend:

• Cross-reference AP data with active contracts: Identify payments to suppliers without a framework contract or associated purchase order
• Analyze corporate card purchases: Categorize by amount, department, and supplier to identify patterns
• Map non-qualified suppliers: Identify suppliers receiving payments but not registered in the supplier management system
• Calculate % of spend under contract vs. spot: This is the primary KPI for measuring maverick: % of spend through approved channels

Download the Buyer Dashboard Template → with pre-built KPIs for measuring maverick spend, spend under contract, and savings.

5. Step 2: Simplify the Buying Process

The #1 cause of maverick spend is a slow and complicated buying process. The solution isn't more controls—it's less friction:

• Auto-approval for small purchases: Purchases under USD 500 auto-approve against pre-assigned budget
• Mobile requisitions: Users can create a purchase request in 2 minutes from any device
• Emergency fast-track: An express workflow with direct manager approval for urgent purchases (< 4 hours)
• 2-click recurring purchases: E-catalogs that allow reordering without repeating the entire process

Egixia's Purchase Requisitions module → — designed so internal users can buy in minutes, not weeks.

6. Step 3: Implement Electronic Catalogs

E-catalogs are the most effective tool against maverick spend for recurring and indirect purchases:

• Category-based catalogs: Office supplies, technology, travel, maintenance services — each with pre-negotiated suppliers and prices
• E-commerce experience: Users search, select, and confirm as if shopping online
• Guaranteed prices: Catalog prices are procurement-negotiated, ensuring the best cost
• Automatic budget control: The system checks budget availability before confirming the purchase

Measurable result: Companies implementing e-catalogs reduce maverick spend by 50-70% in covered categories. Procurement Management with Egixia →

7. Step 4: Smart Approval Policies

Approval policies should be proportional to risk, not uniform for all purchases:

• Tier 1 (< USD 500): Automatic validation against budget.
• Tier 2 (USD 500 - 5,000): Direct manager approval. Maximum 24 hours.
• Tier 3 (USD 5,000 - 50,000): Department director approval + procurement validation.
• Tier 4 (> USD 50,000): Procurement committee with formal evaluation. Mandatory tender process.

Key: The policy must include an emergency fast-track to prevent legitimate urgencies from becoming maverick spend. The fast-track approves quickly but records everything.

8. Step 5: Continuous Monitoring and Reporting

Maverick spend control isn't a one-time project. It's a continuous process requiring permanent monitoring:

• Maverick spend dashboard: Percentage of spend under contract vs. spot, updated in real time
• Automatic alerts: Notifications when a department exceeds the threshold for spend without PO or contract
• Monthly C-Level reporting: Executive report with trends, top maverick categories, and captured savings
• Department benchmarking: Compare compliance levels across departments to create accountability

Realistic target: Reduce maverick spend from 30-40% to 10-15% in year one. Below 10% in year two. 0% is neither realistic nor desirable—there will always be legitimate exceptions.

9. Maverick Spend Control Checklist

Use this checklist to assess your organization's maturity level in maverick spend control. If you check fewer than 5 of 10, you have a significant improvement opportunity.

10. Frequently Asked Questions