Reining in rogue spend

Maverick spending can cause a real headache for organisations, especially those managing multiple sites, as it can lead to a lack of budget control, unexpected invoices, a lack of consistency, and a lack of compliance.

Regulating company spend – and preventing rogue purchasing – is an ongoing challenge for many businesses but one which, if tackled effectively, has potential to result in savings running into the many thousands of pounds.

 

What is rogue spend?

Also often referred to as maverick spend or tail spend, rogue spend is any expenditure that is unexpected, unpredictable or unorthodox. It happens when purchases are made outside of agreed supplier contracts and in defiance of established procurement processes.

Research suggests most rogue spend happens around low-value, high-frequency purchases.

 

What causes rogue spend?

A survey by The Hackett Group listed the top three reasons for employees going off-piste when it comes to business expenditure as a lack of self-service tools (75%), a non-compliant mentality (69%), and resistance to behavioural change despite official policies being in place (69%).

 

What can companies do to prevent rogue spending?

Conversely, it may seem, the very act of relinquishing a little bit of control can actually help you to gain control of rogue spend in your organisation.

Research suggests that maverick spending often happens when employees become frustrated by a perceived lack of speed in official processes. Where processes are time-consuming, or they encounter slow approvals for purchase requisitions and orders, employees may be tempted to bypass company policy and take matters into their own hands. Likewise, they may feel frustrated that their employer is not getting the best deal and feel that they can source better quality or value goods themselves elsewhere.

Implementing so-called “guided buying”, whereby employees can purchase goods and services themselves, from any location and on any device, but with controls in place, can help to overcome some of these frustrations. Such systems serve to ensure company processes are crystal clear, meaning there can be no excuses for non-compliance. They can also boost efficiency by speeding up the internal approvals process, and be configured to provide employers with the data analytics they need to manage budgets, plan ahead and prove compliance.

Combined with continued education for employees about the importance of engaging with their own health, safety and wellbeing, and the role tried, tested and company-approved purchasing has to play in that, they can make the difference that helps companies to rein in their rogue spend.

Ideally, systems should allow for users to suggest alternative suppliers for consideration, empowering employees to have a say in what they use or wear at work.

 

How iSB Group can help

At iSB Group, we have developed a powerful, online order management tool that offers easy, self-service access to our products for employees, and complete control over and visibility of spend for employers.

With Control-iT, customers benefit from their own branded web portal offering a bespoke range of items specific to their business requirements.

Among the many benefits of Control-iT are:

  • Easy ordering for employees and teams, including facility to order in bulk and to request delivery to multiple sites

  • Improved conformity and compliance thanks to bespoke catalogue of pre-approved products

  • View spend by depot, department, employee or product, track against cost centre budgets, analyse stock levels, and notice trends

  • Consolidate individual employee and/or depot spend onto monthly invoices encompassing all expenditure during the past 30 days

  • Place orders 24/7, check order statuses and automatically track deliveries

  • Add new employees to the system quickly and easily

  • Create tiered logins to control who can order what, how much they can order, and how often.

 

To find out more about how Control-iT could help your business to rein in its rogue spend, you can read about how the system helped GSF Car Parts monitor and manage its expenditure, give us a call on 0121 749 4433, or you can email us.