Over 22% of Occupational Frauds cases cause losses of more than $1 million, and organizations lose more than 5% of their revenue to fraud. In 2014 alone, 15% of all business frauds were expense reports frauds showing that expense report fraud is one of the biggest issues that employers and finance teams have to face.
It is no longer an option to just ignore fraud as a cost of doing business, and here are some of the key aspects of controlling expense report frauds:
Create Clear Expense Policies:
If your company doesn’t have a clear expense policy, now is the time to create one, and if you already have one in place, it is time to update it, and ensure clarity to all your employees on exactly what the policy entails.
Here are some key points to consider:
- Create clear limits to ensure budgets are adhered to.
- Mention clearly what expenses are authorized as business expenses and procedure to gain approval for any exceptions.
- Ensure that rules are written for your employees and not your legal departments.
- Account for new technologies such as digital and mobile expenses which may have changed spending patterns over the past few years, since your policies were last updated.
Treat All Spenders Fairly:
It is obvious that top level execs will have different expense claims compared to entry level employees, and different departments will have different budgets, depending on the size of the department and the number of employees.
It is critical to ensure that policies created treat everyone fairly, and these are some of the key points to be considered:
- Ensure that expenses are carefully monitored, no matter the designation of the person responsible for the expense.
- Keep your employees informed on budgets, expense policies, and procedures in case of policy violations.
- Clearly communicate that budget holders are responsible in ensuring that department budgets are adhered to.
Make Use of Automation Technology:
Start employing processes and tools that automate the expense reporting process, in order to ensure fewer human errors.
Automated solutions also provide unparalleled visibility, as business expenses are recorded in real time, as and when they occur.
There is also a greater level of control, with authorization on spending limits. With the analytics provided by these technologies, you have instant access to data on business expenditure against budgets, as well as comparisons against past expenditure, to gain further insight against fraud.
Make an investment to ensure that you completely eliminate expense reporting fraud with the above methods.