Expense reports are prone to errors, especially if you are filling them out by hand. It can be difficult to remember how much you tipped the bell hop for holding your suitcases behind the hotel desk, or how much of a tip was left at the restaurant after a lengthy client meeting.
These small errors can add up and when they add up enough to benefit one employee, “fudging” can become downright criminal.
According to the Association of Fraud Examiners, many companies are losing about five percent of revenue each year to expense fraud. In more than 20 percent of cases, companies incurred losses of at least $1 million as a result of occupational fraud, with the average loss approximately $140,000 over 18 months.
While most employees are honest and abide by their company’s expense policies, there are also those who take advantage. Examples of expense fraud include:
Listed below are four things that can help your company prevent expense fraud:
ExpenseWatch’s automated expense management software can assist in implementing an expense policy that becomes a constant reminder that your company is serious about compliance. This policy can be supported by training in company expense guidelines.
Without an automated system in place to help control spending, managers have little or no ability to actively manage company spending, let alone keep tabs on employees’ expense reports. Traditional paper-based expense reporting processes also make it difficult to enforce company spending policies not to mention that creating and approving expense reports are time-consuming and costly. Without a spend management system in place, company policies are hard to implement and enforce, spending information is difficult to compile, and expense fraud is harder to catch.
Furthermore, visibility into spending ensures managers will actually see and respond to requests and commitments before any money is spent, so budgets are managed before overspending can occur.
You can take preventative measures by educating your employees and training company managers to be on the alert for expense fraud. Setting policies so that receipts must accompany each claim on an expense report and issuing corporate credit cards to employees who travel or entertain make it more difficult for them to commit fraud since they don’t need reimbursement. They also make it easier to track and verify any expense charges.
Make sure to monitor and review the charges, or issue a prepaid debit card so that you can set spending budgets for trips ahead of time. They can help to deter employees from overspending, while keeping them budget conscious.
In addition to adding an expense management system to your company, the following are a few extra tips to help prevent employee expense fraud in your organization.
ExpenseWatch empowers companies to spend confidently, and you’ll also know your spending processes are as efficient as possible. It encourages visibility into company spending and can institute policy enforcement. With automated expense management software, you can put controls in place that will automatically alert you to duplicate transactions. In the paper world, these are difficult or impossible to find.
To learn more about how to reduce expense fraud within your company, fill in the form on the right and one of our experts will reach out to you shortly.
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