Bring up the word “fraud” in any business and most people will break into a cold sweat and entertain nightmares of lost profits and possibly going out of business entirely. Fraud is a serious problem in business, and it has extremely harmful consequences for the employees and companies that are victimized by it. On average, businesses in North America will spend about $186 billion in travel expenses, and $1 billion of that will be fraudulent.
Unfortunately, it is usually smaller companies with less than 100 employees that find themselves at greater risk of expense fraud than larger ones, presumably because there’s a belief that a smaller company will have less comprehensive means of tracking and accounting for expenses.
Fortunately, that majority of companies and individual employees conduct themselves with honesty and professionalism. Unfortunately, this also means that the small minority that deliberately make fraudulent expense reports do so frequently and ambitiously. But there are ways to catch these people in the act, and expense report software is one of the more efficient tools in a company’s arsenal to do so.
How Fraud Reports Occur
There are four chief tactics the unethical use in order to fraud a company of travel expenses.
Here, reports are made that simply inflate the expenditures made, and then a reimbursement request is made.
An expenditure may be made for personal reasons that is then passed off as a business expense.
Depending on the system, a fraudulent expense report for reimbursement may be submitted multiple times to different people/staff/departments in order to recoup the same payment over and over again.
Some expenses may be reported with altered receipts, or claims made about fake purchases in an attempt to seek reimbursement.
What To Do
Many fraudulent expense report opportunities can be eliminated through the use of automated expense report software like ExpensePoint. Policies and compliance can be built into the software itself, with automatic flagging and notification when spending falls out of compliance. Reports are made on the spot by users with image receipt capture to provide documentation of purchases, and individual expense accounts can be tracked both over short and long term. This gives finance and accounting the tools to analyze and compare individual employee expenditures and make more informed decisions when investigating possible fraudulent activity. Expense report software doesn’t just make expense reporting easier, it can protect you against fraud.