Expense report fraud is really difficult to track, as separating human error from instances of fraud is tougher than one may think. Take mileage, for instance, which is one of the most common expenses employees request reimbursement for. Mileage can be tough to track, particularly over long periods of time, so an error in overestimating mileage could be an honest mistake, or a really easy way to commit expense report fraud. When manually processing expense reports, determining what is an attempt at fraud and what is a mistake is a slippery slope, and one that can really cost companies of all sizes.
Expense report fraud is a repeating problem, which can help those with manual processes to determine what may be an error and what could be something more sinister. A report by Oversight Systems done in 2014 found that it is only 5% of employees that commit 82% of all instances of fraud on average, so looking for repeat offenders can be a good start to catching a problem. Many of these cases involve additional reimbursements of small or otherwise less-noticeable amounts, which add up as employees file these fictitious reports over and over again
The Association of Certified Fraud Examiners, or ACFE, also found that it’s small businesses that are harmed worse when it comes to expense report fraud. For companies with more than 100 employees, the median cost of expense report fraud is around $30,000 per year, but companies with less than 100 employees can expect to pay a median of 28% more. For these smaller companies, this amount can be life or death, which makes finding a solution to expense report fraud even more important.
So, what can be done? Manual expense reporting is ripe for opportunities in human error and potential fraud. Manual expense reporting goes through several different channels, costs money simply in the process alone, and can be manipulated by those determined to commit fraudulent acts. Automated expense reporting, however, can eliminate this fraud potential by streamlining the process, automatically adhering to policy, and completely eliminating the added factor of human error. Additionally, automated expense reporting saves on time and money by using software to streamline the manual process, which adds an extra beneficial layer to the aspect of fraud protection. For vulnerable smaller businesses, automating the process frees up resources that could be spent growing potential and profits, rather than spending them on making up for fraud related losses.