Fraud prevention is important though organizations may put it on a lower priority. Employee expenses form a high cost for organizations worldwide. An automated expense and invoice management solution can help reduce the risk of costly misuse of resources.
There are various frauds that every organization encounter, irrespective of their size. The two primary familiar fraud sources are employee expense fraud and billing or invoice fraud. These two categories account to form 34 percent of all asset misappropriation schemes, according to the ACFE (Association of Certified Fraud examiners) 2018 report.
Employee expense forms can be of diverse types, like submitting receipts for personal expenses, claiming ticket purchases that were refunded, demanding the same expense twice by submitting a receipt on multiple expense sheets, etc. The expense fraud gets done opportunistically compared to a collaborative effort to fraud employees.
One of the main reasons that only a handful of the expense fraud is detected that 50 % of the organizations still use manual expense processes. The manual systems are at times unable to flag illegitimate expenses leading to missed entries and subsequent reimbursements. It forms a weak link in fraud prevention in expense reiumbursement. So, employees who submit expenses manually commit fraudulent activities twice more than those who use automated expense management solutions.
Invoice fraud can be both an internal and external threat. It could be an individual scheme or involved with a third party. Organizations are also at threat by sophisticated external fraud initiatives. It is not only small companies who fall into the vicious net of fraudulent activities but also big multinational companies like Facebook and Google to the tune of $122 million using high sophisticated schemes involving fraudulent invoices, corporate labels, and contracts.
Companies must take ‘Fraud’ as a serious concern today. Here are some methods in which organizations can protect themselves.
Tracking a credit card transaction and verifying its business intent can be challenging many times, especially in personal credit cards. Transactions are imported to the expense reimbursement system automatically in the case of corporate cards. In this scenario, employees will be unable to change the value of transactions. Corporate cards have more enhanced provisions in terms of ownership and setting expense limits.
Today technology has innovations to automate and power the expense reimbursement process. Companies must ensure that they take needful steps to eliminate Fraud by integrating the organization expense policy with expense processes. Employees must be familiarized with the rules. Companies must take the onus to implement automated expense management tools.
Expense reimbursement applications avoid checking every single expense claim. There are automated pre-approval and approval processes. Using pre-approval processes, ensure that employees only make purchases within the defined corporate travel policy. Modern expense reimbursement solutions allow easy identification of duplicates, holiday expenses, suspicious transactions, etc. It becomes easier to verify reimbursement claims.
The advantage of automated processes is that you have all the expense data in a digital format. You can generate reports to identify irregularities and fraud instances. Periodic audits can pinpoint violations in transactions, unjustified travel or food costs, employee compliance issues, etc.
Outdated systems and manual processes for expense reimbursement increase exposure to financial Fraud. Automated solutions eliminate potential fraud risks. It is high time companies invest in automatic expense and invoice management software for fraud prevention.
See the benefits of automated invoice management:
Better overview. Less accounting work. More time for your ideas.