Tips & Good practices to reduce fraud!
See our infographic to reduce fraud! Business travel expenses, excluding manufacturing purchases, represent a company’s second largest budget item after salaries. These expenses, generally paid by employees, are reimbursed to the employee via expense reports. This process exposes companies to errors, either because of a lack of knowledge of the reimbursement rules or a deliberate desire to defraud. The proportion of these errors, or even outright fraud, can vary from 20% to 30% of the total amount of a company’s expense reports.
It is key to communicate the rules around travel policies and reimbursement of professional expenses at the recruitment stage and particularly during employee onboarding. You should also make your travel and reimbursement policy easily accessible to employees, for example via a dedicated place on the company’s intranet.
Make known and apply the policies
The implementation of an expense management tool is best practice to automatically publicise and impose company rules. Let’s take the real-life example of a morning coffee taken in bars across the company and presented for reimbursement by employees without meaning any harm. The implementation of an expense management solution has enabled this company to save several hundred thousand euros over a year.
Similarly, for the reimbursement of mileage costs, which are generally inaccurate by 10 – 20%, an expense report solution will limit or remove any abuse. For duplicate claims, such as lunch between employees, automatic controls eliminate errors and misconduct.
While the expense report solution cannot systematically block false restaurant or taxi receipts, statistical monitoring and audit procedure simplification allow the company to target offenders.
Better control for better intervention
An expense management solution also allows the implementation of blacklisting and sampling techniques that allow potentially fraudulent expense reports to be verified more effectively. This involves manually checking a certain percentage of expense reports. Rather than performing these checks at random, the expense report management software can visually indicate which expense reports may be suspicious according to the management rules in force, e.g. detection of duplicates, fuel receipts from third parties or issued at weekends, etc.
Technology for risk reduction
According to studies, 33% of expense report fraud is reported to involve old expenses submitted late for urgent reimbursement. Workflow digitisation is one solution to this problem. Scanning or photographing the invoice or receipt facilitates the instant submission of expense reports using a smartphone for immediate processing.
Set up a corporate payment solution
Companies can provide their employees with individual company cards and/or use cards registered with their travel agency. The company card is not only easier for the employee but also allows improved follow-up of expenses. This is thanks to the integration of payment flows allowing the assisted entry of locations, dates, supplier names and conversion rate data.
The agency-registered card allows the company to pay the biggest expenses such as air and train tickets, hotels and car hire, reducing the use of expense reports and improving control.
For example, fraud is possible when purchasing transport tickets. The employee may be refunded by the transport company and also reimbursed using an expense report, if the company has not provided for the correct follow-up procedure.
In an era of new technologies, having a professional expense management solution is, now more than ever, best practice to fight against errors and expense report fraud. An expense management solution must be an easy and user-friendly tool for the employee who claims expenses for his company. It is also an essential ally for finance, purchasing and auditing.