Fraud and Compliance

Tackling and Preventing Expense Fraud in Modern Business

Hanneke van Leeuwen |

Running a business and incurring expenses go together – it’s expected. However, what isn’t expected is exaggerated expense claims or non-compliance of expense policy. Yet, expense fraud is a threat that businesses continue to face.

Our recent research, found that employees think it’s acceptable to knowingly submit a fraudulent or false claim of up to 128 euros. When you extrapolate this across the number of employees in an organisation, you begin to realise how such attitudes could significantly impact your business.

When almost half of employees think it's acceptable to over-expense or disregard company expense policies on a yearly basis, it's time to take expense fraud more seriously.

In our webinar, we discussed the recent research findings with SAP Concur customer, Patsy Christian, Accounts Payable Manager at Bourne Leisure, and Nkolika Chikwendu, Principal Consultant at SAP Concur Managed Business Services and member of our Audits Service Team, to get their thoughts on the subject.

 We have highlighted the key takeaways, regarding the challenges business leaders must overcome to prevent expense fraud, how they can influence the attitudes and mindset of employees and how artificial intelligence can have an impact.

Key challenges faced by business leaders

Expense fraud, in its simplest term, can be seen as a deliberate intention or action to get something deceitfully. However, in this context, a broader definition is that it doesn’t only include malicious intent, but also the idea that errors and mistakes can occur through lack of knowledge.

 During the discussion, we touched upon three important challenges faced by leaders including:  

  1. Outdated finance processes

One in three companies say they rely on manual checks to prevent expense fraud, 24% admit that their expense process is not digitised at all, and the finance and travel teams say they spend more than two days a week fighting expense fraud.

These findings aren’t surprising given the sheer volume of what's involved in a traditional manual audit process. However, manually trying to match receipts for date, amount, VAT, expense type, etc, for every expense submitted is a laborious task.

By integrating manual processes with technology such as artificial intelligence (AI) and machine learning like our Intelligent Audit solution does, although these won’t completely replace these processes, will help support those in charge and in turn bring efficiency.

  1. Lack of interest towards policy

Just over a third (35%) of employees say the travel and expense policies their company has in place are well-fitted and fair. What’s more, 48% believe it’s fine to over-expense or disregard company expense policies at least once a year. ​

There could be various reasons for why employees feel this way, explored by our panellists. For example, it could include feelings of being undervalued by the company, of not being sufficiently rewarded for overtime, of not earning as much as they should, feelings of the policy not being fair, or even feeling aggrieved by a particular situation. It solidifies the need for robust policies in place to be able to educate and point employees to them, by the right teams who are trained to be able to tackle these issues when they arise.

No matter the reason, this is a serious challenge that organisations must overcome to combat expense fraud.

  1.  Ineffective expense fraud prevention measures

Only 21% of finance and travel leaders say they’ve put fraud awareness and prevention training in place for their employees.

When an organisation lacks the resources to tackle employee expense fraud or has prioritised other key initiatives within the company, this type of fraud is more likely. Needless to say, this is a challenge that businesses have a control over and can implement more robust measures to overcome.

Given these three key challenges, how can business leaders ensure they tackle expense fraud in the future?

Solutions for tackling expense fraud

Creating a robust policy and reinforcing guidelines

As highlighted in both the research and the webinar, only 33% of employees believe it’s never okay to disregard expense policies. And 19% cite fairness as a reason for their tolerant attitude.

While it isn’t surprising that such thinking exists among employees, the numbers are alarming and reveal that there’s much to be done by business leaders to change these attitudes.

So how can this be achieved?

  • Creating a robust policy that is clear, enforces accountability and highlights consequences for non-compliance.
  • Educating managers on the importance of the policy is critical to success. When approving expenses, managers have a proper audit process in place and raise any concerns with individual. The goal is to facilitate positive habits of submitting expense claims.
  • An informative guide that can be shared companywide on a regular basis to remind people of what they should and shouldn't be claiming, as well as how to submit claims through the system to avoid any errors or malicious intent.

As policies become enforced, employees will realise they have to abide by the policy, making a positive impact overtime.

Utilising technology

We’re in a technology revolution. And like in other parts of business operations, technology including AI can be leveraged to bring efficiency to the manual process of handling expenses. Actually, 54% of leaders recognise technology’s capacity to help detect expense fraud as our research highlighted. Concur Detect by Oversight for instance simplifies the audit process by automatically reviewing expense and receipt data to identify fraud, mistakes, and policy violations.

However, as we all know, the introduction of new technologies tends to represent uncertainty. So, organisations must be sensitive about managing change by being transparent with employees, ensuring policies are clear and that employees are listened to, and any concerns are addressed.

Following this process with due diligence will enable open mindedness to adopting technology.

Want to find out more?

Watch the webinar on-demand to hear the conversation in more depth and find out how technology can help your business prevent expense fraud and non-compliance.


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