When you look at employee expenses from the viewpoint of a fraudster, you can understand why it poses such a risk to companies. With most finance teams having to manually check and process a monthly flood of paper receipts, it creates the kind of inefficiency and lack of visibility that enables expense fraud to thrive.
It’s estimated that UK businesses continue to lose in excess of £100 million each year to expense fraud as costs are routinely exaggerated and falsified. Only a tiny minority of the illicit costs submitted will ever be challenged or properly checked.
A 2017 global survey carried out by webexpenses of more than 4,000 workers which found that, despite almost half (47 percent) of the respondents admitting to submitting false costs, 86 percent said they had never had an expense report queried or rejected.
It creates a self-perpetuating problem with each fraudulent claim that’s processed helping to embolden dishonest activities. Employees know that if they’re ‘sensible’ with the amounts they claim, their fraud is liable to remain safely ‘under the radar’.
The benefit of an automated expense system is that it helps to tackle the inefficiency that feeds workplace fraud problem while also providing AP teams with a set of powerful tools to improve the way reimbursements can be monitored and analysed.
Streamlining the process
One of the most important resources in the fight against expense fraud is time. It’s having the ability to properly check and analyse each cost on a report, rather than giving it a cursory glance as a backlog of work piles up.
An automated system does this by streamlining the entire process and removing the need to manually process paper receipts. A smartphone app is used by claimants to convert any paper receipts they submit into a digital form, and the latest AI technology can now extract claim data directly from a photograph of a receipt and create a claim from scratch.
This allows the whole process to be handled digitally, with information being automatically collated and stored. Typically, it will reduce processing times by around 25 percent when compared to a traditional, paper-based system.
By removing many of the slow and cumbersome processes that have made expense management such a slog, it allows AP to start focusing on robustly monitoring and checking for incorrect, fraudulent or out-of-policy costs.
Automating checks and balances
Along with unlocking the time needed to make proper checks, automated systems fundamentally transform the way reimbursements can be managed and monitored. With data handled in real-time, AP has the ability to start setting alerts which will be triggered whenever submitted claims breach any pre-defined limits.
These can be used to warn the claimant of an out-of-policy expense via an on-screen notification or they can silently flag a report for the benefit of the finance team. It’s a way to quickly identify those costs, amongst a sea of claims, that will most benefit from further attention.
The use of on-screen notifications and more frequent checks and challenges helps to chip away at the confidence of the expense fraudster. The risk-reward ratio starts to swing back in favour of AP as employees realise that stringent checks are being carried out.
Improving financial visibility
Automating the expense process provides instant access to data on every aspect of an expense operation. With integrated reporting tools, it allows AP teams to access an unprecedented level of information on employee expenses; drilling down into costs, categories, and spending habits.
It provides a way to start shining a light on an area of business spending which has, for too long, been allowed to exist in the shadows. The use of data analysis allows pattern and trends to be monitored over time by individuals and departments.
Using the data with visualisation tools, allows fraudulent activities to be spotted in ways that are difficult to match when faced by spreadsheet full of figures. It allows fraud ‘hotspot’ areas within an organisation to be identified.
Additional benefits are provided by the use of a mileage tracking feature to provide accurate road mileage claims from start to end postcodes. It removes the need for claimants to provide an estimate of distances travelled; an area that has always been susceptible to fraud.
When all of these areas are combined, it gives AP teams the tools and time needed properly check the accuracy and legitimacy of each expense report that’s submitted. It helps to shift the balance away from simply processing costs and to start analysing and identifying fraudulent activities.
Webexpenses provides a smarter and safer way to manage employee expenses. Find out for yourself by requesting a free demo.