Why are companies failing to challenge suspicious expenses?
from our UK office
Expense fraud is still commonplace amongst global industry, with many businesses still not challenging suspicious expense claims. Webexpenses spoke on the topic of suspicious expenses during this year's CIPHR's stand at HRSS event (June 2018).
Recent research into fraud suggests there is a lack of fear of employees getting caught.
A 2017 global survey of 4,000 office workers found that more than a third (39%) of respondents said that fraudulent claims would never be challenged if they were ‘sensible’.
Despite almost half (47%) admitting to having submitted false or exaggerated reimbursement costs, 86% said they had never had a claim challenged or rejected.
These statistics shine a light on how fraud has become so commonplace within the business world. It is a problem of which affects every kind of business, irrespective of size or industry.
It contributes to global business losses of $2.9 trillion each year. Representing around 5% of each company’s revenue. Leaving you to question why there are so many illegitimate expense claims going unchallenged.
Outdated systems, inefficient expenses management
The problem is mainly a consequence of companies still being reliant on outdated expense management systems. This hinders the ability for finance teams to properly monitor or enforce an expense policy.
The research found that only a third (33%) of expense reports were being managed via expense management software. The vast majority are still handled via a traditional approach, is the manual processing of receipts, forms and spreadsheets.
It creates a slow and inefficient system. Finance teams start to struggle to cope with a monthly surge of expense reports and paperwork. With reimbursement costs taking weeks, or even months to be processed, it severely limits management visibility.
Typically, only the most blatant examples of expense fraud are ever likely to be identified. A vast majority of ‘sensible’ dishonesty often goes unseen and unpunished. The research highlighted how employees adopt a ‘little and often’ strategy to avoid detection.
Invisible expenses policies
Another reason for the lack of policy enforcement was that employees simply didn’t know what their company policy was. It was found that 61 % of respondents had not seen or read the company’s expense policy over the last 12 months.
Combined with a lack of checks or challenges, it creates a self-perpetuating cycle of expense fraud. Dishonest practices become embedded within a workplace's culture and employees no longer view it as being wrong.
Webexpenses’ research found that 29% of expense ‘fraudsters’ felt no guilt about their actions. 17% saw it as a justified way to compensate for what they perceived to be low wages.
Breaking this cycle requires more efficient management systems which are able to provide the kind of visibility that’s required to properly police out-of-office expenses. This is exactly what cloud-based expense management solutions are designed to do.
Winning the fight against expenses fraud
Webexpenses removes any reliance on the old paper-based ways of working. Claimants use an expenses app and OCR scanning to instantly convert any paper receipt they receive into a digital form.
The system allows the whole process to be handled via fast, automated processes. This automation typically reduces overall processing times by around 25 %. A cloud-based approach also provides finance teams with real-time data over every aspect of an expenses operation.
It enables automated policy reminders to be delivered to claimants via on-screen notifications. Checks can also be carried out whenever reports are submitted to ensure costs don’t breach any limits set by a finance team.
Reporting tools integrated into Webexpenses also provide access to the kind of accurate and up-to-date information that’s required to identify suspicious looking claims. You can also spot and report unusual costs or spending patterns. (Request a demo for an in-depth demo of Webexpenses reporting tools.)
Creating a healthy workplace culture
Webexpenses provide the full range of tools that are needed for a company to start effectively monitoring and enforcing an expense policy. It provides users with time and resources needed to start challenging exaggerated and falsified claims.
As more suspicious costs start to be queried, the risks of submitting falsified claims start to outweigh the potential rewards. It is a shift that can quickly transform a workplace culture - creating a healthy work environment in which fraud is no longer the norm.
A full analysis of the Webexpenses’ survey findings was presented at a Webexpenses’ session during CIPHR's 2018 HRSS event. You can find a full recording of the event here.