Posts in category: Compliance

According to the 2020 report by the Association of Certified Fraud Examiners, expense reimbursement cases account for 20% of fraud in small businesses and 13% in large organizations.

Small organizations are more vulnerable to employee fraud when compared to large organizations because they lack the resources or technology to implement complete systems of internal controls.

This blog investigates some of the most common travel expense frauds. Additionally, it discusses the tactics used by the employees while committing expense fraud. Finally, we also look at the best ways to detect and prevent expense fraud.

What is Expense fraud?

Expense fraud refers to an attempt by employees to claim reimbursements for fake or inflated expenses.

Generally, there are 4 common types of expense fraud, according to the Association of Certified Fraud Examiners. 

•  Fake Expenses

This type of expense fraud is usually done with a fake receipt for a purchase that was never made. The fake receipts are often taken from a vendor, such as restaurants, hotels, taxis, etc., and filled with false amounts.

• Multiple reimbursements

This scam involves submitting reimbursement claims for the same expense multiple times. The finance team may end up approving duplicate payments if not careful about accepting expense claims.

• Personal Expenses

Personal expenses occur when an employee submits a receipt of personal expenses as business expenses. For example, an employee might take a vacation with family or friends and claim it as a meeting with a client or investors.

• Overstated expenses

Like multiple reimbursements, these expenses are incurred as legitimate business expenses but are over-claimed by the employee. For example, an employee buys a refundable business-class airline ticket, travels in an economy class and then submits the higher price receipt for reimbursement.

Why do employees commit expense fraud?

Companies wonder, what is the motivation behind the employee’s committing fraud and risking their job for little reward?

However, reasons may vary from individual to individual and company to company.

Here are a few reasons employees cheat on expense reports

• Employees claim that they are running out of cash due to business travel expenses.
• Some employees take advantage due to an unclear expense policy.
• Some companies have inadequate resources to regulate the approval process.

Keeping your expense fraud in control

It is not wise to reimburse any expense claims without proper verification. So, safeguard your organization from expense report fraud by maintaining strong internal protocols. There are a few key steps the finance team can consider to detect and prevent fraud.

Setup automatic policy checks

Automating policy checks helps to eliminate fraud. For instance, you can set the policies to accept the reimbursement claims only for weekdays and reject them on weekends without any human intervention.

You can apply the same to travel requests and reports where you can setup approved vendors and spending limits.  To make the process of policy enforcement easier, you can rely on an expense management solution, such as ExpenseOut that can automatically identify violations and notify both the employee and the management/ finance team.

Provide your employees with the right system

You can provide your employees with the proper tools to manage the expense claim without any hassle or paperwork. ExpenseOut allows paperless expense tracking, quicker reimbursements, and extensive analytics to keep track of employee spending—all from a single platform.

Manage business expenses with corporate cards

Implement the use of corporate cards for better control of travel expenses. With corporate cards, you can get real-time insights and comprehensive visibility into spending detail.

Make smarter expense claim approval workflows

As the business grows, performing the expense claims process manually takes numerous employee hours and could still end up inaccurate, out of date, and costly.

However, automating the approval process with expense management software, like ExpenseOut is completely error-free and is easy for both the employees as well as the management. It is easy to create two or more steps in your approval workflows and customize the workflows according to your needs, which saves a lot of time.

Audit your expense reports frequently

Making receipts digital and mandatory for every expense claim helps you to avoid expense fraud. In ExpenseOut software, all claimed reimbursements are stored in a digital vault.

As a result, you can check the receipts whenever you want, keep them safe forever, and always be audit ready. Auditing your expenses is a great way to ensure that your travel and expense program is in alignment with company goals and that fraud is in check.

Mitigate expense fraud with ExpenseOut

ExpenseOut helps you to protect your organization’s financial health. Our software automates the management of expenses, and the benefits of this functionality are compelling. It reduces the risk of fraud and human error, limits the impact of lost receipts, saves report processing time, allows for faster reimbursements, and offers a more efficient means of monitoring and managing expenditure.

Conclusion

Nowadays, many companies are slowly getting awareness about expense fraud and are taking necessary steps to prevent it. The company should take adequate steps to enforce clear expense policies. With automated expense solutions like ExpenseOut, businesses can also automate multi-stage approval workflows and real-time policy compliance. These help to reduce errors and eliminate potential expense fraud.

To learn how ExpenseOut can help your organization, schedule a demo today and experience the AI-powered expense management system.

Reach us at [email protected] for more details.

Paper receipts from business travellers are one of the biggest hindrances that any finance or accounting team can face. The receipts are hard to track, manage, and retrieve when needed, making it one of the main reasons why companies struggle to become audit-ready on time.

 It is worth mentioning that failing to produce the relevant receipts during tax audits can land the company in serious trouble. In addition, it can further signal to investors and regulatory bodies that your company has something to hide.

To avoid these hassles, companies need to use an expense management solution, like ExpenseOut, with advanced receipt management capabilities that you need to be audit-ready at all times. 

Here, we look at why this is the case, given the shortcomings of traditional methods of receipt management. 

How traditional receipt management hinders audit readiness

Paper receipts are notoriously easy to misplace, manipulate, or even duplicate. This poses a severe threat to both the finance team and the employees. For the employees, poor receipt management means delayed reimbursements. On the other hand, the finance team runs the risk of not being audit ready when they most need to. 

Most of these challenges are due to the disadvantages of the traditional means of receipt management, which are: 

• Inability to keep track of the countless paper receipts in circulation
• Inability to retrieve receipts as and when needed due to the sheer volume 
• The ease with which paper receipts can be lost or tampered with

ExpenseOut to the rescue: How the cloud-based, automated expense management solution can help companies stay audit-ready all through the year 

Speed up expense reporting like never before 

Usually, expense reporting involves the employees filling out spreadsheets, elaborate forms, or emailing the finance team screenshots of paper receipts. 

ExpenseOut puts an end to all this: the moment an employee makes an expense, they can scan the receipt using OCR and have it automatically uploaded to the cloud. Instantly, the manager or admin is notified of the expense, and the receipt is stored safely on the cloud with all the relevant details that can be used to retrieve it when needed.  

Notably, upon uploading the expense, the system also automatically checks for policy violations, meaning that the approval stage of expense reporting takes no more than a few seconds. 

Seamlessly view and track all your business expenses in one secure location

As your company grows and you have numerous invoices, receipts, and corresponding expense reports, it will become challenging to track everything and retrieve the information you want. 

With the right expense management solution, organizations will maintain all their financial statements and receipts in a unified platform, where the information is safe and easy to reach. 

Further, the company can filter out expenses based on location, department, employee name, expense category, date of spending, etc. Besides, the information can be reviewed/ approved seamlessly in the same window. 

Secure all your receipts with cloud storage 

When employees submit paper receipts to the finance team, it can be a nightmare to verify if they are policy compliant and authentic and store them for reimbursement and expense report generation.

With a solution like ExpenseOut, organizations can hold all their employees’ receipts in a digital vault powered by cloud technology after the employees use the app with OCR functionality to scan the paper receipt. 

This system of storing receipts in ExpenseOut’s unlimited cloud storage is much better because paper receipts can be misfiled, mishandled, or lost. Another great benefit of leveraging cloud technology is that anyone can conveniently access the information they want from the device of choice. 

Conclusion

As you can see, ExpenseOut ensures that the whole process of organizing, managing, viewing, and tracking receipts is pain-free at all levels of the organization. Also, the cloud storage capabilities and automatic report generation in real-time for all the tracked receipts make the solution a must-have that will save your organization tons of resources and time. 

Switch to ExpenseOut today. Reach us at [email protected] for more details. 

An estimated 82% of employees lie or file inaccurate expense reports. While there is no way of preventing anyone from knowingly making false claims, companies can do a lot to ensure that most employees comply with the established T& E (travel and expense) policies. 

This reduction in incorrect expense claims shouldn’t be taken lightly. 

Fraud and non-compliance in employee spending claims cost companies billions of dollars every year, so even a slight uptick in policy-compliant submissions should be something you need to pursue energetically. 

Now, how do you go about this seemingly arduous task? 

It all boils down to what you do when you present your expense policy to your employees. Turns out, there are several things you can do as part of the management or the HR team to ensure that everyone understands your spending policies and adhere to them as much as possible. 

Here are a few pointers on how to go about doing just that. 

Setting an example

One of the first things companies need to do to get the most out of their expense policy is to have the senior members take it seriously. Suppose junior employees are questioned over tiny infractions, and senior team members are let off the hook. In that case, the whole system collapses, as an atmosphere of skepticism prevails regarding the expense policy. 

Prioritize transparency 

Many studies have shown that employees tend to violate the expense policy of a company frequently if they think it is unfair. To ensure that your expense policy is respected and followed, ensure that employees are informed as to why each aspect of the document exists. Further, it is vital to get their inputs while creating your company’s expense policy and keep them notified of any change you make to it. 

Simplicity and clarity are key

Make the expense policy as clear as possible. If the employee is on a trip or making a key purchase, and they are left scratching their head as to whether or not some aspect of their expense is compliant or not, they will most likely make the purchase and later on file a report that meets your policy requirements. 

Also, ensure that there is no jargon and that the policy is readily available throughout the organization. 

To ensure simplicity, include a table of contents, bolden the key points, and provide graphs, flowcharts, or photos to illustrate how to best adhere to the policy. 

It is also quite crucial to spell out every aspect of your expense policy. For instance, include:

• Tools to be used for booking travel
• How the reimbursements process works
• The criteria for the approval/ rejection of travel itineraries 
• Which sites, travel agents, or internal documents/staff are to be referred to while booking travel 
• Food allowance details
• Specific flight details, including rough budgets, class, and other limits 
• Permissible hotel and car rental budget 
• Timeframe for expense reporting and expected reimbursements 

Keep up with the times

Remember to constantly make adjustments to the expense policy to keep in tune with the present scenario and incorporate factors, such as inflation. For instance, if your salespeople have stopped taking regular cabs and switched to Ola or Uber and are traveling at a reduced price than before, make sure that that change is reflected in your policy. 

However, it is equally crucial to communicate these changes to the employees and confirm that everyone has seen the changes and is fine with them. 

Audit frequently 

If the employees know that the compliance is monitored for each individual and the department, they are less likely to be sloppy with the expense reporting. So, you must conduct regular auditing of spending in terms of the volume and the nature because it will provide you with crucial patterns of what is happening regarding expense policy compliance. 

Automated policy compliance—the most potent way to ensure responsible spending and accurate reporting 

Companies can employ cloud-based expense management software to implement a clear expense policy, simplify the reimbursement process, and seamlessly integrate policy changes into the company’s day-to-day workings. 

Companies can easily set spending limits, automatically flag inappropriate reports/ claims, leverage GPS to determine the accuracy of travel claims made by employees and make everyone aware of tax and other obligations. 

Conclusion

Following these steps while creating, maintaining, distributing, and enforcing your expense policy will go a long way in reducing fraud, misreporting, and other malpractices in your company’s expense management process. 

However, if you are ready to take your compliance to the next level with automation, ExpenseOut will be perfect for you. 

Given the vast amounts of money that companies are losing every year due to fraudulent expense claims, they must leverage the latest technology to identify fake expense entries in the reimbursement claims made by employees. 

To give you a picture of the gravity of the situation, here are just a few of the types of fraud that takes place. 

• Claiming expenses that never took place. For instance, traveling by public transport and billing for taxis. 
• Inflating the amount spent. 
• Claims made for personal expenses.
• Overspending. For example, using first-class travel rather than the economy class that the company agreed to pay for. 

How can you prevent this? 

An automated expense management solution can help any organization to be systematic in the expense reimbursement process. Automation of the entire process helps in maintaining all records with enhanced transparency. It also increases the convenience of the employees as they can upload their bills, get approval, and receive reimbursements all within the confines of the company’s spending policies. 

Here are a few of the other steps that can be taken. 

Multi-layer approval:

The approver must ensure that the claim adheres to the corporate policies before approving them. Multi-layer approval ensures enhanced monitoring and control. Manually maintaining such a process becomes almost impossible but with an expense management solution, it happens in just a few clicks. Automation helps in sending quick emails and notifications to approver and employees related to expense claims.

Tracking and monitoring:

Every expense of an employee should have a unique expense code to keep track of. Expense management solutions can help in providing insight into expenses that is specific to employee, department, category, and period. Any duplication of expenses can be easily identified using an automated expense management solution. Through analytics, expenses made on the same day, month, purpose can be reviewed and cross-checked.

Lead your employees:

According to the ACFE report, senior officials account for nearly 24% of all cases of employee reimbursement fraud at an organization. The senior officials must set an example of having an honest approach in their reimbursement process that can indeed influence the employees to follow the lead.

Conclusion

With ExpenseOut, you can easily enforce corporate policy, curb overspending, and make your employees behave responsibly with company money without micromanaging them. Reach out to us for a customized solution for all your expense claim issues.