3 Things You Need To Know About Expense Fraud and How to Avoid Fraud
We’d all like to think that our companies employ honest, trustworthy people. And it’s true that a large percentage of your employees probably are as honest as you hope them to be. In fact, by far the most common way companies stop fraud is when it’s caught and reported by an employee.
Even so, internal fraud still happens at an alarming rate. Of these cases, 89% fall into the category of asset misappropriation, of which expense fraud is one example. While the amount of money lost to expense report fraud is low compared to other types of fraud, it can add up quickly.
It’s vital that you understand how common expense fraud is, how much it can cost your company, and what tools you can use to stop it. The more you know about expense fraud, the better able you’ll be to stop it from harming your company.
It’s More Common Than You Think
Some employees submit fraudulent expenses unintentionally. This is generally due to a problem with unclear T&E policy and inconsistent controls. The biggest issue happens when employees deliberately work to defraud your company.
According to the Association of Certified Fraud Examiners (ACFE) in their 2018 Report To The Nations, expense reimbursement fraud makes up 17% of occupational fraud schemes in the United States. That might not sound like a huge number, but it’s still high enough that you can’t afford to ignore expense fraud.
The Cost of Fraud Adds Up
Fraudsters often spread expense reimbursement scenes out over long periods of time. The median duration of expense reimbursement fraud is 24 months. Because the individual amounts of money being pilfered from the business seem trivial, businesses often overlook expense reimbursement fraud.
Unfortunately, the cost of this type of fraud can quickly add up. As a general rule, expense reimbursement fraud causes a median loss of $31,000. It’s not the most costly form of fraud but it’s enough to significantly impact your business. And it’ll add up particularly quickly if multiple employees are running scams on your company.
Automation Helps Stop Fraud
T&E fraud relies on outdated anti-fraud controls and finance departments that are too busy to double-check every expense report. That’s why fraud prevention is one of the top reasons to automate your expense reporting system. Travel and expense automation software enforces company policy, tracks all reports, and flags any suspicious activity automatically.
Anti-fraud controls do work if you can keep them up-to-date and enforce them as part of your T&E policy. A high-quality software system like the one from NextProcess will give you the tools you need to take control of T&E reporting and fright fraud even before it happens. Contact us today to get started.