Leadership & Productivity
How growing businesses can lead the fight against expense fraud
5 min read
13 November 2017
Each year, in excess of £100m is being lost to UK companies through falsified and exaggerated costs.
The recent webexpenses’ study into workplace expense fraud revealed that 84 per cent of UK office workers have never had an expense claim challenged or declined.
It’s a staggering fact that helps to explain how expense fraud has become the global epidemic we’re faced with today – stifling the growth of our businesses. Each year, in excess of £100m is being lost to UK companies through falsified and exaggerated costs.
The survey results should act as a wake-up call for any growing business. They highlight how the lack of adequate monitoring or checks enables fraud to become deeply embedded with a workplace culture. Of those surveyed, 42 per cent said if they were “sensible” with their dishonesty, their claims wouldn’t be challenged.
This lack of perceived risk helps to embolden employees, normalising the act of fraud within a business. As fraud levels rise, outdated processes become increasingly incapable of controlling costs.
And the survey highlights the way that employees are finding smarter and more nuanced ways to beat the system, ‘bumping up’ legitimate business expenses with the addition of personal costs.
It’s a cyclical problem that needs to be broken and this is a challenge where our growing businesses have a vital role to play. They now have access to the technology, tools and mindset that’s needed to start winning the battle against expense fraud.
The problems faced today are a legacy of the traditional way that organisations have managed reimbursement costs, relying on paperwork, Excel spreadsheets and the manual processing of information.
It creates a slow, clumsy and error-prone way of working with finance teams too busy processing claims to properly check or challenge any suspicious looking costs.
The time and resources required to police expenses meant that many businesses simply stopped trying, choosing instead to tolerate an “acceptable” level of fraud.
While established companies have the “baggage” of these outdated systems and traditional attitudes, it’s a barrier that our new SMEs and growing businesses don’t have to overcome.
They now have access to digital management systems which revolutionise the way reimbursements are able to be monitored and controlled. Webexpenses replaces paperwork, spreadsheets and manual tasks with fast, automated and cloud based processes.
Employees use a smartphone app to convert paper receipts into a digital form, allowing the whole process to be automated. It allows finance teams to create automated policy checks to flag any costs that breach any defined limits.
It reduces processing costs by 25 percent and provides finance teams with the accurate data they need to start regaining control of expense costs. Mileage fraud is one area, in particular, where digital systems can virtually eliminate fraud.
This was the number one cause of fraud revealed by the global survey with 47 percent of respondents admitting to exaggerating or falsifying road journeys. They could do this because traditional expense management relies on workers providing estimates of distances travelled.
With a cloud-based system such as webexpenses, the smartphone app tracks and records the exact route and distance of any business journey. If a journey hasn’t been made – it can’t be claimed.
It also helps to tackle the strategy of merging legitimate business claims with personal costs. If an employee’s journey includes a non-business related detour – the tracking data shows it.
With access to these powerful tools and a shift in attitudes towards workplace dishonesty, the stage is set for our growing businesses to lead the fight against expense fraud.
With a new generation of businesses equipped with effective and scalable expense management systems, we can start to battle back against a resource sapping epidemic that has no place in the modern business environment.
Webexpenses provides a smarter way to manage employee expenses and scale-up your business. Find out for yourself by requesting a free demo.