Travel and entertainment expenses make up a very large portion of many company’s budgets. Some estimates put it at around 10 percent of operational costs. These are also areas that are full of fraud in many organizations, as well as inefficiency and wastefulness.
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Travel and Entertainment: Costs and Fraud
Despite the major expense of T&E costs, and the problems associated with these costs, many businesses still don’t fully grasp the large-scale effects that can occur on an entire organization.
Many businesses don’t even have the means to spot fraud, much less then have the steps in place to take care of it if it occurs.
The following are some things every company should know about T&E costs, as well as fraud.
Expense Management Software
One of the best ways companies can reduce or eliminate T&E fraud and also eliminate inefficiency and human error is to use expense automation tools. Too many businesses still use outdated methods of keeping up with T&E costs.
The problems include not only an increased likelihood of fraud because it’s difficult to spot without automation, but there are other issues with using outdated methods. For example, the cost of manual, paper-based processing is more expensive and time-consuming than using automated software.
It’s also cumbersome for employees who travel to complete manual expense reports and wait long periods of time for reimbursements.
Expense management software can not only reduce fraud, waste, and error but can also improve employee satisfaction.
T&E Fraud Usually Happens Among a Small Group of Employees
While T&E fraud can be a serious problem, it’s not happening among a widespread group of people. What instead is happening is that a small group of people tends to be responsible for committing the majority of all T&E fraud that occurs. A small group of travelers committing fraud can add up to very big expenses, however.
Research has shown that most people violate T&E policies and commit fraud at any level tend to do it repeatedly. They may start with smaller fraudulent behaviors and then progress to bigger types of fraud from there.
What this all means is that it can be difficult to spot fraud until it spirals into something much larger. That’s why technology solutions such as expense software can be so helpful. Expense software and automation tools can flag even the smallest behaviors that are non-compliant with policy. These small issues can be dealt with before it becomes a repeating pattern with certain employees.
Fraud is Most Common in Certain Areas
There are certain specific ways employees tend to be most likely to commit T&E fraud. For example, an employee might charge expenses that aren’t related to business purposes, while on a business trip. They might charge expenses to the wrong account, change receipts, or submit duplicate expenses. Duplicate expense submission is actually one of the most common forms of T&E fraud committed.
If an organization can identify the areas where T&E fraud is most often happening or is most likely happening, it can help them put a stop to it.
Consider Apps Often Used
The use of mobile apps in business travel can provide great advantages. For example, business travelers can enjoy the convenience and often lower prices of taking an Uber as opposed to a taxi. However, this can make it more difficult to keep track of expenses, and it can also create opportunities for fraud.
For employee satisfaction, it is important that business travelers have a sense of flexibility in how they travel. At the same time, there need to be careful guidelines and controls in place for how these non-traditional forms of travel are used for business trips, and how expenses are managed.
Corporate Cards Can Help Reduce T&E Fraud
Some businesses are cautious about the idea of issuing corporate cards, but the reality is that it can reduce the likelihood of fraud. Corporate card programs can actually make it easier to integrate spending records with an expense management system. It also provides a more tightly controlled system to see what’s being spent and where. Paired with an expense management software solution, there is a high level of not only control but also visibility with the use of corporate cards.
When you have in place both corporate cards and expense automation, you can get real-time data in a second. Since expenses are being automatically imported into the system, it also reduces or eliminates the chances that expenses will be changed or falsified. Plus, with automation and other modern tools business travelers are likely to be happier with their overall experience as well.