You’ve heard it before, you go to lunch with a friend (or colleague for that matter) and after discussing everything except work, they utter the phrase, “My company’s got this” as they pick up the tab. You weren’t a client or even a prospective client, but your pal reached for the bill and charged the corporate card. [pullquote]Seemingly harmless, the charge is actually an example of expense fraud, and it’s more common than you might think.[/pullquote] Oftentimes employees view expense fraud as a victimless crime; they think that insurance covers it, or see small discrepancies as meaningless in a large budget, or think that the company budget accounts for overspend.
However, those small “harmless” charges add up, and some estimate that U.S. companies lose a gargantuan $2.8 billion a year to expense fraud. Wildly enough, 40% of that typically goes undetected. For small businesses, mid to upper-level executives carry out the majority of expense fraud, but it usually takes two years for the company to catch it, costing businesses, on average, $33,000 before they even detect the expense fraud. That amount of lost revenue could cripple a small business. It’s a widespread issue, but there are ways to identify and eliminate it from your equation.
Well, now that we’ve probably given you a healthy dose of trepidation (sorry about that), how do you search this out and cease all expense fraud in your organization?
You might think your best option is dedicating your time, energy and money to converting your finance department into a team of stealthy sleuths. Or, you could train your finance team in the expense process so they can recognize the warning signs. Way more effective.
Expense reports have been the bane of finance professionals since the dawn of small business. Spreadsheets made the process easier but were eventually replaced by SaaS programs to automate certain parts of the process. Over the years, expense fraud and the hassle of keeping track of expenses have inspired numerous expense report automation services. Expense management systems still force employees and finance teams to work through expenditures and process payments. Another option is Divvy, a free expense management app that allows budget controllers to control money at the point of spending. It’s kind of like venom for business; the platform allows employees and managers to send and receive funds through an app. Divvy takes away filing expense reports and makes reimbursement obsolete, thus taking one giant leap towards expense fraud elimination for good.
Any small business owner can take control of their employee’s expenses by keeping their eyes peeled for suspicious behavior, recruiting managers to hold employees accountable, auditing frequently, and using technology to track your expenses. By making yourself aware, you can save your share of the $2.8 billion lost to expense fraud every year.
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