End wasted spend. Automate your expense policies.
“Set yourself up for success” — a simple platitude but a useful one, especially when it comes to saving your company money. Creating automated processes that guide employees through purchasing compliance from the beginning is the most effective way to end wasted spend, and is much easier than identifying and correcting incidents after they happen. Setting employees up for successful purchasing saves time across an organization, because no matter how much effort goes into crafting an employee expense policy, it’s ultimately only as good as the controls that enforce it. Unclear procedures and a lack of visibility put businesses at risk of zombie spend, unnecessary or duplicative spend, and employee fraud.
Flimsy implementation undermines the work done to create both an effective expense policy and a balanced budget.
Sometimes the barrier to end wasted spend is simply a matter of poor communication or lack of visibility into spend activity, such as when an employee leaves a company but doesn’t terminate ongoing subscription expenses on their corporate card. Or, an employee may simply see an opportunity to benefit from a “gray area” in a company’s policy. Sometimes, procedures are so confusing that employees find workarounds to avoid expense reporting. Most employee fraud is opportunistic, not pre-planned.
There is, however, a surprisingly high level of expense violations made with fraudulent intent, and these incidents can be difficult to detect. The Association of Certified Fraud Examiners reports that an employee expense reimbursement fraud scheme lasts an average of 24 months before it is noticed, with an average loss of $1,400. The lengthy time for detection is not surprising when looked at with other stats. Expense reimbursement fraud is more common in companies with more than 100 employees, where it’s easier to fly under the radar, and harder to end this type of wasted spend. And IT controls only detect about 2% of fraud attempts. This is unfortunate, because the Association found that in 12% of occupational fraud cases, no attempt was made to conceal the fraud, so the evidence was essentially waiting to be found. The technology exists to recognize and stop noncompliant spending, and end wasted spend, but it hasn’t been adequately built into many businesses’ expense management processes.
To truly set employees up for success in purchasing, and stop wasted spend and fraudulent expense reporting, expense processes should:
Start with clear, flexible approval policies that provide end-to-end visibility. Nobody wants to waste time figuring out who has to approve an expense, and nobody likes to be asked to approve a noncompliant purchase after the fact. When purchases are approved up front, financial information is up to date and accurate.
With visibility into spending across departments, an intelligent approval process can end wasted spend by alerting a requester if a company is already subscribing to a service, or if a subscription is about to auto-renew.
Create an audit trail. A complete audit trail also protects employees from any accusations that they’ve misused funds or spent unnecessarily. Every element of a transaction, from the initial request to their receipt submission, is stored in the system and can be referenced — loose policies are some of the mistakes made in corporate expense management. Enforced receipt compliance contributes to this audit trail. If an employee purchases a service with a corporate card, it’s much easier for them to simply take a photo of a receipt than it is to find the receipt a few weeks later when they submit an expense report — they can set themselves up for success right away.
Ensure accuracy. It’s harder to end wasted spend if a purchase isn't categorized properly, or if a claim is missing information. Automated processes help ensure all information is correctly recorded in the GL.
Wasted spend and fraudulent expense reporting don’t have to go unnoticed for years. Set employees — and your company — up for success with processes that protect the budget and build compliance into the very act of purchasing. Contact Airbase to learn more!
Airbase offers a one platform solution to manage all non-payroll spend. It provides oversight and control over spending with real-time reporting and automatic syncing directly to your general ledger. Control all payments – physical cards, virtual cards, ACH, and checks – from one place. Close faster. Empower employees. Control spend.
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