Expense refund fraud can be very costly for small businesses. According to a recent study by Chrome River Technologies, it could cost up to $ 1.9 billion a year to US companies.
It's about $ 35,000 per business. Small Business Trends has been talking with Anne Becknell, senior vice president of customer success at Chrome River Technologies, about what small businesses need to know.
As its name suggests, expense reimbursement fraud is a crime that occurs when an employee submits a claim for reimbursement for false business expenses.
How to Avoid Fraud in Refunding Costs
Using Up-to-Date Technology
The management and verification of expense reports must use modern technology to be effective. The use of manual expense reports was the number one survey.
"It's amazing how many small and medium-sized businesses still use the candle and pencil method," Becknell says. "They always do it by paper or with Excel spreadsheets and email it around the company."
The problem with these obsolete systems is the inability to track and see trends that should trigger alarms. Technology incorporating tools such as automated analysis helps you spot hot spots as the same receipt that has been submitted a number of times.
Becknell says that automation halves the expense reimbursement fraud.
Understanding Men Cheat More
Expense refund fraud is not an area where there is gender equality. In fact, the report indicates that men were more than twice as likely to commit the crime as their female counterparts. Not only that, they were over four times more likely to add at least $ 1,000 to their expenses.
Know that young employees engage more in these crimes
In fact, almost 83% of the expense fraud was committed by employees aged 25 to 44.
Implementing a formal written policy
Not only is a written policy important, but small businesses should have a procedure to follow to inform managers that employees have dealt with what they need to know. Becknell suggests getting employees to sign the document to help them take ownership of the policy.
When you sign something, there is an emotional attachment, "she says.
Incorporate high level rules
The policy does not need to be too detailed, but it must set the limits of spending. For example, although it is not necessary to specify the exact amount that you can spend on a taxi ride, it should tell your employees if business class or coach is acceptable.
Simplicity should be one of the reference points you use here.
Do not complicate the process
Accountants often see the opportunity to deepen the expenses of a company when they automate the process. The result is an expense report that is complicated and tends to be stamped without being properly examined.
Therefore, it is important to look at how often and why expense reports pass from one person to the other. Small businesses should seek to streamline this part of the process.
Pay attention to personal expenses
One of the biggest claims for expense fraud is the substitution of personal expenses for business expenses. One of the gifts here is claims for weekend meals when the employee is not expected to travel.
Watch out for extravagant spending
More than one-third of those who admitted to cheating in the Chrome River technology reported adding amounts ranging from $ 100 to $ 499. Amounts that seem altered are red flags that you should look for. For example, a receipt that seems to have used two different types of ink is usually a dead gift.
Approve Approvers
"You will want to make sense of the approval of these receipts and train the approvers," says Becknell. She adds that it is important that they understand what to look for and that they are held accountable for any fraudulent claims.
Using corporate credit cards as a proactive step
Wherever possible, the use of corporate credit cards discourages fraudulent claims. These are a great way to lock important information like the date and amount of any transaction.
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