Ending Expense Fraud & Abuse with Modern T&E Management
Modern T&E management platforms help finance leaders mitigate the risk of fraud -- to the point that they can turn a corporate card “on” or “off” for specific trips and make various merchant categories, types of spend and amounts off-limits.
Do you remember a couple years ago when a partner at a consulting firm was sentenced to prison for hundreds of thousands of dollars in fraudulent expenses and invoices? Many other instances of corporate card abuse have come up in recent years, ranging from executives at a pharmaceutical company and an insurance company, to an employee at a local water company, who expensed more than $10,000 of personal expenses on their corporate cards.
In fact, with many employees home due to the coronavirus, T&E fraud could be a bigger concern than before. Corporate card abuse and fraud are among CFOs’ biggest worries when considering whether or not to offer corporate cards to their employees--yet there are significant benefits to doing so.
We had this in mind when we launched TripActions Liquid™. CFOs can feel more confident than ever that they are protecting their company from careless or irresponsible actions while enjoying all of the benefits of corporate cards, like removing the burden on employees of carrying company expenses on personal cards, full and real-time visibility and control over spend, and more.
Let’s take a closer look at how old school corporate cards leave enterprises open to abuse and fraud.
1. Lack of hard guardrails
Simply having an expense policy living in your employee handbook or on your intranet is not enough. Your T&E platform should provide limits for corporate cards that prevent out-of-policy purchases from being made in the first place. That way the expense policy doesn’t need to be at the top of every employee's mind--which it inevitably isn’t. Admins can apply limits by card, or set the cards to be active only during approved work trips, or by expense category or merchant--all so that out-of-policy spending and abuse can’t take place.
2. Card numbers everywhere
In old-school T&E management, employees’ corporate card numbers are used everywhere, including in email correspondence with suppliers and vendors, putting them at greater risk of being stolen and used fraudulently. Modern T&E solutions use tokenization, which limits exposure and risk. This means that a virtual credit card number is only available for single use, on one transaction, and then cannot be used again, thereby mitigating the risk of fraud.
3. Places to hide
Because it’s difficult to closely scrutinize transactions one by one, historically there’s been opportunity to fraudulently charge non work-related spend and not get caught. In fact, studies show that expense reimbursement fraud accounts for 21 percent of fraud in small businesses and 11 percent in large businesses. These amounts can add up, especially in an economy where margin and cost savings on the path to business recovery are more important than ever.
4. Time delays
What finance team hasn’t pulled their hair out over the $10,000+ four-month-old expense report that was filed 10 hours after closing the books for the year? With a modern T&E solution, reconciliation can take place in real time, so there’s no delay in seeing where money is being spent--including fraud. You can see who spent what and when, and then make adjustments to policy or individual spend authorizations in real time. You don’t have surprises, especially many months after the initial spend.
5. Highly manual reconciliation
Closing the books no longer needs to be a last-minute scramble. With corporate cards aligned with your T&E platform, and cutting out the “middleman” of expense reports, you have less manual work, so your finance team isn’t bleary-eyed when reviewing expenses. A modern T&E platform flags any questionable expenses for you to follow up on and automation frees time for finance to focus on higher priority strategic initiatives such as fraud prevention and spend optimization.
Broadly, the issue with T&E fraud is one of visibility-- or rather the lack thereof. All these issues can be addressed through a modern T&E management platform that delivers greater visibility and control, combined with automation to remove the highly manual reviews and analyses that go along with old school expensing.
TripActions Liquid assures better management of expenses and combats abuse by helping finance teams:
- Ensure employee accountability: Hold employees accountable for unauthorized transactions in violation of the T&E policy.
- Minimize company’s financial liability: Companies can recover costs that stem from non-compliant spend.
- Give employees the ability to pay back: Allow employees the option to pay for out of policy expenses seamlessly without involving finance and payroll.
Modernization of T&E is a win-win that helps enterprises large and small gain the visibility and avoid fraud and abuse while streamlining their T&E processes to remove friction for both employees and the finance team. Learn more about how TripActions Liquid also simplifies recourse and even makes contactless payments easy for employees in this video.