Fraud is extremely common these days. Why? Because it’s that day and age when you can easily create and modify anything to look like something it’s not. Technology allows you to create a receipt, modify an invoice, or change a flight itinerary with just a few clicks.
But what most people haven’t recognized is that technology also allows you to fight against the very thing it can do. Digitalizing the way companies make and track payments will eliminate receipts, expense reports, and reimbursements; therefore, eliminating the possibility for employees to commit fraud.
The stats behind fraud
In an article posted by The Point Guys, Michael Park interviews managing partners and CEOs who have dealt with the T&E fraud issue. Craig Greene, founding partner of McGovern Greene LLP, a forensic accountancy firm based in Chicago in Las Vegas, said “it is very easy to commit fraud these days.”
The bigger the business, the easier it is to go unnoticed but even small businesses don’t go untouched. A typical company loses 5% each year to employee fraud.
According to the Association of Certified Fraud Examiners’ (ACFE) 2016 Report to the Nations on Occupational Fraud and Abuse, the typical organization loses 5 percent of revenue in a given year as a result of fraud. For large companies like Walmart, that could add up to $42.1 billion losses in year. Wheres for SMBs like you and me, that could add up to $1.25 million losses.
The most recent Report to the Nations on Occupational Fraud and Abuse said that T&E frauds alone account for 14.5 percent. This number is increasing as employees find it easier and easier to slip in personal perks with their corporate card without notice.
Park went on to quote Greene when he said, “The tech of today makes it really easy to make up documents. I book a flight on Southwest to Las Vegas from Orange County on an alleged business trip, get a quote of $226, and Southwest sends me the itinerary, which is what most people submit for their expenditures. I go into Microsoft Word and change the $226 to $426, and — boom! — I just made $200.”
Forging a receipt isn’t an underground event where you meet someone in a dark alley to exchange information. All it takes is a simple edit on the computer. People have been selling those types of softwares for years.
Changing the receipt is just the beginning of what people can do to get a little cash from their company. How easy is it to purchase an expensive flight, cancel it, and send in that receipt for a reimbursement instead of the second, cheap flight you purchased? Too easy. You could do the same with hotels and other travel necessities.
How to prevent fraud
A lot of the simple fraudulent actions go unnoticed. Sometimes even the big fraud goes unnoticed–or people won’t speak up due to incentives or fear of hierarchy accomplices. So if people don’t notice, or don’t want to cause trouble even if they notice, how do you prevent this from happening?
Like I said, the technology can be the tool to commit AND prevent fraud. Because most fraud is easily committed by optimizing receipts, expense reports, and reimbursements, why don’t we just get rid of them? Why don’t we get Divvy?
Divvy is the first free, fully-automated expense management system that gives every employee a physical and/or virtual card. They get to spend with their own power and control, but every purchase is categorized into a budget and automatically uploaded into a visual, real-time web dashboard. It’s called swipe-to-book technology. Everything is automated from the swipe of a card, to the spending report in your accounting software.
Choose to have no more receipts, no more expense reports, and no more reimbursements–AKA no more wasteful or fraudulent spending. Or you can micro-manage every employee to make sure they don’t do anything dodgy.
I would choose the first.
Divvy is a secure financial platform for businesses to manage payments and subscriptions, build strategic budgets, and eliminate expense reports. By integrating real-time tracking for every transaction, Divvy provides organizations with instant insight into their spend. With Divvy, you can make informed cash flow decisions, curb losses before they happen, and never have to save a receipt again.
Get a free demo to learn more.