According to an SAP Concur global survey, mid-sized enterprises could lose $17,000 per year owing to fraud. The research “The Hidden Cost of Cost Fraud and Non-Compliance” delves deeper into the topic of expense fraud and employees’ attitudes toward it and how businesses are dealing with the problem and the digital solutions that can help.
Pierre-Emmanuel Tetaz, EMEA SVP & General Manager, SAP Concur, explains: “It’s clear from our research that expense fraud is commonplace, and often at such a small scale, that some employees don’t even see it as an issue. For some employees – from juniors to leaders – it’s not only okay to hand in incorrect expense claims, but they also consider themselves totally justified in doing so.
For organisations it can be an issue, though– and this goes beyond lost profits. Travel and finance teams may spend many hours checking and investigating expense claims, and there is always the risk of non-compliance and its potential consequences.
Tools like our new Concur Detect by Oversight that uses Artificial Intelligence (AI) help to ease that burden. AI can help automate some of the more labor-intensive tasks, identify patterns and make data-based decisions. This frees up time for organizations to focus on educating employees on T&E policy and the perils of non-compliance and making tailored policy adjustments.”
Adjusting expenditure submissions could include everything from intentionally fabricating invoices to claiming a “little bit extra” as compensation for a lengthy weekend work trip. According to the study, employees believe it is permissible to submit a fraudulent cost claim for up to 145 USD on average.
While it’s critical to recognise that the majority of inaccurate claims are submitted unintentionally, it’s equally critical to recognize the elements that make deliberate expenditure fraud more likely, which are frequently linked to employee awareness and satisfaction. According to the results of the poll:
• There is a broad misunderstanding about fraudulent behavior and the consequences for employees and the company. For example, 49% of employees have rounded up mileage payments, and a further 14% are considering doing so. In addition, 41% have expensed private restaurant costs, and another 16% plan to do so in the future.
• Almost half of the employees (48 percent) believe it is completely okay to overspend or ignore corporate standards on a yearly basis. If all of these people act on their beliefs, a company of 250 people that submit expenditure reports might face a loss of USD 17,000 every year.
• Many employees cite fairness as a reason for their tolerant attitude toward cheating: whether it’s to get a little extra compensation for the overtime they don’t get paid for (19%), for the private money they need to spend on working from home (18%), or to get a little extra compensation for the overtime they don’t get paid for (19%) or for the time spent traveling for business (17%).
Business and financial professionals are beginning to recognise how AI-enabled solutions can help them better combat fraud and non-compliant spending as they look to the future:
• Artificial intelligence techniques can assist prevent fraud, according to more than half of travel and finance decision-makers (54 percent).
• More than half of travel and finance decision-makers (54%) feel artificial intelligence tools can help them streamline their compliance processes.
• AI, on the other hand, raises serious worries about unexpected implications for employees. Nearly half of decision-makers (44%) are concerned that employees may oppose to the use of AI tools in the compliance process, and 39% are concerned that AI will make their job obsolete.
