The 4 Best Ways to Proactively Prevent Expense Fraud

The 4 Best Ways to Proactively Prevent Expense Fraud

In small and midsize businesses, dealing with expense fraud can be difficult for several reasons:

First, the procedures for identifying and dealing with expense fraud are not well developed due to reliance on traditional bureaucratic and cumbersome solutions. Accounting managers don’t find the time with their day to day operations, which render them unable to execute comprehensive expense review processes.

Secondly, employee expenses occur in various forms such as corporate cards, personal credit cards, and petty cash. Additionally, reconciliation often only happens after expenses are reimbursed. Managing the multiple ways of expenses happening can be difficult for approvers. Therefore, it becomes nearly impossible for managers and approvers to comprehensively review each and every expense or question the individual.

All these factors make it increasingly difficult for SMBs to manage travel and entertainment expenses. Often, discrepancies are overlooked or otherwise ignored. Therefore, SMBs that want to prevent expense fraud must implement a proactive system that greatly reduces or eliminates the likelihood of expense fraud from happening.

Fortunately, SMBs can leverage technology to prevent expense fraud to the maximum possible extent. In a nutshell, business owners have to:

Execute Pre-Trip Approval

This is a process wherein each employee is required to submit expense claims in advance, all which comply with company policy. Pre-trip requests will be sent to the appropriate manager(s) for approval. Likewise, approvers can know the expected amount of expenses for each trip. When employees spend more, you can easily uncover the reasons for the out-of-policy spending. Additionally, the requests can be automatically converted into reports once the trip has been completed.

Offer Debit Cards

Eliminate personal credit cards and offer debit cards to your employees. This way you can see where the money is going before it is spent. Additionally, debit cards can be limited to certain spending types, daily limits, and can be deactivated, if required.

Document and Categorize Expenses

Allow employees to document receipts within seconds or minutes of the transaction occurring. This eliminates missing/lost receipts, and users don’t need to keep track of until they return to the office anymore. Mobile applications will allow employees to submit receipts instantly.

Accounting Ready

Expense data such as transactional information, documentation, and expense categorization should all be captured into the accounting system in real-time. This way transaction with exceptions can attain the accountant’s attention to questionable transactions.

Implementing expense reporting software that features these elements allows organizations to simply just avoid all the expense fraud issues that have previously held companies back. Furthermore, this puts businesses at the forefront of future expenditures, so you don’t have to experience any surprises at the end of the month.

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