March 31, 2021
A study by the Association of Certified Fraud Examiners (ACFE) found that 2,690 cases of reported fraud in 125 countries came with the staggering price tag of over 7 billion dollars in total losses, and a median loss of $130,000 per case. And if you were to make the common assumption of assuming that these cases of fraud were mostly in larger companies, the ACFE found that small businesses lost almost twice as much per case, with a median loss of $200,000 in companies with under 100 employees.
Expense fraud is a looming problem that doesn’t always have a clear solution. But left unattended, fraud can take a massive bite out of a business’s bottom line and breed a culture of complacency and downright dishonesty which can lead to dire consequences (see: Enron).
To encourage a culture of accountability, while cutting down on wasteful spending, here are a few best practices to consider in the prevention of expense fraud.
When there are clear rules in place, it’s harder for individuals who are seeking to exploit the system to claim ignorance while creating a culture of honesty and integrity within the company. It makes it much easier to play by the rules when everyone is fully aware of what the rules are exactly!
Any budget that involves booking high-priced airline tickets or hotel rooms can be a category that will attract expense fraud. Having an official business travel policy in place — basically a framework of limits set around how your employees travel, accommodation/expense allowances, and your company’s preferred suppliers or booking channels — can be a great way to set firm boundaries when it comes to business expenses.
And yet, a study of travel trends by Expedia Group found that only 60% of businesses have any sort of travel policy in place. If your company falls in the 40% of businesses without clear policies, this could be a great way to take back control of expenses with clear, transparent policies. Here’s what you need to focus on:
Be sure to make time to go over the policy with your employees and make sure they have a clear understanding, and whether or not they have any questions or concerns — before you officially put your new company travel policy into place.
While structure and rules are a good thing, you want to be careful not to go over the top. If employees feel like they’re being treated like criminals, they will begin to feel resentful.
A good way to set firm limits while still making employees feel that you trust them is to set limits for expenses — for example, up to €50 monthly transportation budget.
Platforms like the Bolt Business Team Account can be helpful for creating employee-specific budgets where managers can set a business travel or commuting budget, and it’s ultimately up to the individual employee how that budget gets spent. Meanwhile, all expense reports and receipts are automatically handed over to the company’s Accounting department, with no “middle-man”, no wasted paper and, crucially, no wasted time or money.
Pop quiz! Which of the following sounds like a better solution?
Waste none of your time worrying about the above because all transportation-related invoicing, accounting and reporting is all streamlined onto a 100% paperless, hassle-free platform.
Your employees don’t need to worry about hanging on to their receipts. If their ride is work-related, it’s deducted from their expense budget — with an accounts-ready receipt automatically emailed to your Finance department.
It’s a no-brainer, right? Rather than an ad-hoc, manual solution for dealing with paper receipts (which can be doctored to allow fraud to go undetected), modern technological solutions can prove integral to your business because not only do they cut the workload in half, but they make it much harder for individuals to discover opportunities to “game the system.”
When you’re down on the ground, it can be easy to miss things. Sometimes it takes a different perspective, or even a holistic overview, to truly grasp a situation.
This is where regular accounting reports can be a serious help in the fight against internal expense fraud. Reporting can help show where there are unusual levels in spending that may not have been noticed during day-to-day operations.
Bolt Business Team Account account holders receive an automated monthly summary of rides and expenses straight to their inbox, which makes it that much easier to get a grasp on how money is being spent within the company.
This is especially important if you’re planning on scaling, and luckily, Bolt is available in over 40 countries, to support you as your business expands.
In addition to making savings on ride fares, the Team Account’s intuitive platform streamlines all of your company’s travel expenses onto one easy-to-use dashboard. Learn more about the Bolt Business Team Account, how we can help your company cut down on travel costs and make travel expense management a breeze!