In part one of our four-part series, we discussed how changes in employee spending and a rise in regulations are costing organizations that have decided to “make do” when it comes to travel and spend management. But the disadvantages of using an inefficient, antiquated approach don’t stop there. It also opens up your organization to substantial fraud and noncompliance risks.
Rising regulations and the costs of noncompliance
With regulations ever-changing, understanding the rules and how to play by them is a key challenge for every business. But when employee spending isn’t completely visible and complex regulations are introduced, it can be difficult to stay on top of it all – especially when you’re not operating with modern technology that can build custom reports in minutes.
The risks of financial crime, data breaches, and regulatory infringement place extra importance on financial transparency, data integrity, and internal auditing. Not being up to par in these areas means risking hefty fines and intense scrutiny. FCPA violations, for example, have resulted in hard hits to businesses:
- $965 million by a European telco
- $800 million by a multinational technology company
- $795 million by a global telecom
Connecting travel and spend in one integrated, cloud-based system can keep you compliant across multiple areas, provide faster reporting, and give you more accurate data. Plus, policy rules built into your solution help guide employees to make the right decision from the start.
Employee purchasing power and the challenges of fraud detection
If your travel and spend management solution isn’t set up to manage noncompliance, it also won’t be able to capture fraudulent spend. And as employee spending habits are changing, purchases across new channels and payment methods make it easier to conceal fraudulent spend without a trace.
But when your travel and spend solution has built-in anti-fraud safeguards, your organization’s risk will be substantially lower. In fact, ACFE found that companies that use data-monitoring and analysis technology had 52% lower losses and 58% faster detection.
For example, CenterPoint Energy used modern reporting on employee expenses to uncover fraud schemes that were far-reaching:
- A $3.95 late fee charge for a DVD rental automatically flagged on an expense report led to an employee investigation for over a decade’s worth of fraudulent time reporting for both the employee and her department staff, plus gift card purchases for personal use.
- A purchase discovered from a home store led to an employee investigation uncovering thousands of dollars for a new home when the employee’s purchasing card showed details that conflicted with the uploaded receipt. Additional meal expenses that fell under the threshold amount for receipts were also found fraudulent.
With regulations ever-changing and employees gaining more power to spend on your behalf, it’s becoming more difficult to remain fully compliant with legal and regulatory measures plus remain confident you have everything in place to effectively manage the risks of fraud and financial crime. But when your travel and spend technology is still stuck in years past, it’s almost impossible to confidently uncover employees that accidentally violate the rules, or worse, intentionally commit fraud. Luckily, you don’t have to do it alone.
To learn about how SAP Concur can help you upgrade your travel and spend solution for better risk management, fraud detection, and increased compliance, visit us online.
This post originally appeared on the SAP Concur Newsroom.