As much as companies would like to give full spend control to those they hire, statistics show that a surprising percentage of employees have been loose with company expenses. Roughly 75% of employees have admitted to imperfect expense processes at least once, with nearly one-third of the cases lasting more than five years.
The psychology behind these employees' poorly managing expenses ranges from innocent mistakes to a littany of personal or financial pressures. Still, the results are always the same—businesses reconcile imperfectly, and funds go unaccounted for.
Fraud is any activity that relies on deception to achieve a gain, according to the Association of Certified Fraud Examiners (ACFE). Sometimes called occupational fraud, the act becomes a crime in the workplace when an employee, manager, or executive deceives the organization with inflated or fictitious expenses.
Depending on the policies, fraud will look and occur differently for every company. Common examples of fraud include:
These fraud schemes can lead to accounting errors, asset misappropriation, and employers scratching their heads over how to control employee spending. To solve this, companies can implement controls and technology ahead of time to smooth out gaps and prevent fraud rather than removing an employee‘s ability to purchase business expenses altogether.
Since every misappropriated dollar can affect a company’s bottom line, it’s important to limit opportunities for fraud or misspend before the swipe even takes place.So how can businesses prepare?
Rather than seeing charges when the expense reports flood in at the end of the month, businesses should implement technology integrated with a fair but transparent expense policy that leaves no room for ambiguity. This includes set per diems that match current market trends for travel expenses.
With frequent travelers, look for an expense management solution that immediately implements these controls and flags out-of-policy expenses so employees and companies can keep track of spending in real-time.
Finance teams don’t want to be flying blind, so having expense technology with accounting dashboards for spending activity means admins get a front-row seat to watch employee purchases. Company cards with built-in controls have unique numbers programmed for each employee, so repeat offenders are caught earlier and more frequently.
Requiring employees to submit receipts through optical character recognition (OCR) and fuzzy matching technology leads to proper documentation, and finance teams have proof of purchases. If the technology is truly efficient, it will also catch double submissions of receipts through matching processes and flag them for review. This process means reimbursement requests can be proven legitimate expense-reimbursements with immediate documentation.
Random spot audits of expense reports can also help uncover problems and encourage accurate compliance.
Whether human error or malicious intent, companies without the proper controls are vulnerable to misuse of funds. So why risk it?
With Navan, companies can define spending in whatever configuration best suits their unique needs. Whether for everyday needs around the office or to set parameters for travel, Navan cards provide an instant view into every swipe—physical or virtual.
Navan leverages AI spend auditing technology and internal controls to monitor for any indications of suspicious transactions. Navan also boasts the industry’s only auto-itemization feature that splits transactions into multiple line items and attributes individual expenses to specific policies.
Thanks to policy controls that finance leaders can tailor to a granular level, Navan customers can achieve up to a 90% reduction in out-of-policy spending—and 100% peace of mind.
Navan solves the most major problem associated with using legacy corporate purchase cards by giving you control over your company's entire spend ecosystem. Ready to start using Navan today? Get up and running in 5 mins.