Controlling corporate spend is always high on the list of priorities for controllers and their teams but has become even more critical thanks to the COVID pandemic. But corporate expenses are notoriously difficult to control and often managed internally by costly manual processes littered with inconsistency.
And at a time when remote working is a must for many organizations, the risk from expense fraud has never been higher – it’s not uncommon for employees to accidentally submit duplicate or out-of-policy expenses, which are both challenging to identify and easily overlooked. Unfortunately, misuse is also common, thanks to “enterprising” employees who know just how difficult it is to track missing receipts and expense fraud when spread across multiple reports.
Manual expense processing is painful – and incredibly inefficient
Most companies can’t afford to pore over every single line in thousands of expenses every month and still be able to pay their employees back promptly. Partial expense report audits try and find issues; however, these are far from ideal. They’re tedious, time-consuming, and require a lot of human resources. Even with a thorough team of auditors, the probability of catching all errors is small and will take a lot of effort.
Traditional technology solutions don’t solve this challenge either because they can’t compare data in an expense report with what’s on receipts themselves or check every merchant for legitimacy or appropriateness.
But AI can help. AI-powered spend automation provides the opportunity for your finance team to identify high-risk spend accurately and without eating up time or budget.
AI to the rescue
AI-based spend automation solutions are a fast and cost-effective way to manage company expense spend. While rule-based systems and manual audits can catch some overspending and misuse, only AI-powered software can give you the full picture of every expense.
Below are four ways an AI solution can make a difference to your company expense spend management:
1. Audit 100%, prepayment:
AI allows you to automatically audit 100% of expenses before reimbursement – checking for duplicate items, discrepancies, and potential fraud. With this, you know which expense reports require manual review and those that can go straight to payment. Reject expenses that don’t adhere to policy before they’re paid out, rather than trying to claw back that spend when it’s too late, in a much more efficient and painless manner.
2. Intelligence-enriched processing:
Matching transactions against controls is a fundamental discipline in Accounts Payable. Two and three-way matching are universal best practices. But for employee expenses, receipts have nothing to match against. Critical information you need to validate spend is likely scattered across the company or in external online sources. AI can check the internet to verify merchants and prices, and check referenced people against regulatory lists like politically-exposed persons. This allows you to fully assess your risk by bringing in additional context to understand every single transaction.
3. Assess and refine risk:
Determining which expenses are erroneous, fraudulent, or non-compliant with your company policy quickly adds significant benefit. A simple example is being able to spot duplicate expenses across the company, whether the expense is from the same person or different people. Effective AI solutions continuously assess risk, allowing you to take automated action – quickly.
4. Understand and improve:
Automating expense spend management takes insights, trends, and benchmarks out of your auditors’ heads (who can only see a limited sample of claims) and makes it available to everyone in the team. A 360º view of your spend allows you to pinpoint and control risk in real-time, even allowing you to compare your spend, risk, and operational performance against other similar companies. AI-based data analytics holds the key to turning a good program into a great one.
Controlling corporate expenses starts with crafting clear company policies and communicating them effectively across all levels of your team. But for enterprises, the application of these policies at scale is where manual processes cannot deliver.
AI solutions that can enforce compliance, root out fraud and other risk factors, and ultimately prevent significant spend leakage, offer an automated solution to addressing expense processing without needing additional human resources. At a time where spend management is more critical than ever, doing more with less is a welcome relief for CFOs and their teams.
Related Content: 8 ways to Eliminate Unnecessary Spend, Waste, and Fraud with AI