A recent 2016 report shows an astonishing 37% of companies still rely on managing their T&E with paper and Excel. Many of these companies may not realize they’re relying on the same manual expense review and sample testing procedures they used a decade ago. What you’re left with are loopholes that can put a company at great risk, both financial and reputational, due to a reluctance to change.
Many of these loopholes exist simply because companies believe their current processes are working, although not necessarily very well. ‘There’s no way to catch every fraudulent transaction...and if there were, it would be too expensive’ is the rationale we often hear from employers. We often hear a $6 cigarette pack purchase, which is a violation of company policy, is not worth following up with the employee. But what if that $6 out of policy purchase leads to something bigger? Just yesterday, we wrote about a P&G Executive Assistant of 24 years embezzling $450k over a 6 year period by using a corporate credit card for personal expenses. From my experience investigating accounting fraud, I would assume the EA started small - perhaps with a $20 personal charge on her corporate card. Once the charge was approved for payment, she increased the dollar amount to $100, then $1000. Rinse and repeat.
Moving to technology adoption is often painful and may even be disruptive in the short term. If you’re unsure if technology in your team is really necessary, look at the trends of using technology in other fields outside of accounting and finance. You’ll see this issue is something that every field, at some point or another, will have to come to grips with and start using.
Getting started does not require spending millions on technology and resources. Today’s data visualization, automation, and machine learning tools enable companies to easily march ahead of the curve to prevent and detect fraud at nominal cost. For example, by creating a visual representation of mileage expensed by the sales team, you may be able to manually identify outliers and dig deeper into those employee’s expenses. Taking this to the next level, consider the benefits of using artificial intelligence to identify the outliers and trends for you, so all you have to do is take action on the findings - reducing the time you spend manually sifting through data and conducting the analysis. Bringing this to the company’s attention will provide opportunities for increased efficiency to company operations. Data analysis findings may identify relationships or areas of operating risk that companies may not have previously considered, giving management the opportunity to anticipate problems.
Utilizing technology in your team shouldn’t be something scary – it should be embraced and encouraged because of the ability to significantly improve operating efficiency, reduce cost, and increase transparency. The adoption of new technology solutions will require changes in the way your team operates. It often takes a lot of work and dedication to successfully integrate technology into your daily routine, but the results will speak for themselves. It’s essential for companies to rigorously keep abreast of the changing times and play the long game by continually evaluating and implementing new technology.
With travel expense data being easily available and of high quality, we suggest starting your technology adoption process with T&E. We at AppZen can help you take that first step.