“No, let me get this. We talked about my work for two minutes, so I can expense it to my company [chuckle chuckle].”
Travel and expense padding is a habit all too familiar with business auditors and definitely a not-so-funny anecdote to company owners and their investors. Padding is defined as any “inflated or false entries in a financial account”. So unfortunately, those souvenirs at the hotel will have to be bought with the employee’s personal credit card, not the corporate one. An extreme version of expense padding would be an executive who purchases a first-class ticket for a work event but then later exchanges it for two coach tickets so that he can bring his wife for a mini getaway. Some employees might think they’ve earned the extra money as a complimentary perk but make no mistake, it’s an abuse of your company’s system. And more over, it’s a crime.
Perpetrators pose an even larger threat to the company in the sense that if they think travel and expense padding is acceptable, they might believe it’s okay to directly steal company funds or goods. When someone is willing to try and get away with stealing, in any form, it’s hard to know where they draw the line.
The typical organization loses an average of 5% of revenues each year due to fraud according to a Global Fraud Study conducted by The Association of Certified Fraud Examiners’ (ACFE). Meaning, on a global scale that translates to approximately $3.7 trillion in losses.
With so much loss, more and more, companies are realizing the importance of automating travel and expense reporting and doing away with manual processes. Numbers and receipts can be easily altered or falsified, and piles of paperwork are daunting when reliant on one or a small group of accounting personnel. Human error is bound to happen, but inserting an automated system will help do away with overlooking honest errors or blatant cheating. Most companies report that it takes about 24 months to discover expense account fraud never mind the amount of time it will take to recoup what was lost. Most companies don’t have that kind of time to fix a problem that could have been prevented with simple measures.
Apptricity Expense Management is used to track all types of business expenses including travel, materials, repair operations, and recurring costs. Apptricity solutions will ensure that your travel expenses (airfare, hotel room, and car rentals) stay in line with the corporate guidelines.
The most unfortunate part is that it’s the smaller companies that will take a bigger financial hit from dishonest behavior within their organizations. The study by ACFE discovered that companies with less than 100 employees lose an average of $155,000 per year as a result of fraud. Compare that to the average $120,000 per year for businesses with 100 workers or more. Financial damage inflicts the most amount of damage to companies with an average $1 million per year, even over asset misappropriation and corruption cases.
Ultimately Apptricity is here to help businesses like you avoid these situations. Whether big or small, Fortune 100 or small startups, we’ll make sure your information is secure and your business rules are followed.