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5 Key areas where businesses may be at risk of fraud

How businesses of all sizes can prevent fraud and scams while increasing efficiency. Business owners often wear many hats, from operations and finance to marketing and human resources (HR). With limited resources, it’s important that leaders streamline processes to remain efficient. However, the challenge doesn’t stop there. Any change or process optimisation must be done so without compromising on security. For example, the rise of fraud means organisations need to be more vigilant than ever. A 2022 global study by the Institute of Financial Operations & Leadership revealed that over two thirds (69 per cent) of businesses have experienced external fraud in the past three years, while 81 per cent of teams admitted they would not be able to identify finance fraud immediately. What’s more, 66 per cent of teams don’t believe they are well protected from fraud. (1)
Fabian Calle, managing director, small and medium business, SAP Concur Australia and New Zealand, said, “Financial strain and personal challenges can sometimes push individuals towards ill-advised decisions, resulting in occupational fraud. The repercussions go beyond just monetary loss, with potential knock-on effects including regulatory non-compliance, company inefficiencies, potential reputational damage, and even a possible dip in team morale.”
There are five key areas where Australian and New Zealand businesses may be at risk of fraud: 
  • Questionable expense claims: sometimes, employees might claim expenses that weren’t actually incurred. This could involve using fake receipts or making and then cancelling bookings. 
  • Non-compliant expenses: it’s not uncommon to find expense claims that veer from organisational policies. This can range from bypassing established booking procedures to submitting incorrect receipts or even double-dipping and claiming an expense twice.
  • Misleading invoices: be on the lookout for fake or duplicate invoices. They might appear legitimate but could be for services or products that the company never received. 
  • Business email compromise: small and micro businesses in Australia saw losses almost double to $13.7 million in 2022 due to scams, with business email compromise playing a major role. (2) This scam, where fraudsters alter genuine emails to redirect payments, contributed significantly to the 95 per cent increase in losses from the previous year. Across the Australian business community, scam losses surged by 73 per cent, totalling $23.2 million. (3)
  • Double billing: particularly for organisations still relying on manual processes, paying the same invoice twice can happen. It’s an error that can be costly, and fraudsters know how to exploit it.
In the face of new methods and increasing incidences of fraud, companies of all sizes must continually identify and address vulnerabilities. Here are four strategies business leaders can use to ward off fraud and enhance efficiency: 
1. Take policy into consideration 
A travel and expense policy should be dynamic, adapting to evolving business needs. Consider:
  • How often is the policy reviewed?
  • Does the policy plainly define acceptable expenses?
  • Are there clear protocols for handling deviations or non-compliant expenditures?
  • How does the organisation approach detecting discrepancies in expenses or invoices?
  • Is the company capturing essential data to assess its compliance and fraud potential?
2.  Establish the right technology process  
Having the correct technology in place can significantly help in preventing and detecting fraud. Business owners should:
  • ensure audit systems are in place for automated checks
  • implement approval workflows that share accountability
  • standardise reasons for flagged expenses
  • integrate credit card details directly into expense reports
  • set thresholds for mandatory e-receipts
  • consider third-party audit systems to oversee spending.
3. Use reporting to monitor and analyse spend data  
Monitoring employee spend is crucial in fraud investigation. The swiftness and method of fraud detection can influence the magnitude of the fraud. Business leaders can: 
  • use data to discern patterns, such as contrasting car mileage with car rentals or airport parking against rideshares.
  • periodically scrutinise duplicate meals, lodging, expense items, unclaimed refunds, and merchant verification.
4. Compare compliance benchmarks with industry experts 
Recognising fraud schemes can guide an organisation in designing controls against significant threats. Determine the effectiveness of policies by evaluating areas such as:
  • attaching receipts
  • use of high-risk expense categories
  • predominance of cash transactions
  • instances where reports are greenlit without inspecting receipts
  • unusual mileage claims. 

Fabian Calle said, “Efficiency is more than just cutting corners; it’s about working smarter. Automated expense, travel, and invoice management solutions are designed with this ethos in mind. These solutions streamline the expense report process, leading to faster reimbursements, and they offer mobile tools that both enhance the work experience and show team members that they’re genuinely valued. Importantly, the solutions also reduce time-consuming administrative tasks like chasing receipts, ensuring that the focus of employees remains on core business responsibilities.”


Also read: Fake refunds: small businesses left with tax debts after trusting scammers


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