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5 Simple Steps to Prevent Expense Fraud

5 Simple Steps to Prevent Expense Fraud
Read Time: 4 min

Financial fraud is something that we are all afraid of. While individual fraud is painful enough, there is nothing like expense fraud for any company. It is a unique situation that needs to be prevented before things get out of hand. Such instances for a company can be pretty harmful financially and start a cycle of mistrust among the internal team. 

What Is An Expense Fraud?

An Expense Fraud
An Expense Fraud

Expense fraud is hurting the company as an existing employee mostly does it. But on the other hand, stealing from the employer is conflicting. And the motive behind such an action is quite complex as well. Suppose we shed light on a few of the reasons. In that case, it could be dissatisfaction towards the company or the authorities, financial problems or other issues mostly linked to an emotional cause. 

Even though there is a good reason for it does not mean that this sort of behaviour can be excused. On top of it, there is no reason to steal or take an organisation’s money entrusted to an employee and use it for a personal cause. In these cases of expense fraud, the company loses its morals and trust more than money. 

Steps to Preventing Expense Fraud

Steps to Preventing Expense Fraud
Steps to Preventing Expense Fraud

Expense fraud can be a blow in the gut, but there are signs that can prevent a situation like this from ever taking place. When you notice the early signs, it is time to get into action and start putting two and two together to see the whole picture. Next, we will be talking about the prevention methods that may work in terms of stopping fraud. 

Digital Receipts Are Necessary For Identifying Fraud

Digital Receipts Are Necessary For Identifying Fraud
Digital Receipts Are Necessary For Identifying Fraud

In the era of digitalisation, it would be foolish not to use the various tools and technologies that detect fraud in a matter of moments. Digitalizing most parts of the business finances give you a clear view of the accounts. These include bills and receipts, collected digitally and placed under the books. 

Once the company has all the correct entries, it can identify the expenses made by employees for personal gain hiding in plain sight. Digital receipts are rather hard to lose, and you can get access to specific receipts whenever you want. When you use digital receipts for everything, it gets difficult for the employee to take out money without alerting the owner in the process. 

Clear Communication With All Employees

Since employees mainly commit expense fraud, the employer needs to have clear communication with all employees to know who has the potential to do such damage. Most unsatisfied employees make such a mistake, which is why the company needs to stay clear on their part. In addition, the employees must know the company’s expectations and remunerations when joining, leaving no reason to think they are being mistreated. 

Company Policy & Its Effective Usage

Company Policy & Its Effective Usage
Company Policy & Its Effective Usage

There is a reason for curating the company policy, which can be used in times like this. The company policy will state all the dos and don’ts that employees must follow. The policy should also mention the consequences of breaking any rules, and for a severe intent like expense fraud, there must be graver steps taken. These rules must be enough to keep your employees in line. 

The Usage Of Business Debit & Credit Cards

The Usage Of Business Debit & Credit Cards
The Usage Of Business Debit & Credit Cards

When you have made a business account with a banking institution, they are sure to keep you notified of every transaction in real time. So, when the business has a debit or credit card for making business transactions, it will not only have the records, it will send off updates and notifications to the owner if any changes have occurred. When and if the owner misses out on the notification, the digital records are enough to find the error in the system. 

Outsourcing Audit Checks As A Second Opinion

Outsourcing Audit Checks As A Second Opinion
Outsourcing Audit Checks As A Second Opinion

If the company believes something is wrong with the accounting body, it can outsource third-party firms for the financial audit. As they are not part of the team and are not biased, they can see things from a different perspective and only work on the collective goal of preventing any expense fraud. 

Conclusion

Prevent Expense Fraud
Prevent Expense Fraud

Expense frauds tend to be a personal matter for the business and can be really disheartening for the company. Moreover, since one of your trusted employees may have something to do with fraud, there is a lot of uncertainty about handling the situation well. Hence, the best bet is to prevent the expense with the above-mentioned steps.