Finance teams need to be checking expense reports and payment card bills in 2024 to prevent fraud. Employees who normally wouldn’t try passing off bills as business expenses may be feeling more pressure to give it a shot.
Current economic data shows why. Consisder that:
- Americans’ credit card debt is higher than ever and delinquency rates are at historic levels.
- Folks who put off paying down their student loans during COVID are now struggling to catch up.
- This year looks likely to surpass 2023 in car and truck repossessions.
- Rent is still out of control in certain areas, nowhere worse than in the New York metro area.
- And now inflation is creeping up again, which means the Federal Reserve likely won’t lower rates until June or later.
The temptation to think, “the company won’t notice,” and pass off personal purchases as business expenses is always a possibility even for a normally honest employee. Any organization that doesn’t put checks in place to spot fraud quickly, audit the books periodically, and act if something seems amiss, can lose a lot of money and see its reputation damaged. Just ask the Jacksonville Jaguars.
Reimbursement hurdles escalates risk of fraud
Expense management software firm Emburse reports that 1 in 4 employees “admit their personal financial circumstances have led them to make personal purchases and pass them off as business expenses.” An additional 15% of respondents say they’ve thought about doing it more than once but held off.
Emburse surveyed more than 1,000 employees and 1,000 finance professionals on expense reports. Roughly 50% of finance pros think employees would rank their companies’ expense management processes an eight or higher, on a scale of one to 10.
Most employees don’t see the process that way at all. “Almost two-thirds (62%) of employees reported being somewhat or very concerned about their finances, and slow expense reimbursements compound that concern,” Emburse found. Employees are “struggling financially, but employers’ spend policies are inadvertently making those struggles even worse.”
Nothing ticks off workers more than waiting to get paid back for a business-related purchase. A third of respondents say their company’s done that to them more than once. It stands to reason that making reimbursement more difficult than it needs to be will make some people bitter enough to foist personal expenses off on their companies.
Younger employees are more likely than Generation X and Baby Boomers to defraud their employers. Forty-two percent of workers 35 years or younger admitted to passing off purchases as business expenses compared to just 14% of those over 35. Two-thirds of older workers say they’d never consider doing it while just 23% of younger employees said the same.
