Fraud and Compliance

Risky Business: Avoiding Rogue Spend with Our Top High-Risk Expense Types and Best Practices

Kathryn Kamin |

Our employees are our most valuable assets, however, managing their spend across a growing number of spend categories and payment methods often leaves room for error and non-compliance. These are serious (and time-consuming) issues that can create mistrust, misuse, and an overall waste of your organization’s time. Not to fear: with crystal-clear expense policies and relevant expense type categories, you can reduce most of the ambiguity and non-compliance – saving you time and money while reducing your organization’s risk.

Checks and balances, in the form of clear expense policies, make it easier for employees to comply, and simple for you to mitigate, detect, and prevent losses from accidental errors or fraudulent activities. Whether internal guidelines or external regulatory requirements, the way an organization defines and enforces policies determines its risk for fraud and non-compliance. Sound policies are only part of the equation; efficient and consistent enforcement through best-in-class technology helps to close loopholes that could leave you exposed. Using our interactive expense policy builder, you can create a policy to prevent non-compliance before it happens. Read on for our best practices to whip your organization’s spend compliance into shape.

Sleuthing for non-compliance: Our top high-risk expense types

A recent IDC Report indicated that “30% of executives are concerned with compliance to spend management policies in order to make strategic business decisions.” But where do you start? Identifying top high-risk expense types in your organization is a great first step. Here’s a list of the top 14 out of 29 expense types found with spend in high-risk categories across SAP Concur customer data. These are categorized as high risk because they have the greatest room for fraud or non-compliant spend. We recommend running your top expense types and then using this list to prioritize your auditing process for non-compliant or fraudulent spend:

  1. Airfare
  2. Airline Booking Fees
  3. Car Rentals
  4. Entertainment
  5. Gas and Fuel for Mileage
  6. Ground Transportation
    • Company or Personal Car (Fixed Expense)
  7. Lodging
    • Room Rate
    • Lodging Tax
  8. Meal: Daily Allowance
  9. Meetings, Tradeshows/Conventions
  10. Mileage Reimbursement: Company or Personal Car
  11. Office-Related
    • Computer
    • Facility
    • Janitorial
    • Office Supplies
    • Rent
    • Shipping
    • Utilities
  12. Rail (Train)
  13. Telecom/Internet
  14. Training

While these high-risk spend categories are important to watch, of equal importance is everything categorized as “other.” Constant evaluation and update of your expense policies to accommodate for new categories of spending will help make your employee initiated spend program efficient and accurate.

Best practices to reduce non-compliant spend

After evaluating your high-risk expense types, here are some best practices to keep your organization’s spend aligned to policies and regulations:

  1. Establish clear and appropriate expense policies
  2. Provide continuous and comprehensive training and support for all current users and new hires, by updating training materials when new policy guidelines or product features are introduced
  3. Offer employees booking, expense reporting and authorization tools with functionality to prevent or identify non-compliant behaviors (e.g., lack of documentation, limit spending, unauthorized use of expense types)
  4. Encourage mobile receipt capture and mileage tracking with smart phones
  5. Conduct regular audits to check for policy adherence
  6. Use what you learn about your own data to drive policy changes and configuration updates

What you can’t see can cost you: Minimizing fraud, maximizing compliance

Keeping a pulse on your organization’s Highest Expense Spend categories is an excellent barometer for the health of your overall spend management program. What more could you be doing to guide your employees towards responsibly stewarding your organization’s dollars while protecting your organization from potential risks? Leverage our handy expense policy builder to keep yours relevant in these ever-changing times. 

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