T&E spend programs can be valuable resources for Compliance and Financial professionals to identify trends and potential risks associated with travel and expense transactions.So, it made perfect sense when Oversight Systems partnered with Concur’s platform team to develop a pre-built integration for real-time audit and transaction analysis to enhance their spend management programs.
Oversight recently released our first-ever T&E Spend Analysis Report, a compilation of data from 10 million transactions and over $1 Billion in spend from Oversight Insights On Demand™ customers for T&E.Of the companies surveyed for this report: 68% utilize Concur as their expense management program.Over 90% of the customers analyze transactions on a monthly basis with the remaining 10% analyzing data either daily or quarterly.
Based on the findings of this study, we’ve discovered many behaviors lurking within corporate spending programs. Here are the 5 unexpected places your savings could be hiding:
We found the most popular merchant category codes for non-compliant spending are: electronics stores, computer software stores and entertainment venues. We call these “masquerade purchases,” as the non-compliant spending in these areas can easily pose as a legitimate company purchase. Only through the use of sophisticated, predictive analytics can you tell who was really acting in your company’s best interest.
The good news is that of the 6% of purchases flagged as outside of policy, only 1% of transactions (about 5% of total travelers) were blatant attempts to defraud the company. The bad news: our analysis revealed that the 5% of fraud-loving travelers were committing close to 80% of the infractions revealed in our study. The lesson: there are a handful of bad actors in your company that could be costing you, big time.
11% of travelers in this analysis had an expense on their report flagged as policy misuse. Sometimes policy misuse can be nefarious, but many times it can be a good thing as they often shape spending programs for the better. Our favorite example of this is our client who did not allow in-room movie purchases on the company card. Then they did their own analysis and found that those travelers who bought in-room movies spent less money on trips overall. They adjusted the policy and everyone was more compliant, and happier.
Out of Pocket Expenses
Of the 160,000 travelers studied for the analysis report, 10% had a suspicious out of pocket expense. Out of pocket purchases can often be completely legitimate transactions where the traveler purchases something on behalf of the company. To catch those attempting to defraud the company, you have to look for a pattern of a statistically unusual out-of-pocket reimbursements, often just underneath the $25 receipt limit most companies have in place, or catch duplicates that may appear on multiple expenses reports. (See below)
Whether duplicate expenses happen harmlessly or with a malicious intent, duplicates are an area of incredible vulnerability for corporate spending programs. In our analysis, 10% of the travelers had at least one duplicate expense. An example of this would be a meal between colleagues: one pays for the meal on the company card. The other takes the receipt and expenses it as an out-of-pocket expense.
Another reason for a duplicate expense could be someone making an honest mistake, like forgetting they submitted a plane ticket for reimbursement when the purchased the ticket six weeks ago. People are busy, it definitely happens.
From our set of 10 million transactions, 75,000 were duplicates. With each duplicate transaction in the study having an average value of $50, this totals nearly $3.8 million in duplicate submissions alone. This is a significant amount of completely preventable waste
20% of the 160,000 travelers in our report had at least 1 non-compliant transaction on their expense report, with 11% having two or more non-compliant expenses. As previously stated, 5% of that 20% are fraudsters. The other 15% are simply good employees who aren’t being as cognizant of company spending as they should be, which you can easily correct by deploying a technology solution that analyzes transactions for non-compliant spending.
Such data indicates a need to regularly monitor transactions for fraud, waste, and policy misuse. How much money could your company be leaving on the table?
To download the Oversight T&E Spend Analysis Report click here. Ready to find out where your own savings are hiding? Take a free test drive of the Oversight Insights On Demand™ software.Learn more about Oversight’s T&E Fraud and Compliance Insights via the Concur App Center.
About the author: Patrick J. D. Taylor is the CEO of Oversight Systems, a leading operational analysis technology company. Oversight’s primary offering is Insights On Demand™, a web-based application to assist T&E, P-Card, and accounts payable programs in tracking company spending for policy violations, potential fraud and misuse, and compliance errors. With every organization needing to ask questions of their data, Oversight Insights On Demand™ aims to answer those questions, and help users drive actionable, cost-effective results at the front lines of business. Find out more at Oversightsystems.com.