According to the Association of Certified Fraud Examiners (ACFE) 2014 Global Fraud Study, the average organization loses 5 percent of revenue each year because of fraud. That figure doesn’t include indirect costs, such as low employee morale, decreased productivity and a tarnished brand image. The study also revealed companies with less than 100 employees are more vulnerable than their larger counterparts.
You’ll find most of your clients’ employees are honest and walk the straight and narrow. However, not all employee fraud is intentional. From disorganized expense reports to poorly defined office procedures, employee mistakes could be costing your client thousands. Here’s how to help:
Automate Expense Reports
Mistakes happen, and they’re especially easy to make on manually processed expense reports.
Expense reporting isn’t always a straightforward process for companies to tackle. Instead of manual entry, set up your clients with a streamlined system to keep track of expenses. If clients use a Business Card from American Express OPEN, they can enroll in Connect to QuickBooks®, which will automatically send the client and their employees’ business card transactions to the client’s QuickBooks so that expenses can be managed in one place.
In QuickBooks, expenses are automatically categorized and manual data entry is virtually eliminated. The ease of use may also be a morale boost.
Instill Checks & Balances
Create a robust system for checks and balances to ensure that the finances of your client’s company are running smoothly. No single person should be responsible for money coming in and going out. Simply diversifying staff can reduce the chance for human error, as well as intentional fraud. For example, an administrative assistant struggling to play bookkeeper may not have the proper training or organizational mindset to deal with bills, mail, deposits and payments for the entire company. There should always be a second set of eyes on important financial documents.
Lay Down Ground Rules
Employees don’t necessarily understand what’s expected of them without a clear set of ground rules, along with managers who lead by example. It may seem perfectly normal to skim office supplies or snacks if the office has a relaxed, communal atmosphere. Employees may also think nothing of borrowing things from around the office, or not claiming something on their expense report one month and making up for it on the next month. Though not intentionally deceiving the company, there is a lack of transparency.
Help your clients create a culture of responsibility and accountability around the office. Encourage clients to lay down the ground rules for new hires and hold a semi-annual meeting to discuss issues such as morale, productivity and expectations. The more employees understand exactly what the office policies are and why they’re important, the more likely they are to follow them.
Create a Company Credit Card Policy
Business credit cards are an efficient way to manage employee expenses, and offer a level of transparency into charges, spending trends and expenses that personal cards, cash payments and paper receipts can’t provide. Still, it’s important to take steps to ensure business credit cards aren’t abused.
It’s fairly simple for employees to make charges, or accidentally mix up business with personal expenses. A streamlined expense reporting system, as well as a checks and balances process, is necessary. Your clients should issue a company credit card, with firm guidelines on how employees can use it and for what purposes. Review each expense and set spending limits and alerts. It’s also advisable to require pre-approval for large purchases. Most business credit cards come with some degree of fraud protection, alleviating the financial responsibility in the event fraud happens. Help clients choose the right card.
Help your clients prevent both intentional and unintentional employee fraud within their companies. Foundational rules, a corporate credit card policy and expense reporting guidelines can go a long way in saving the company money.