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The 3 Biggest Problems in Corporate Spending Programs

The 3 Biggest Problems in Corporate Spending Programs Oversight PRESENTED BY CORPORATE CARD 1 Fraud Fraudulent and non-compliant spending costs organizations hundreds of thousands of dollars each year. Non-compliant transactions happen every day for a myriad of reasons with the largest problems being fraud, waste, and misuse. For an organization with an average of $10 million in spend, 5% of the transaction value, or $500,000 is lost to these three problems each year. This infographic contains data from: 10 Million Transactions • The behavior of 160,000 travelers in corporate T&E programs. • 10 million transactions • A total of $1 billion in spend. 1% Potential Fraud Of the 10 million transactions, 6% were flagged as being outside of policy, and 1% were classified as potentially fraudulent. 5%) Waste & Misuse Of the 160,000 travelers represented in the analysis, 20% had at least one exception on their expense report. Within our analysis, 11%, or roughly 1 in 1O travelers triggered an exception multiple times. Why look for repeat offenders? Because most fraud, waste, and misuse committed in organizations is perpetrated by a small handful of employees. 5% of travelers were making over 80% of the purchases flagged for Fraud. Meaning in each organization there are only a handful of "bad actors." Compliant Travelers Travelers attempting to defraud the company Non-Compliant Travelers 5% 80% 15% • Travelers that aren't being as cognizant of spending 75% 25% • Travelers that admitted to submitting out-of-compliance expense reports Since 20% of the travelers in the study had at least one non-compliant expense on their expense report, and only 5% are attempting to defraud the company. What are some of the ways the other 15% are losing money? • 2 Waste Duplicate submissions are a large area for non-compliant spending. From our set of 10 million transactions, over 75,000 were duplicate submissions; instances where the same item was expensed on more than one expense report. 10% of the travelers analyzed for this report had at least one duplicate expense on their expense report. 75,000 $50+ duplicate transactions average duplicate value $3,750,000+ total in duplicate expenses alone 3 Misuse The third problem is policy misuse; non-fraudulent charges but activity that still takes advantage of the system. Nearly 18,000 travelers in our analysis, (11%) had an expense on their report flagged as policy misuse. Error Detected Policy Misuse | EXPENSE REPORT 16,000 travelers in our report, or 10% had a suspicious out of pocket expense on their report. Example: A traveler submits an unusual number of "out-of-pocket" expenses just under the $25 receipt limit, meaning they did not need proof whether the purchase occurred. And there is a statistically unusual pattern of occurrences over the course of the past 90 days. $24.99 $24.99 FRAUD INVOICE FOR ABC COMPANY Example: A traveler routinely puts a big-ticket item on their personal card (for the points) instead of on the corporate card, and then asks for a reimbursement. While this example isn't fraud, as he/she is traveling on behalf of the company, the misuse of policy creates a vulnerability that can be exploited by nefarious travelers. PERSONAL CARD MISUSE Since travelers are spending significant company dollars on non-compliant goods and services, where are they spending that money? The 5 most popular merchant category codes for non-compliant spending are: Electronics stores Computer Software Stores Management, consulting, and public relations firms Sports & Athletic Clubs, Country Clubs and Golf Courses Theatrical Producers (Non motion-picture) The Good News While fraud is certainly a hot button issue, it isn't a rampant problem when organizations leverage proactive monitoring and analysis. Only 1% of transactions in this study were flagged as potentially fraudulent. The same goes for policy misuse, suspicious out-of-pocket, and duplicate expenses: each only accounts for less than 5% of the 10 million transactions we analyzed. How Can We Solve These Problems? Implementing a transaction monitoring technology helps promote appropriate behavior among employees. Oversight Insights On Demand makes it easy to monitor 100% of transactions for fraud, waste, and abuse. Companies who use this solution have seen a decrease in non-compliant activity by as much as 70%. To download the entire report, visit: Oversight Surveys Report Other

The 3 Biggest Problems in Corporate Spending Programs

shared by Oversight on Oct 21
Fraudulent and non-compliant spending costs organizations hundreds of thousands of dollars each year! Find out the three worst behaviors in corporate spending programs and what you can do to prevent y...


Jay Blizzard




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