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: www.oversightsystems.com/t-and-e-spend-analysis-report-volume-01 Oversight Surveys Report Other