Fraud and Compliance

How ready are you to deal with expense fraud in a hybrid work environment?

SAP Concur Team |

The “new normal” of hybrid work is presently a work in progress: experts have labelled this an “era of experimentation” where managers must formulate a hybrid program that balances pressure for results from the C-suite against the demand for flexibility from the rank and file.

As the hybrid working environment allows more employees to move out of management’s direct line of sight, finance leaders must contend with a reduction in risk and compliance oversight. Hybrid work inevitably lowers the management’s visibility over employee spend, resulting in more expense reporting mistakes, or even intentional fraud. Over time, even the small losses that result can compound into significant losses for the company. 

For finance leaders, the mass shift from conventional to remote work – and with it, the complete redefinition of “business travel” – has resulted in an ongoing readjustment of expense and reimbursement policies, particularly around travel and expense (T&E) management.


T&E policies slow to catch on to hybrid work

This “work in progress” has left some rather large gaps in enforcement. T&E processes have been struggling to catch up with the hybrid paradigm; an Oxford Economics report shows that 47% of finance and IT leaders found inefficient business processes revealed through the move to remote work.

Finance leaders had to adjust from a simpler-to-follow pre-pandemic T&E workflow, when flights, taxis, hotel check-in, meals, and transportation followed a logical step-by-step process. Keeping tabs on what is already one of the most difficult operating costs to control is now even more of a struggle in a hybrid work paradigm, as remote work is linked to a rise in high-risk spend: out-of-pocket expenses, bookstore purchases and corporate card use have all seen substantial increases in a hybrid environment. 

Rank-and-file employees are also finding legacy T&E management processes to be increasingly unequal to reporting expenses in a hybrid environment. Manual T&E management processes require too much paperwork, with hours wasted filling out T&E expense reports for reimbursements.

Legacy systems’ inflexibility and insufficient compliance controls for remote or hybrid workers increase the likelihood of inaccurate expense reports even from well-meaning employees; they may even encourage the latter to take “shortcuts” wherever possible.   

Without strict oversight from the finance department, the hybrid work environment offers new variants of known expense report fraud methods. For instance, hybrid workers might fudge mileage reporting by including home-to-grocery commutes in the report.

There is a direct link between the pandemic and a recent increase in T&E spend violation rates; recent research has concluded that T&E spend violation has seen a 292% rise worldwide compared to the pre-pandemic period.


Managing T&E in a hybrid environment

How can you keep control and visibility over T&E in a decentralised hybrid work paradigm? The reimbursement process simply cannot go on as before. As the office ceases to become the reference point for T&E expenses, finance leaders must redefine their processes to accommodate new ways of working without undermining risk and compliance management.

First: remove all possible gray areas to reduce the temptation to take shortcuts on T&E reporting. Ask yourself a few key questions to audit your present expense management procedures against your company’s evolving hybrid work setup. You can use these answers, along with employee consultations, to help update expense management policies to cover new hybrid scenarios.

Any changes in expense management should consider the unique needs of the people you cover.

For instance, your hybrid workers’ locations might need to be clearly defined and used as a basis for classifying and processing any mileage claims. You’ll also want to gauge the mobility of different employee categories, and formulate your T&E policy to match. You can use PwC’s Employee Mobility Model as a template; the Model defines four categories against which employee mobility can be measured and used as a basis for policy.

The new policies should be flexible enough to accommodate new hybrid-work phenomena like “workcations” and whatever else might come through the pipeline as the hybrid work paradigm changes.

With a revised T&E policy, you can then devote attention to incorporating automation and digital controls into your expense management processes, and help your business better meet the challenge of aligning policy, systems and people. Manual processes are no longer sufficient: your business needs scalable digital transformation to go toe-to-toe with fraudsters in a hybrid environment.


Using automation to put people first

T&E in a hybrid work setting can be hampered by manually-operated planning processes and tools. The use of these legacy processes often results in inefficiencies and misalignment with organizational strategy, not to mention an absence of oversight over a geographically-distributed workforce that can become a breeding ground for fraud.

Implementing automated solutions can digitize the T&E management process and help enforce a total spend management approach in T&E. A versatile enterprise software platform can help finance managers improve efficiency and fraud detection rates, while discouraging the submission of fraudulent expense reports.

Enterprise applications like Concur Expense and Concur Request can help enforce more transparent T&E policies, helping to remove the grey areas that perpetuate fraud in the hybrid environment.

Previously, employees had to fill out Excel sheets, email expense reports, and wait months for reimbursement. By digitizing and automating these painful manual tasks, both finance managers and hybrid workers will enjoy simpler, faster, and more accurate expense reporting. 

Concur Expense automates and integrates expense management: capturing spend at the source and providing visibility that can zoom in to each detailed transaction. Concur Request allows managers to review and approve expense requests, using a powerful but easy-to-use dashboard that provides a single source of truth for finance managers.

Travel program platforms like Concur Travel put workers’ needs first, letting employees book business travel on their own using a single online booking tool, at the best rates and within predetermined spending policies. Empowering employees in this way eases policy compliance, lessening the temptation to find shortcuts in the process.

Finally, invoice management platforms like Concur Invoice can automate invoice processing. In place of manual data entry, Concur Invoice uses highly accurate Optical Character Recognition (OCR) technology to capture invoices from any format. The software can automatically spot inaccurate and duplicate invoices, helping to streamline the purchase request and approval process.


The post-hybrid work environment is here to stay

Employee spending continues to evolve in the post-hybrid work environment: the accelerating and unpredictable changes in this area make managing and controlling spend, across all sources and categories, even more critical.

To minimize fraud in a hybrid work environment, your company needs to go all in and create a T&E policy that truly empowers hybrid workers. Implementing a digital transformation program will put this new T&E policy into effect across a broad range of employee types and travel requirements.  

Using SAP Concur’s integrated ecosystem tools, you can gain greater executive visibility over T&E and implement a total spend management approach in the process. Learn about SAP Concur from one of our representatives, and find out how your company can embrace hybrid work without putting your finance team at a disadvantage.

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