Expense reimbursement fraud can occur in any organization, but are you aware that it happens because of their own employees?
According to the Association of Certified Fraud Examiners’ 2018 Report to the Nations, employee expense claims fraud accounts for 21 percent of total fraud in small businesses (those with less than 100 employees) and 11 percent in large businesses (those with 100 or more employees.)
Company employees make fraudulent claims that charge a lot to the company. Manual reviews and audits can miss fictitious claims/expenses, multiple claims made for the same bills. These claims may be part of mistake or intentional fraud, but ultimately organisations suffer in terms of financial impact.
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What are the common examples of ‘Employee Expense Claims Fraud’?
In the year 2018 one employee of company XYZ submitted the one-way travel expense of $ 30,000 along with accommodation expenses of $10,000 and it got approved and the company paid the amount to the employee. But in this case, the employee was travelling on a pleasure trip along with family, here employee misused his position to cover his personal expenses.
This activity has led to bad behaviour or sometimes to the compliance risk but in most cases due to reputation issues organizations settle the matter without taking any legal action.
An employee can submit the same bill twice.
Handwritten bills/receipts can be manually tampered.
Claims can also include disallowed expenses like alcohol.
Receipts that are submitted from falsified locations .
A false receipt created using a template from the internet.
So, in conclusion, expense fraud may not be that serious compare to the other types of fraud but misusing company policies and rules can lead to a serious offence.
How AI detects such fraudulent claims?
This is where AI can play a very crucial role to detect real-time fraudulent. AI is capable of scanning data real-time, so that reimbursement can be immediately checked. KlearStack is one such AI based software that utillses below techniques to detect expense fraud :
- Capture the data – AI fetches the data available on image and stores it into the system, For example : scanned copy of receipt or boarding pass or any document.
- Identify & remember the fraud pattern – AI detects the patterns like expense submitted by each employee, same expense submitted by multiple employee, same expense submitted multiple times, manipulations in receipts, tampered invoices and many such scenarios.
- Systematic analysis – This helps to determine company-wide spend and audit trends within the organization. For example: Company provides reimbursement to the employee for various reasons like travel expense, food expense, medical expense, driver expense, petrol expense, etc. Now company analytics can analyse the particular area where the most expenses are paid.
Benefits of KlearStack’s Receipt Capture AI
KlearStack is an AI based software that addresses the Employee Expense Claims Frauds in SMBs as well as MNCs using its AI based data-capture and RPA based Automation. Receipts capture & interpretation with KlearStack has simplified the work of accounting teams by a great margin. It has lowered the operational risk and improved internal process. KlearStack automates the process so you can automate the profits!
KlearStack’s Receipt and Invoice capture AI extracts the data from the employee expense documents, drills down through fraudulent entries and highlights the inconsistencies in the claims submitted by the employees. This helps the accounting teams in the organizations to fast-track the disbursements and trim out the disallowed claims. As a result, businesses are saving a significant amount of cash outflows in their ledger.
When you adopt AI-based fraud detection technology such as KlearStack, it helps organization to :
- reduce monitory leakages due to fraud by nearly 80 percent.
- increase compliance drastically
- increase expense management turnaround time
- improve decision making through transparent spend analytics
- increase employee satisfaction by processing claims faster
- improve organization reputation.
It’s high time that organizations across all domains and irrespective of the organization size should adopt such AI based tools to reduce the wastage of resources and leakages in the cash-flow. Besides, the softwares that detect such employee expense claims fraud mostly use cloud-based hosting. Due to the cloud hosting, integrating AI into your existing workflow has been simple and quick like never before!