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As a business grows, its spending increases: from subscriptions to office supplies to work-from-home setups.
But many businesses don’t have the proper systems or the time to check over every purchase request from their employees.
With the pandemic speeding up the digital revolution, B2B expense payments grew at an annual rate of 25%. Now, businesses with 10 to 250 employees have an average of 67 SaaS subscriptions and spend $462k annually on software tools.
More subscriptions and online payments mean more complexity. As teams grow, it can be harder to gain oversight over employee spending (especially if you’ve got a growing number of corporate cards flying around). In this context, it’s easy to see how fraud can creep in and put business profits at risk.
The key to lowering the risks of employee spending comes back to this: having the right policies in place to prevent out-of-scope spending in the first place. Let’s run through some practical steps to lower the chance of fraud while empowering your people with the tools and support they need to do their best work.
1. Use corporate card software with spending limits and controls
One of the best ways to empower employees while minimising risk is using corporate card software with in-built spending limits and controls.
Corporate cards empower employees to pay for business expenses without needing approval from managers (or waiting for a long reimbursement cycle). But giving your team direct access to company money can present risks, especially if controls aren’t in place.
That’s why it’s essential to find a corporate card that allows you to proactively set limits and conditions around team spending. By setting daily spending limits for individual employees, you can stick to your budgets and give your team the autonomy and scope to make purchases as needed.
On top of that, you’re getting increased, real-time visibility on where company money is going and who authorises each payment - it’s a win-win situation.
With Cape Spend, you can customise spending controls and thresholds for each user and set up individual spending limits, where budget owners (a.k.a. managers) control each transaction before they even happen.
2. Built-in processes for automated card cancellation
Another way to proactively curb fraud is to have built-in processes to automatically cancel corporate cards if there’s a possibility of fraud.
By having an automated card cancellation process, you’re effectively reducing risk by immediately cancelling corporate expense cards when you notice unusual activity and spending.
Digital and automated systems allow you to regularly track and check your employee spending in real-time, where you can freeze cards with just a touch of a button.
Plus, having a virtual card gives you an extra layer of security to protect your business from internal and external fraud: meaning you can isolate one-off purchases and subscriptions from your account so no sneaky intruders can access your card details.
3. Empowering employees through a culture of ownership
Protecting your business from internal fraud starts with facilitating a company culture built around ownership and trust. Essentially, this means you’re not only relying on tech alone to detect fraud but putting trust in your employees to flag something they suspect may be unusual.
Research shows that one in four employees are aware of workplace misconduct, but over half stay silent. Staying silent is likely due to fear of negative consequences or even bullying.
However, an organisation that encourages speaking up and facilitates transparency and ownership can ensure employees won’t be scared to speak up. When employees feel protected if they see something suspicious and report it, they can effectively deter wrongdoing and flag any issues early on.
Another great thing about an empowered workforce is that the more satisfied your employees are, the less likely they are to commit fraud. If employees feel like they aren’t treated fairly and lack support at work, there’s a higher risk of engaging in workplace misconduct. So, rewarding and motivating your team is another proactive way to deter fraud inside your business.
4. Effective employee onboarding and training
Fraudulent activity can be detected by having effective internal procedures and processes in place. But your employees also need the proper training and understanding of the procedures to follow them. This comes with setting clear consequences for committing fraud and other workplace misconduct.
Research shows that although companies have a code of ethics, they aren’t actually backing them up with ethics training or providing a clear system for reporting workplace misconduct.
Providing fraud awareness training and educating your employees about how and when to report fraud can minimise the risk of fraudulent behaviour and acts as an early-warning system.
Conclusion
With business growth comes increased expenses which can make it harder to keep up with and track employee spending.
But there are simple, easy solutions your business can implement, like corporate card software and built-in processes for automatic cancellations. With the right policies, systems and training in place, you can empower your team and set your business up for financial success.
