By Ryan Demaray, SMB EMEA MD, SAP Concur UK

It is no secret that businesses have struggled to get to grips with fraud. There is a lack of understanding of fraudulent activity and its implications and most incorrect claims are raised unintentionally, leading to accidental fraud in SMBs.

The 60% increase in fraud last year was a result of a rise in cyberattacks and introducing new initiatives which can be manipulated by fraudsters and forcing communications surrounding these initiatives online where it’s easier to inflate, mischaracterize and falsify claims both intentionally and accidentally.

However, cyberattacks are not the only reason for the rise in fraudulent activity. The UK government has lifted working from home restrictions and people are returning to the office. This may be a relief to business owners as remote working has become a greater issue for keeping data private and secure.

The rise of expense fraud

Although the hybrid workforce has provided many benefits; including increased flexibility, improved employee wellbeing and freedom, adapting to remote work has led to an increase in fraudulent activity and in the last year, more than 8 in 10 SMBs experienced fraud in 2021. This is due to impacting business workflows, a lack of IT resources and difficulty in communication.

In SAP Concur’s “Hidden Cost of Expense Fraud and Non-Compliance” report, it was revealed that mid-sized businesses across Europe could be losing £13,200 a year to fraud. This is largely due to companies lacking policy to protect against common methods, such as expense fraud. This may seem like a small portion of fraudulent claims, but the research confirmed that employees across England would knowingly submit a false expense claim of up to £110 on average and over half (56%) of employees think it is perfectly acceptable to over expense or disregard company policies regarding expenses on a yearly basis.

In some of the schemes, the fraud is intentional. But, in many cases, it’s accidental or a result of confusion as to what is or is not acceptable (just 34% of UK businesses have fraud awareness and prevention training in place for employees). Because of this, finance and travel teams are spending a lot of time and resources fighting fraud instead of focusing on more strategic business activities.

Manual processes aren’t enough

The solution to limiting the impact of fraud is having effective technological detection solutions in place for healthier and more accurate expense fraud checks. This can increase accountability, boost compliance, and reduce human errors to help ensure organisations meet the highest levels of fiscal responsibility. It also means waving goodbye to fragmented, resource intensive, manual processes which make it impossible for finance leaders to get a single, cohesive view of information.

For example, research found that the biggest barrier to more closely monitoring expense fraud is not having the times or resources needed, with teams often spending over two working days a week (20.1 hours) cumulatively on fighting fraud. The time is spent across a range of tasks including solving compliance issues due to fraudulent submissions during audits (4 hours). But these tasks are taking up time because many businesses are still using outdated processes, using manual employee spot checks.

There are a surprising number of businesses that lack the technology needed to speed up the expense process and this can also mean that they lack the data necessary to assess potential expense fraud. By moving away from manual systems and towards sufficient technology, innovation and transparency, companies can automatically, track, assess and put a stop to any fraudulent claims before money is lost.

Embracing artificial intelligence

Of course, UK businesses know that fraud is a potential risk for their company, causing economic and financial issues, but now is the time that organisations need to put additional measures in place to combat the increasing threat of fraudulent claims. Finance teams will be able to put stricter guidelines and rules in place when it comes to expense management. Using technology can not only help to speed up the fight against fraud, but it also allows travel and finance decision makers to create smoother compliance processes that can make their jobs smoother.

Artificial intelligence tools can be used to automate some of the labour-intensive tasks such as detecting fraud, identifying patterns and making data-based decisions. This allows SMBs to focus on educating employees on educating employees on fraud awareness and put prevention training in place. This will enable these businesses to become far more competent in the area of fraud, saving time and money.