Zeno Labs Live

How to gain confidence in your business expense governance and oversight

16 April 2019

It’s an auditor’s worst nightmare to go through expense claim reimbursements to determine whether there is fraud, accidental or otherwise. Likewise, if your business is growing, it’s likely that your accounts teams are already stretched to continue to check every receipt your executives and employees are submitting.

In fact, they are probably trying to do more with the same team resources, a recipe for disaster.

The best case? Your business expenses are likely to be far higher than they should be. Worst case? You could end up being fined by ASIC or the ATO, for false and misleading expense claims that your company is claiming under taxation compliance obligations.

As a CFO, your main question regarding business expenses should be: “How can I ensure my finance team can manage and process the increased volume of business expenses that will inevitably increase in line with growth plans?”  

For example, consider a growth rate of 30% - this could mean hiring an additional staff member to manage and audit receipts, input data into financial systems, oversee policy control, make GST reclaims and run Fringe Benefits Tax reports for entertainment.

However, hiring more staff is only the first issue to consider. Trusting that everyone (both employees who travel and finance staff who check policies are being adhered to) is doing the right thing is a significant risk factor.


Putting data in the driver’s seat

Do you know how much fraud – either unintentional or deliberate – is occurring within your business?

According to global trends, most companies will be experiencing fraud of approximately 7% of total expense claims.

But the answer isn’t simply to check every receipt manually, that way leads to escalating costs in terms of human resources and time.

The saying goes “you can’t manage what you can’t measure” this is why modern governance and business expense oversight requires data. Put simply, while managing the inputs and outputs of business expense systems is impossible to do now without automation, reporting on them is impossible without data.


Why is data so important?

With an automated business expense system such as Zeno Expense you can capture data flows as they enter the system as well as providing outputs in customisable reports to track patterns of spending. This way, you can identify trends across the following areas:

  1. Tracking compliance – reports can be created to track common compliance issues with business expenses. For example, rounded-up mileage can easily go unnoticed using a manual system with no reporting capabilities. Implementing compliance-based reporting means you stop losing money by repaying employees more than they need to plus avoid fines following an audit of travel expenses.
  2. Monitor spending patterns and trends – employees could be submitting claims that follow policy but are still fraudulent. For example, the employee who claimed $19.79 lunch expense every day, where the policy stated anything under $20 didn’t need management approval. Impossible to detect as it was never scrutinised, but over a year, it accounted for thousands of dollars. A report showing food and beverage claims by employee would immediately uncover this pattern.
  3. Audit for regulatory standards – by embedding compliance rules into your business expense management system, you can create reports that flag when these rules are being flouted. For example, ATO guidelines sets limits for reasonable allowance expenses, such as meals during business travel, and the amounts vary according to salary levels and destinations. Setting up rules around these levels and destinations will automatically report against expenses incurred outside these compliance limits, and proactively flag them at the point of purchase, or generate reports for the finance team to query them.
  4. Identify and prevent fraud - finance teams relying on manual checks simply don’t have the time to investigate every business expense claim. Reports from reliable data can identify patterns of claims that uncover fraudulent claims.
  5. Update and improve business expense policies - it’s next to impossible to spot duplicate or out-of-policy claims when relying on data entry and spreadsheets. And often fraudulent claims are not done maliciously, but from lack of understanding of corporate policies and guidelines. Embedding these into a business expense system can help employees understand their limits or entitlements at the point of purchase and avoid making mistakes in the first place.

Read our eBook for CFOs on managing business expenses to understand how an automated business expense system can help solve your key challenges. 

poor expense management ebook download

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