Cases about employees, who’s cheating and breaking the trust of their employers, has probably caught the attention of most people. These kinds of stories frequently get column inches in the media – like this case from Danish media as an example.
Fraud happens in many ways and one of the areas where it’s seen, is with company expense cards. It’s a matter of trust, when a business chooses to equip its employees with corporate cards, and businesses do it, because it provides several obvious benefits. But how can a business, in the best possible way, secure that the trust isn’t broken? I’ll address the issue in this blog post.
Freedom to work efficiently
I’ll start out by touching upon the advantages of providing employees with a payment card – there’s a few of those. A company credit card will come in handy for many types of employees. Traditionally, many businesses have primarily focused on providing cards for employees with frequent travel activity. This makes good sense. However, multiple other groups of employees will benefit just as much from having a payment card at their disposal.
This could, for example, be the employees in the marketing department, who’s paying for digital advertising or other stuff. It could also be the landlords in a housing association, who needs to buy nails and screws or other small purchases. These employees will benefit from being equipped with a company credit card (in some cases also virtual cards to manage subscriptions as an example). It’ll provide them with the opportunity to handle specific tasks in a faster and easier way. The alternative is, that the employees takes care of the purchases per invoice (if that’s possible) or through private outlays. Both alternatives imply an increase in administrative tasks.
By offering company cards to the employees, they’ll be empowered, and they’ll have solid preconditions for doing their jobs in an efficient manner. And I’m one of those who’s fully convinced that it’ll bring increased productivity – I can see that in my own business.
With company cards, the following benefits comes along:
- An easy and flexible everyday work life for the employees
- Less administrative tasks
- Increased productivity
The right control mechanisms
As I started to point out, it’s a matter of trust to put company cards at the employee’s disposal. And fact is, that there’ll probably always be employees, who’s tempted by the opportunity to commit fraud. How does a business secure itself, in the best possible way, against misuse of the credit cards?
Today, most card providers offer functionality to control buying limits and restrict card usage with certain merchants etc. Misuse of a card can, however, also happen through multiple smaller transactions. The important thing is, that the cards needs to be upgraded with technology, that’ll give more control over the transactions that happens on each card.
An obvious solution is to connect an Expense Management application to the company credit cards. A system, that’ll provide an array of productivity benefits throughout the whole value chain – from the moment an expense occurs to the moment it’s booked and accounted for.
When it comes to fraud and misuse, an Expense Management solution can be regarded as a digital watchdog. A watchdog that’ll help control whether all conditions around a given transaction is in order. Both when it comes to compulsory documentation and when it comes to compliance to internal rules for company card expenses. In other words, the leading Expense Management tools can be configured, so that they control compliance to a given company expense policy.
An Expense Management solution cannot prevent that a card is used with the wrong intentions – this can happen as soon as an employee is given a card. However, if misuse is happening, the solution will provide the opportunity to quickly gain insight into the audit trail of a transaction as well as the accompanying documentation. This way, it can be identified whether violations of rules and policies has happened. Thereby, the documentation for this is secured. It’s also solutions like this, that, proactively, can give alerts about potentially abnormal use on user level.
Balancing trust and control
Many studies around both magnitude and causes for employee fraud in private and public organizations has been made. I won’t go deeper into the psychology behind fraudulent behavior, there’s other people who’re more competent in this area. However, I have my own take on, why it sometimes goes wrong; it’s about the balance between trust and control. In general, we exercise a large degree of trust to employees, and as I say, it’s a matter of trust, when we empower employees with a credit card. On the other hand, the businesses shouldn’t be afraid to secure that the right control mechanisms related to such an empowerment is in place. Also, even if the word “control”, in the perspective of some, is tabooed.
I’m also thinking that employees, who’re weighed down by a shady sense of morality and ethics, are tempted if they can see, that the control mechanisms around, for example, company credit card usage are weak. Now, I’m probably moving a little into behavior psychology anyway, but I believe that this type of people have a nose for spotting these things. My claim is therefore, that if a business chooses to “upgrade” it’s company cards with a solid Expense Management solution, it’ll also have a preventive effect in terms of fraud. Those who might be tempted, will see that the control mechanisms around the transactions are strong, which’ll discourage them to misuse the trust. In combination with an application, it’s also imperative that a firm expense policy is defined – the best service providers within the Expense Management field will guide you on this matter, if needed.
My recommendation is, that every business who’s equipping their employees with company cards, with the aim to harvest all the related benefits, also needs to “upgrade” the cards with a solid Expense Management solution.