Using AI for healthier, more accurate expense fraud and compliance checks
As we enter a new year, companies are reviewing policies and ensuring their accounts are in good health to start 2022 on a high note. This can also be a bit of a dreadful moment for finance teams. Many are too aware of the long hours and extensive checks that are needed to ensure every invoice is paid on time, VAT reclaims are filed in the company’s accounts and expense claims processed.
But processing payments and filing them is merely the tip of the iceberg. Anyone who’s worked in a finance department knows that a big part of the job consists in checking information for accuracy – and avoiding processing any payments that don’t meet the company’s requirements. After all, companies who fail to single out inaccurate expense claims and invoices could fall victim to considerable fines as a result.
Artificial intelligence (AI) is here to support – but is not widely used yet according to our new report ‘The Hidden Cost of Expense Fraud and Non-Compliance’, which looks at finance habits among 1,500 finance and travel leaders, and 2,500 employees across Europe. Interestingly, it’s not just knowledge gaps that hinder businesses from making use of AI.
The hidden costs of expense fraud
But first, let’s take a look at the costs that come along with expense fraud. Based on our research, the average European company risks losing 15,000€ a year.[1] While this stat speaks for itself, there is another invisible cost: the time it takes finance and travel teams to tackle the issue. Finance teams are dedicating over two working days a week to combat expense fraud on average. This process spans faulty expense claim detection – including unintentionally faulty expense reports - pre- and post-reimbursement, checking expense submissions, and solving compliance issues due to faulty submissions during audits.
Surprisingly, one fourth of European companies are still relying on pen-and-paper to handle these complex operations. This creates additional pressure for the finance team and increases the chances of human error in the process. Even those that have digitised their expense process tend not to capitalise on the full value of their services: only one in four companies use automated expense management today. This leaves finance teams dealing with minute operations that could easily be automated.
The AI opportunity
Many finance leaders see the immediate benefits AI-based solutions can bring: over half of respondents to our survey believe that they can help them detect expense fraud, and that it can help simplify their compliance processes.
The first benefit of AI consists in helping automate away some of the more mundane processes. In addition, it can identify patterns and help anticipate fraudulent activity in order to speed up decision making. This way, travel and finance teams can focus on educating the business on expense policies and the perils of non-compliance. By extension, they will be better armed to fight against fraud and create smoother compliance processes that make their jobs easier.
However, almost half of respondents think their team lacks the skillset to effectively use AI tools. As a result, only 2 in 10 companies currently use AI for internal expense fraud detection. But despite the knowledge gaps, it’s worth taking a look at underlying reasons that are preventing AI-based tools to become more widely used. And some of these challenges relate to a more emotional reaction to AI.
It turns out that many finance and travel leaders worry about unintended consequences. Almost half of all respondents are concerned about data security and privacy implications and worry about the potential for false positives, or mistakenly implicating employees.
Close to half of respondents also fear AI might damage a company’s culture or that employees might object to the use of AI tools in the compliance process. And last but not least, there seems to be a fear that the technology might be too effective - two in five finance and travel leaders are afraid that AI will put their own job at risk.
With this in mind, finance and travel teams should avoid jumping into AI without the right know-how. To help them get started, partnering with an organisation that understands the technology and how it could and should be used in the expense and compliance process is vital – as is taking the time to educate employees and taking their concerns seriously.
If you would like to better understand the impact of expense fraud and how to remedy it, please download our report The Hidden Cost of Expense Fraud and Non-Compliance.
