Fighting fraud – where are the main threats to your firm?

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SAP Concur fraud sponsored feature

Director recently hosted a webinar for business leaders concerned about the risk of fraud, both external and internal. Here’s a summary of the session, including simple steps that firms can take to foil the fraudsters

Nearly a quarter of the UK’s small and medium-sized enterprises have fallen prey to fraud in some form, according to research in April by YouGov, which has calculated that the average cost to each affected business is £35,000.

It has also estimated that successful online fraud targeting British SMEs to date has resulted in the loss of more than 50,000 jobs through redundancy, as the victims try to recoup their losses.

With the scale of the problem in mind, Director recently held a webinar in conjunction with SAP Concur, a leading provider of expense, travel and invoice management services, to look more closely at the threat that fraud presents to businesses.

We focused on the main sources of risk and how companies can deal most effectively with these. Joining us to share his expertise was Robert Flello, regional sales director at SAP Concur. Here are some of the highlights from the discussion…

External fraud

Fraud against business can be divided into two types: external and internal. One example of the former that’s on the increase is invoice fraud, which occurs when criminals either submit false payment requests to their intended victims or pose as existing suppliers and claim to have changed their bank account details. Many firms regard this method as the single biggest fraud risk, yet others aren’t even aware of it.

Globalisation is a key factor behind the rise of invoice fraud, because the expansion in trade around the world has created more opportunities for criminals to exploit. This and other contributing elements were explored in the webinar, a recording of which you can download here.

Internal fraud

Fraudulent payment claims can also come from within an organisation, of course. Flello highlighted a number of headline-grabbing examples of losses incurred by UK and US firms resulting from criminal acts by their own workers.

Expense fraud in particular is proving worryingly widespread. It can take various forms, including fake claims, multiple submissions, overstatements and attempts to seek repayment for non-business purchases.

The webinar explored some of the key factors behind its prevalence, including human error, highlighting how the risk can be heightened when no one has specific responsibility for expenses compliance.

Managing the risks

Despite the serious repercussions of fraud, there are straightforward steps that businesses can take to effectively minimise their exposure to both the internal and external threats.

Flello offered a four-step guide to managing the risks, starting with the establishment of clear policies and robust procedures for dealing with invoices and expense claims. (SAP Concur offers free guidance on its website on how best to do this.)

The other steps covered stress-testing processes, segregating responsibilities and putting user-friendly IT tools and systems in place.

“Clearly, fraud isn’t just a problem for bigger businesses,” Flello said, but he added that, while the threat could never be eliminated, the precautions he’d outlined could make a positive difference for firms of all sizes. “Think about your policies and think about your processes,” he advised. “And stay vigilant.”

Robert Flello SAP webinar

Q&A: Robert Flello (pictured) addressed questions from the webinar audience about their fraud concerns

Should I be more concerned about external or internal threats? Which type of fraud is more likely to be committed – and which has more potential to damage my business?

“While the common perception may be that businesses are more at risk from external fraud – and this is certainly on the increase – the internal threat cannot be ignored. If employees are regularly exaggerating claims and flouting travel and expenses policy, this ‘little and often’ fraud can have more of a prolonged impact. My recommendation is to treat both threats with equal urgency.”

Do all methods of managing the risk of fraud entail a sizeable investment? What steps can I take that won’t require a lot of time and money?

“The most important thing you can do is ensure that you have clear policies and robust processes in place. Once you’ve got these foundations, automated solutions, such as those from SAP Concur, can give you the necessary control over spending.”

If travel expense claims present such a serious fraud risk, what steps can we take to tighten the process and reduce our exposure without making life too difficult for our employees?

“This is one I hear quite a lot. It’s fundamentally about giving your employees the right tools. If they don’t know what the travel and expense policy is, how can you expect them to follow it? Likewise, expenses are emotive. So, if you make life difficult for your employees over what they’re entitled to, there’s a strong chance that this will have an adverse effect further down the line. At SAP Concur, we recognise that this process needs to work for both employees and the finance team to really be effective.”

For more information about SAP Concur, visit concur.co.uk

Download a recording of the webinar

SAP the best runSAP Concur

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Director commercial and sales

Director commercial and sales

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