SMEs already struggling with the impacts of COVID-19 restrictions may also be at greater risk of occupational fraud over the next 12 months that will put further stress on business resilience. Businesses have already needed to make significant adjustments, and in many cases completely change business models, to adapt to the changed economic environment. Unfortunately, these changes have created new gaps for businesses when it comes to the opportunity for fraud.
The size of a business is irrelevant when it comes to fraud, which can impact any organisation at any time. The only way to truly protect a business from fraudulent activity and build business resilience in the digital economy is via automation.
SMEs already face challenges with adapting to a digital economy and constantly changing service needs in the wake of COVID-19. However, those that continue to rely on manual processes are now also likely to find themselves at greater risk of fraud. This is because the shift to remote work and changed interactions with customers and suppliers is opening up new opportunities for fraudulent activity involving paper-based and email processes.
A recent global study of more than 1,500 anti-fraud professionals found that 71 per cent believed the level of fraud at their organisations would increase in the next 12 months. Fifty-one per cent said their organisation had uncovered more fraud than usual since the start of the pandemic. A Report to the Nations global study on occupational fraud and abuse found the median loss of fraud for businesses in Asia-Pacific was US$195,000.
Non-compliant employee expenses are one of the most common forms of occupational fraud and can be very difficult to identify through manual processes. Fraud can also easily occur when supplier invoices are duplicated, which is also hard to track with manual tools. Fraud not only costs SMEs lost revenue but can cause issues that put the business at risk when it comes to regulatory compliance.
One of the most secure and cost-effective ways to ensure compliance and reduce the risk of fraudulent activity is through an integrated and automated cloud-based travel, expense, and invoice management system.
Travel and expense automation significantly reduces the risk of fraud because the system rejects non-compliant expenses and automatically detects the duplication of supplier invoices and employee expenses. By comparison, spreadsheet-based processes make it much easier for non-compliant expenses and duplicate invoices to slip through the accounting process, which may not be detected until an audit, if at all.
SMEs may not even realise how much money they are losing to non-compliant expenses, which could be further increasing the financial pressure that the business faces in the current volatile economic environment.
In addition to the revenue impact, fraud directly affects business resilience because fraudulent activity skews business data. This means that strategic decisions end up being based on misinformation as a result of corrupted data.
No business can afford to lose revenue or make decisions based on the wrong data insights. Automation is the only way that SMEs can protect themselves from fraud and ensure clean expense and invoice data that delivers real-time insights to achieve better business resilience.