Our Bureau Expense fraud is one of the most overlooked types of fraud at corporates, and entails a staggering cost for the firms. Despite this, around 48 per cent of companies do not have a system to detect frauds and are manually mapping travel and expense (T&E) costs, according to a recent study.
Nearly 55 per cent of the companies surveyed stated their inability to retrieve past expense data as a key bottleneck in auditing and managing their T&E costs. Moreover, some 33 per cent of the companies surveyed said they do not have GST-compliant T&E solutions, and are unable to use any digital means to perform the calculations.
Most organisations continue to function on an old and archaic systems of expense filing, which require manual entry of data, notes a study by fintech company Happay, in its ‘CFO Benchmark’ report.
While airfare and hotel stay form the larger cost, there are several other micro-spends such as luggage fare, meals and local travel expenses. Compiling information from various sources is susceptible to errors, says the report, adding that corporates in India are still prone to error and fraud due to lack of automation.
Over 200 CFOs and finance heads across verticals contributed to the findings of the report.
Around 57 per cent of the companies in the sample had revenues of over ₹1,000 crore and half of them were very large enterprises with revenues of over ₹5,000 crore.
Lack of analytics
The report highlighted that 21 per cent of the CFOs cited manual data entry of expenses and attaching of receipts as their biggest challenge.
Another factor that makes the work of a CFO more difficult and time-consuming is the lack of travel spend analytics around T&E costs, which increases the workload of the finance department.
Three-fourth of the respondents in the study said expense claims still had to be filed manually by attaching bills and paper vouchers.
The report noted that a significant number of corporates have not realised the importance of automation with respect to GST. Though 67 per cent of the companies surveyed said they have some GST-compliant software, they still need employees to submit tour bills and enter vouchers manually to claim input credit.
“There are enough data points to prove that fully automated T&E has resulted in paperwork reduction by 96 per cent and plugging leakages by 90 per cent. Digital CFOs are more confident and show urgency to adopt for new age, mobile-based solutions,” said Varun Rathi, co-founder and COO, Happay.
Pointing to some of the insights, Rathi said: “Most CFOs are tired of half-baked automation, which impacts the company’s bottom line. CFOs are now more focussed on the outcomes of their digital journey and getting the necessary technology integrations done, to make the automation process smoother.”