The possibility of internal fraud is a real concern for many executives, regardless of the organization's size. Popular news articles point to high-profile cases of corporate card abuse, asset misappropriation and various examples of employee fraud. The narrative leaves many middle market executives, especially those who are hesitant to adopt a corporate card program, steadfast in their belief that such a program could leave their company vulnerable.
However, for companies managing tight margins, understanding where money is made and lost is critical for business success. Corporate cards, by their very design, offer increased visibility and control over other payment forms — including employees using personal credit cards — making them an ideal choice for managing expenses.
U.S. Bank partnered with Protagonist to better understand the beliefs held by middle market financial executives and their staff when it comes to corporate card policy, expense management, corporate card products, and benefits. The study found misconceptions among those hesitant to adopt a corporate card program. Top among the list of misconceptions is the belief that corporate cards are a gateway to fraud and encourage overspending.
The startling truth about employee fraud
With the recent high profile cases of employees treating their corporate credit card like a personal ‘slush’ fund, many hesitant adopters believe that the risks of a corporate card program outweigh the benefits. But many of the cases in the news are exaggerated examples of fraud and point to a lack of controls and personal accountability.
There are, however, more subtle forms of fraud, like exaggerated expense reporting, that can have a significant impact on an organization’s bottom line if left unchecked. In fact, a recent survey by webexpenses found that employee expense fraud is on the rise — and employees are actually having quite an easy time committing it. Examples include billing for travel and expenses that never materialized, seeking reimbursement for items never purchased or purchased and returned, and purchasing items for personal use. And because the fraud is subtle, the claims fall through the cracks and raise no red flags.