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Gelco SmartTalks – Bringing You Industry Trends and Topics To register for upcoming SmartTalks presentations, click here. Is a Global Travel Management Program Right for You? Hillman stressed the need to evaluate, first and foremost, if creating a global travel management program is appropriate for your company—can you make a compelling business case for going global? Implementing such a program can be a complex, time-intensive process, so it's essential to be able to make a strong case before moving ahead. Companies can realize a significant ROI as they go global with an automated T&E expense management system when they use the information proactively. The visibility of global travel data can increase compliance, support analysis and benchmarking, impact vendor management, and improve the budgeting process. Companies benefit from accurate and timely reporting, consistency and quality in the level of data, and improved communication standards. Once you've decided to move forward with global travel management plans, keep in mind, above all, that the requirements and regulations governing travel and expense management vary by country and that there are also significant cultural differences from country to country. In the early planning stages it is essential to:
The next step is to consider organizational infrastructure—will the program be supported through central management or with regional managers? How will local representation be handled? You'll want to be sure you have agreed on metrics, established a realistic budget and review process, and created a mechanism for effective communication. When you are ready to consider local vendors and suppliers (travel management agencies, airline carriers, hotels, and corporate cards, etc.) be certain your RFPs request detailed information on vendors' international experience, training approaches, local support, implementation plans, and the types of service level agreements. Be clear and explicit about your requirements during the selection process. Hillman emphasized the need to work exclusively with vendors that have solid international experience and expertise. Corporate card issues can be one of the most problematic areas for a global travel management program. It is essential to determine where you want the card issued and where it will be used, as corporate cards are highly regulated by country. Hillman recommends that companies develop policies tailored for regional differences, after carefully reviewing local regulations and business practices. Even if you have to implement local card programs, an expense management solution can allow you to consolidate data on a global basis. Along with the identification of vendors and the consolidation of technologies, you'll want to create meaningful travel policies. It's imperative to tailor your company's policies to the local culture and business practices. (For example, Hillman explained, there are parts of the world where business travelers never fly coach, so creating a universal policy that only coach fares will be reimbursed will not be acceptable.) There are great potential benefits to creating a global travel management program supported by an automated T&E management system:
Improving Internal Controls: Identify and Prevent Fraud A $600 Billion Problem Why do people commit fraud? Bishop explained that a recent study ("The Cressey Study") of more than 200 cases indicated that the following conditions were most often in play:
The employee who commits fraud most commonly has a difficult personal problem (excessive health care expenses for a relative, gambling debts, a substance abuse problem, etc.); does not believe the fraud will be detected; and views the action as a way to solve the problem, not as a crime. In other words, Bishop concluded, fraud is often committed by good people who find themselves in difficult circumstances. Fraud occurs both in large and small companies and is committed by both men and women, although men tend to commit bigger frauds than women ($160,000 as opposed to $60,000). One surprising statistic is that long-term employees commit more fraud than new employees. The median loss in 2005 was approximately $93,000 per incident. No matter the size of your company, such losses certainly add up over time. The most common type of occupational fraud is the misappropriation of funds (i.e. stealing cash, fraudulent disbursements, billing schemes, payroll schemes, check tampering, etc.). Expense report fraud accounts for a significant portion of these frauds and is an area, in Bishop's estimation, where most companies can improve substantially. (The most common type of T&E fraud involves airline ticket schemes, swaps of expensive tickets for lower-priced ones, with employees pocketing the difference.) New technologies can help improve internal controls, and new thinking about T&E expense procedures is critical. The case for making full and effective use of new fraud detection technologies is made all the clearer by the facts about detection— 40 percent of fraud is detected through tips by employees, customers, suppliers, or anonymous tipsters. In fact, more fraud is detected by accident than through internal controls. Good anti-fraud controls work because they increase the perceived likelihood of detection and therefore decrease the perception of opportunity. When organizations communicate clear policies, implement good controls, and exercise enforcement, they send a message that fraud will be detected and that there will be consequences. Bishop concluded by urging those who suspect fraud to proceed carefully and follow these essential steps:
Missteps can lead to legal and financial problems and put the company in jeopardy. During the question and answer session, Bishop urged businesses to implement corporate card policies which can greatly minimize the opportunity for fraud. Because 100% of transactions are charged directly to the card, corporate cards act as a significant deterrent. Managing the Fraud Control Cycle with Automated Expense Management First, organizations must examine the history of policy violations to identify trends and questionable activity. Companies can review expense details by department, expense type, or other categories. The next step is to use this information to set internal controls and conduct routine audits. Internal controls can include warning and stop payment limits to let employees know that activity is being tracked. Managers should review transactions and third party audits provide an objective review. Gelco recommends that companies audit 100% of expense reports for top managers and a random sample for other employees. It is not sufficient to put the controls in place—audits are an essential part of the fraud control process. ExpenseLink provides detailed, year-to-date spend data. Companies can use reports and feedback to reconfigure their policies and reset internal controls, as necessary. Managing fraud is a continuous cycle, not a one-time activity. Targeting spending categories for scrutiny based on solid, reliable data is an effective way to detect fraud and improve compliance. It's important that managers and internal auditors have access to transactional information, that they review this information on a regular basis, and that they communicate with employees about how the controls are being executed. Finally, companies must match electronic transactions to paper documents, track manager approval activity, and balance reports to the GL. Gelco's Imaging Services provides a choice of two methods for imaging receipts, depending on a company's needs. Fraud control tools have always been an integral part of the Gelco solution. Best-in-class processes, data capture, receipt and audit services, payment reimbursement solutions, and maintenance and support provide a complete solution to travel expense management. To find out more about how Gelco can help your company detect and deter fraud, please contact Gelco or click on our feature article "Gelco Audit Services put you in control" in this edition of the newsletter. |
