Managing risk and ensuring compliance is a vital part of every finance manager’s role. Yet in the average small to medium-sized business, it’s often one of those areas that gets squeezed because of a lack of time and money.
In the next couple of articles in this compliance series, I’d like to explore the subject of risk and compliance and look at how managing them effectively can be easier than you might think.
In this first article, let’s look at the risk and compliance issues around employee spend. How does your business manage risk when it comes to employee spend? And how do you ensure employee compliance with your internal policies and external government regulations?
Managing Regulatory Risks and External Compliance
We all know our businesses have to be compliant with legislation. But what if you inadvertently break the rules? It’s worth remembering the penalties HMRC can charge don’t just apply if you deliberately break the law. They also apply if your error is due to “a lack of ‘reasonable care’”.
It means it makes sense to have a system in place that gives you end-to-end visibility over your spend. Whether it’s travel, expense or accounts payable, a robust system that allows you to see non-compliance as it happens makes all the difference. It’s where tools such as SAP Concur excel.
Not only does a robust process give you confidence in your compliance, it also helps in other areas of finance too. For instance, Duty to Report on Payment Practices was introduced to reduce the impact late payments were having on the cash flow of small businesses. When you have visibility, you are able to take steps to make targeted improvements.
Managing Financial Risk and Internal Compliance
Alongside regulatory risk and external compliance, there are also internal ones to think about.
Are travel bookings and employee expenses consistently checked so you can be confident they are compliant with your policies? Or do you rely on employees’ better nature to ‘do the right thing’? Yet our research shows that one in five employees thinks it’s okay to exaggerate expense claims.
Then there are financial risks. Maintaining a consistent, balanced cashflow is critical to the health of your business. Being able to provide accurate forecasts is essential when you are planning to invest for future growth. But without the right systems in place, you lack the visibility you need and any plans you make are based on out-of-date information.
Integrated travel and expense management solutions from SAP Concur enable your policies to be enforced on individual line items automatically. They also give you real-time visibility so it is easier to track and forecast spend.
Minimising Fraud Risk
No one likes to think their business is at risk of fraud, but sadly that’s not true. Research from the Association of Certified Fraud Examiners suggests eyewatering losses due to occupational fraud, which it defines as fraud committed against a business by its own officers, directors or employees. It found the median annual loss due to occupational fraud for a business of fewer than 100 employees was over £150,000.
And Action Fraud says it’s believed that as many as 675,000 businesses have fallen victim to a fake invoice fraud at some point in their trading history.
Products such as Concur Invoice help by enabling you to spot duplicate invoices. They also give you a complete audit trail and visibility into spend. It means you are taking steps to protect your business from those less scrupulous than you.
Managing Risk and Compliance Around Employee Spend Effectively
Only 17% of businesses say they are very satisfied with the effectiveness of their compliance programmes. And those businesses were more likely to use technology to help them manage the risks than their peers.
Cloud solutions such as SAP Concur give you the visibility you need to manage risk and ensure compliance. And their scalable nature means they will fit your business both now and into the future too. Visit www.concur.co.uk/compliance for more information on how to protect your business against risk and ensure greater compliance.