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Travel & Expense Purchase Card

10% of Travelers Commit Nearly all High-Risk Purchases

on February 14, 2017

To uncover fraud, waste and misuse in your company’s T&E program, you need only focus on a fraction of your travelers. Oversight’s third annual Spend Analysis Report found that it’s consistently only 10% of travelers in any given organization generating nearly all instances of high-risk activity.

We analyzed 98 million expense report transactions and 50 million card transactions with $11.1 billion in total spend to spot the trends in spending among business travelers. Of the travelers analyzed, 10% had a least one potential fraud exception on their expense report and only 3.8% had two or more.

Fraud is not a rampant problem. In fact, the majority of travelers have clean expense reports. The Spend Analysis Report shows 37% of travelers have at least one potentially non-compliant purchase; this figure drops to 24% for travelers with two or more exceptions. These are not malicious transactions aimed at defrauding the company, but rather wasteful spending and misuse that when discovered can be addressed with policy reminders and training to help travelers to self-correct behavior.

A travel program can dramatically reduce its fraud risk by focusing on those few employees that exhibit high-risk patterns.

But how do you find the handful of employees engaged in potential fraud in your company?

The problem with traditional audit methods, which focus on reviewing a sample of transactions that can be random or based on high level audit rules, is that it’s hard to detect fraud when just looking at a single point in time. It’s difficult, if not impossible, to spot anomalies and patterns that emerge over time. Sample based audits are very labor intensive and many hours are wasted because the majority of the transactions are within policy.

New approaches enable companies to completely change this business process by using Artificial Intelligence (AI) to look for behavior patterns and highlight what managers/auditors need to review. They identify the small number of employees with patterns of non-compliant activities and prevent them from recurring.

Companies with a devoted analytics-based spend management program have seen significant improvements in high-risk categories including:

  • 60% reduction in personal retail MCC codes
  • 15% reduction in gas stations
  • 6% reduction in other retail stores
  • 4% reduction in miscellaneous stores (the #1 risk for traveler spend abuse)

Companies that transform their expense process with AI technology reduce the time and effort it takes to review, audit and take action on out-of-policy spending by at least 50%.

Each year that we conduct the Spend Analysis Report it becomes increasingly clear that technology to monitor your company’s spend program is no longer a nice to have; it’s a must!

Download the Spend Analysis Report Volume 3 for a look at more trends in T&E programs and the results of companies that have transformed their expense processes with AI. 

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