Travel and Expense Management with AI – Automated Reports, Fraud Detection, and Compliance Management
Organizations have been struggling with employee travel and expense management for years, and as they expand globally, it is getting harder. Luckily, innovations in technology are changing the way companies manage their employee expenses. The latest technologies provide a lot of possibilities for enhancing the way businesses can simplify travel and expense management. One of these technologies is Artificial Intelligence (AI), which automatically audits expense reports and instantly detects fraud and compliance issues.Thank you for reading this post, don't forget to subscribe!
How AI Transforms Business Travel and Expense Management
A typical expense management workflow requires employees to create and submit an expense report for their manager’s approval. Using an expense management system, the employees can upload digital receipts after the purchase or trip. Managers can send the report to the finance team for approval before the reimbursement is made to the employees. The entire process may take days to weeks.
Organizations have automated many of the expense management processes, including matching receipts to credit card bills, creating and submitting spend reports for users, approving reports on behalf of managers, and reimbursement. Today, most companies use Artificial Intelligence (AI) to automatically audit certain processes and flag irregular expenses or doubtful patterns for managers. An AI integrated expense management system uses machine learning and predictive analytics to assess claims in real-time and find those that may require further inquiry. The technology also can categorize, arrange, and transform expense receipts and invoices into formatted data with 100 percent accuracy.
However, many companies have hesitated to adopt advanced automation because they want the employees and managers to confirm the accuracy of expense reports before funds are reimbursed. The main reason is that an employee or manager could blame the technology when a non-compliant spend gets through the system.
A study carried out by an expense management software provider stated that most companies are using only a few of their automation capabilities. Thus the firm is focusing on enhancing the manual expense reporting side of its application.
Today, many companies believe that the most effective way to catch fraud is to review 100 percent of reports, but it is time-consuming and ineffective, as most managers approve expenses without scrutiny, particularly for employees they trust.
Online expense management system with AI technology can analyze every report, do it faster and catch violations a human could not. The system can also analyze an employee’s historical expense submission data to find unusual patterns and behavior. It can also search over the internet to confirm acceptable vendors and recognize suspicious meals or meeting participants.
Most business travelers do not commit fraud, it is better to use AI to find good travelers, remove manager approval of their spend reports and reimburse them automatically. Similarly, AI can categorize offending travelers based on their risk levels and respond accordingly. The system scans a traveler’s historical expenses and automatically triggers emails in case of violation. It sends repeat offenders a more severe message and could copy a manager on the email.
AI technology learns from humans, but it also can teach them. For example, the system can send automatic emails to indicate which policy a given employee violated and a link to the travel policy. The purpose here is to educate employees rather than warn them.
How AI helps Automate Expense Report Audit, Detect Fraud, and Maintain Compliance
Most organizations rely on manual audits to find fraud and compliance issues in their employees’ spend reports. Due to the huge amount of data that need to be researched and examined, it is hard for finance teams to detect most issues, despite using travel and expense policies and traditional violation flagging tools. In addition to being inefficient, this leaves businesses vulnerable to fraud and compliance risk.
Organizations spend about 8% of their budget on business travel and expenses. However, compliance and audit of these reports are completely manual. Since not all risks can be identified manually, the traditional processes are inefficient, potentially expose them to fraud, misuse, and wastage.
Why is manual expense report audit inefficient?
- A lot of money is lost annually to expense report fraud because of inadequate checks
- Expense report audit only involves verification of receipts and documents
- The process is time-consuming and expensive – with most audits not actually showing any actionable issues
- Auditors struggle with massive amounts of data and lack of context to detect fraud patterns and spend irregularities.
Having a business travel and expense policy and flagging policy violations is just not enough – what’s required is the ability to analyze the human behavior being used to avoid those policies.
An expense management system with integrated AI can automatically audit expense reports and identify fraud and compliance issues. The advanced technology quickly analyzes spend receipts, credit card transactions, travel booking, and other data to empower your finance to automatically audit 100 percent of your expense report.
The solution detects patterns and irregularities, automatically flags fake and non-compliant expenses. The AI-enabled system learns based on usage, so it can verify the legitimacy of every expense and detect issues such as fake claims, duplicate spend reports, irregular expenses, regulatory compliance violations, and accidental misuse from habitual offenders.
There are many ways that the use of AI in travel and expense management can help businesses automate expense report audits and eliminate fraud. Here are a few:
- The AI technology automatically extracts information from both structured and unstructured spend data such as expense descriptions, vendor information, location, receipts, and more
- It identifies irregularities in expense spend. Uses data mining to automatically detect spend patterns for merchants, categories, and locations – across employees and organizations.
- The technology can crosscheck thousands of external and social data sources in real-time to verify the accuracy of every expense.
How AI Helps Enforce the Business Travel and Expense Policy
A clear and well-communicated travel and expense policy is the primary aspect to ensure compliance. Yet, even with the most airtight policies, compliance concerns inevitably arise. Some travelers break the rules, while others are not aware of them or simply make mistakes when submitting expenses.
Most organizations don’t have the time or resources to review every expense before reimbursement. Sometimes it is left up to managers to approve or reject each report, and they approve a spend report just to get it off their desk. To overcome this, many companies rely on post-payment audits. But, a major portion of expenses goes unobserved with this process. Even if an out-of-policy spend is found, it would be late to get back that spend.
With an AI integrated expense management system, you can proactively enforce your organization’s travel and expense policy and identify errors, waste, and fraud. Here we present a few out-of-policy things that AI can track.
Over the Limit Expenses
The solution alerts you if any receipt on an expense report goes beyond a specified limit, so you can double-check overstated expense reports. Since the amount varies by spend category, you can set thresholds by category. Spend categories can be defined further by amount and vendor.
Unauthorized Credit Card Use
Many organizations mandate that employees should use corporate cards for business expenses. In this case, the AI scans all receipts to find and flag any unauthorized card usage.
The system makes sure that everything on an expense report aligns with the receipts your employees submit. This double-checking takes a lot of time for finance teams to do manually, but AI makes it easy.
Breach of Per Diem Limits
Daily limits for a meal and other travel expenses are standard parts of nearly every business travel and expense policy. AI can flag reports where meal costs exceed those specified limits. You can also make custom settings if you want the solution to flag all over-the-limit spend or only certain levels.
The solution can automatically flag if two employees submit the same expense twice so that your finance team doesn’t end up paying double. Similarly, the system automatically flags if an employee submits the same expense twice.
Out of Policy Merchants
Sometimes your expense policy doesn’t look upon employees expensing visits to unauthorized areas such as casinos, clubs, and spas. However, you’d be surprised at how often employees get away with this. AI can flag such kind of questionable receipts for further review.
A better travel experience is a top priority for your employees, who simply want to look for an efficient trip, accelerate reporting, and get reimbursed faster. Yet traditional systems often demand time-consuming manual expense capture and reconciliation processes.
Advanced expense management systems that incorporate AI can help streamline the expense reporting process while still providing the necessary data for finance to negotiate vendor contracts, accumulate expenses, and minimize costs. Using existing travel data, such as digital receipts, the solution offers guided workflows, simplifying the process while freeing employees to concentrate on crucial tasks. An AI-integrated expense management system offers remarkable savings and high visibility that benefit companies while prioritizing employee needs.