How AI Can Improve Payroll Claims Management and Reduce Fraud
Most companies have payroll management systems that allow employees to claim reimbursements for office related expenses. This may include taxi receipts, lunch bills as part of client entertainment, or business travel expenses.
Sometimes, employees make fraudulent claims that can weigh heavily on a company’s bottom line. Take for instance, the case of a Deloitte accountant who submitted more than £90,000 of phony Uber bills, and nine duplicate subscriptions to fund his gambling addiction. It took three years for HR to uncover his scam.
The abundance of resources online makes it easy for employees to generate fake business receipts and inflate expenses without raising an alarm. According to the Association of Certified Fraud Examiners, the world’s largest anti-fraud organization, expense reimbursement is responsible for 14% of all corporate fraud.
AI-Driven Payroll Services
Traditional audits and reviews for fraud detection depend on random sampling, usually covering about one-fifth of total reimbursements. This makes it very likely for organizations to miss fictitious or double claims charged via their online payroll management systems.
Transitioning to a payroll outsourcing service that is augmented with artificial intelligence, can be the solution to arresting internal expense fraud. Using AI, it is possible for a company to scan 100% of reimbursement claims and flag suspicious activity in near real-time, and hunt down duplication, inflation, or false bills.
Machine learning and deep learning can also be leveraged to understand the context of reimbursements filed instantly. For instance, it will be able to compare flight rates across destinations within seconds to reveal whether a travel booking is justified.
Additionally, smart payroll engines can potentially identify employees who repeatedly make opportunistic claims. Such analytics can raise red flags and highlight small errors that cumulatively add up to a high charge for the company.
The primary advantage of automation in payroll services and other areas of HR management is that it helps improve overall operational efficiency. An AI-backed payroll service will not only reduce the load on HR to detect fraud, but it will also make it easier and faster for employees to expense claims.
Not all incorrect claims are filed with the intention of fraud. Sometimes, it is a genuine mistake. Having a system where people can quickly check company policy on reimbursements can save the company time and money. Ultimately, technology and AI help free up resources that can be invested for long-term growth. Automated expense management, coupled with a payroll outsourcing service, is an effective cost control technique that can improve profitability.