Organisations lose millions each year due to payroll fraud. It is not only difficult to detect but is perpetrated by employees within the company. Common types of payroll fraud include inflated wages, counterfeit or “ghost” employees, and falsified expense reimbursement. Most people think crime like fraud don’t hurt anyone, but companies suffer in the short and long term from fraudulent payroll practices. So how can you reduce the risk of payroll fraud in your organisation?
Whether it is employees submitting personal expenses for business reimbursement, or more hours on a time sheet, there are steps you can take to avoid payroll fraud and reduce fraudulent payroll claims. Up to 20% of fraud is detected through internal audits, so it’s important to audit your payroll process each quarter to review what is working, spot errors, and identify fraud.
Using cloud-based technology to automate payroll reduces manual processes, spreadsheets, and misuse of data. With custom reporting tools integrated into your payroll solution, you can create reporting each month in real-time to ensure employees are paid accurately each month
Another important step in the payroll process is having more than one person managing your payroll process. More often than not, payroll fraud is committed by a lone employee in the organisation that has complete control over the payroll system. If you have a team in place – even if it’s just one other person verifying payroll data and accuracy, you can instantly reduce the potential for fraud.
Creating employee identification codes and verifying payroll costs each month can ensure there are no “ghost” employees on the payroll. As this type of fraud can be very difficult to detect, it is much easier to spot irregularities if you can identify payroll costs versus budgeted amounts and any discrepancies. Payroll fraud has lasting effects on the company bottom line, so it’s important to understand the risks and steps to avoid issues down the line.
Payescape has created a cloud-based payroll technology to automate payroll and ensure compliance. With customized reporting, direct filing with HMRC, and a CIPP-certified team, you can simplify payroll and take steps to reduce risk. Talk to our team today about our easy-to-use payroll technology – click here to get started
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Payescape Limited is authorised by the Financial Conduct Authority under the Payment Services Regulations 2017 (register number 821826) for the provision of payment services.