14 September 2020 - Reading time: 5 Minutes
When it comes to types of fraud, we’re all familiar with insurance, tax and even identity theft, but payroll fraud is often swept under the rug. It’s not one to be ignored, as every year it costs UK businesses £12 billion in loss.
One of the reasons why payroll fraud is so rife is because of the complex nature of the payroll function. With new legislation release in the UK every few months, and the constant changes to payroll, there are dozens of opportunities for fraud. Here are some of the different types of payroll fraud your organisation can be vulnerable to:
This lost above contains common types of payroll fraud, but it is not an exhaustive list. Fraudulent activity thrives in conditions where there is a lack of control and clear processes.
You might also have added complexities, such as paying people in different types of roles like contractors or temporary staff, across multiple sites. With this type of complex payroll, it’s easy to make errors and have difficulty reconciling hours worked and pay rates.
However, with the right steps in place you can beat payroll fraud. Below are some tips:
Eliminate timesheet fraud by using an automated system that links to payroll. The right system can calculate hours worked and automatically request approval from managers flagging when someone has claimed for over time.
Expenses can be easily logged, approved and reimbursed by using an automated system which uses OCR technology to scan and validate receipts.
Manual processes performed by one individual across multiple systems increases the risk of fraudulent activity. Switch to technology that integrates with payroll to improve accuracy and security and reduce errors. For example, timesheets that can be automatically sent to payroll to review and process.
Unfortunately, Payroll fraud often starts with a payroll employee. Employers can reduce the risk by performing background checks on all employees, referred to as a Disclosure and Barring Service (DBS) check in the UK. You can request a basic criminal record check for all employees or a more detailed check for certain roles, such as payroll, finance and anyone looking after sensitive data.
By outsourcing payroll to a reputable supplier who is security accredited, you can relinquish the burden. Outsourcing puts your payroll in the hands of a team of payroll specialists who understand complex payroll. The staff should be background checked before they can work for the company, which you won’t have to pay for. Plus, you’ll have regular performance reviews to make sure accuracy and efficiency is maintained. In the rare occasion that any fraud does occur, the outsource company will be liable for any loss or damages.
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