Digital communications have helped make global trading accessible to all businesses. It’s now as easy to contact a company on the other side of the world as somebody in an adjoining office.
The uncertainty caused by Brexit has also encouraged companies to look further afield for suppliers and trading opportunities. A 2017 survey by international payments company, OFX, found 48% of SME owners are now looking to increase overseas connections.
It provides businesses with the potential to unlock lucrative new markets and drive growth but it also comes with some added risks, particularly in the form of the Bribery Act 2010. The legislation was introduced to promote ethical trading and to guard against the threat of corruption.
Businesses found to have breached the regulations can face unlimited fines and 10-year prison sentences for directors found to have knowingly been involved with corruption.
Compliance weak spot
One of the risk areas for companies who operate overseas is with the management of employee expenses and the need to make sure that every business cost is legitimate, particularly when handling corporate hospitality expenditures.
If anything suspicious is found, one of the argument against prosecution is that all reasonable steps were taken and the businesses had ‘adequate procedures in place’.
The five key criteria set by the SFO (Serious Fraud Office) are that the:
- Company has a clear issued policy regarding gifts and hospitality
- Amount of employee expenditure is within policy limits
- Expenditure is ‘proportionate’
- Company has evidence that all employee expenditures were recorded
- The recipient was entitled to receive the hospitality under the relevant legal jurisdiction
To ensure these are met requires a robust expense policy, together with the tools to actively maintain it and ensure all reimbursements are legitimate. It’s one of the reasons more businesses are switching to digital management systems.
A major advantage of a system such as Webexpenses is the ability to integrate anti-bribery policy notifications and reminders into employee workflow. Each of these checks is automatically tracked and recorded, creating a full compliance data log.
It’s the level of detail that authorities need when looking for evidence that all reasonable efforts have been made to ensure the accuracy and legitimacy of business costs.
The ability to handle costs digitally also removes the dangerous informational lag that can occur when relying on a traditional paper-based expense set-up. Typically, a switch to digital reduces processing times by 25%.
It prevents the difficulties faced by finance teams when they are trying to check the validity of an expense claim which may be weeks or even months after the cost was incurred.
Webexpenses provides a smarter and safer way to manage employee expenses. Find out for yourself by requesting a free demo.