’Tis the season to be more vigilant. Is your organization ramping up its internal fraud prevention and detection efforts in case anyone is tempted to finance their personal holiday shopping via a P-Card? Less serious, but still a concern, are cardholders who might think their P-Cards can be used to fund department parties, office holiday décor, and/or employee gifts. Maybe this is allowed at your organization, but most prohibit such purchases. To help prevent P-Card misuse and abuse this holiday season, following are some things your organization can do.
Provide Reminders About Appropriate Card Usage
Communication is key. Remind cardholders and manager-approvers about what is and is not allowed on P-Cards. Focus on potential purchases related to the holidays, such as what is noted in the introduction above, but also include a link to the complete list within your policies and procedures.
If your organization is more lenient, like allowing card use for a holiday lunch, ensure you have very clear rules. For example, state that a P-Card may be used for “one holiday lunch per cost center per year, for which the total cost per person does not exceed $X” and require the cardholder to include an attendee list within their transaction documentation.
This might also be a good time of the year to execute annual refresher training.
Holiday surprises can be great, but not when they are in the form of fraudulent or inappropriate transactions.
Apply Greater Scrutiny of Cardholders and Their Transactions
An effective auditing strategy is necessary at all times, but the holiday season can warrant some extra efforts. Tweak your transaction audit criteria accordingly. The following could be warning signs that something is amiss, but do not jump to conclusions. Anything unusual deserves more research.
- A notable increase in spend—whether dollars or transaction volume—by a particular cardholder
- A cardholder with little P-Card activity all year suddenly becomes more active
- Increased purchases with “retailers,” such as department stores and restaurants
- Purchases that do not align with a cardholder’s specific job responsibilities
- A spike in weekend purchases or purchases with new suppliers
- An epidemic of lost receipts
- A cardholder initiates more transaction disputes than usual or reports more external fraud
The last bullet point could lead to the discovery of “friendly fraud.” There is nothing friendly about it, but it is the common term for when a cardholder makes a purchase and then disputes the transaction with the bank. Meanwhile, they have pocketed the purchase.
In addition to strategic auditing, consider increasing the percentage of transactions you randomly audit.
Final Thoughts
The combination of increased communication and thorough auditing will help protect your organization this holiday season. While I believe people are generally good and employees should be trusted, the holidays are a time when temptations can get the best of someone.
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About the Author
Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…
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