Payroll expenses are always difficult to manage. You never quite know how many hours might be needed or what your next quarter will bring in terms of workers hired. Regular payroll issues are hard enough to deal with, but fraud can make things even more difficult. Common types of payroll fraud like buddy punching can make your life much more difficult, and wreak havoc on your bottom line. If you know how to spot this type of fraud and how to prevent it, though, you can spend your payroll money in a more productive manner.
Buddy punching is a specific type of timesheet fraud that tends to happen in companies with a large number of workers. The fraud is simple and, in many cases, can go unnoticed if enough people are employed. When employees use buddy punching, they sign another employee in when he or she isn’t present.
This is often done to aid employees who are running late, but in extreme circumstances, it can also be done when the other employee isn’t present at all. While workers might think of this as a method of helping out one another, it actually causes a great deal of loss for many companies. The money wasted through this type of fraud can actually lead to budget shortages, staffing issues, and even layoffs.
In order to prevent buddy punching, we recommend taking the following measures:
You’ll need to be thorough, though. You don’t just need to find ways to physically stop it from happening – you need to convince your employees that it’s a real problem that can impact them negatively. Changing attitudes can be difficult, but setting up systems to ensure that punching in for others is more trouble than it’s worth can send a strong message. Your goal can and should be to not only block your employees from signing in for one another, but to also create an environment where doing so will be seen as a major breach of your company’s policies. A solid combination of policy and prevention will be your best defense against erroneous log-ins and other types of payroll fraud.
Your first step towards solving this problem is having a clear, easy-to-understand policy for signing employees in. Every employee who goes through training should be reminded that they are only able to sign themselves in and that signing anyone else in for any reason is forbidden. Employees should know that significant penalties can be accrued not only for those who are signed in by others but also by those who do the signing in. Your policy should be such that an employee who is asked to sign in a friend won’t see this as a simple favor, but rather something that will negatively impact their own ability to keep getting paid. While the immediate punishment for punching in someone else need not be termination, it should be significant enough that it’s a barrier to the action.
The best ways to protect against this type of fraud is often to make it harder. Instead of simply letting employees sign their names or punch a card, give each employee their own password that will allow them access to the system. This has two major benefits. First, it makes it harder for employees to log in on another name. Perhaps more importantly, though, it will allow you to see a record of who signed in immediately before or after the phantom employee, allowing you to more easily see who is breaking the rules. Make sure to insist that your employees regularly update passwords and that they keep the information to themselves, which will also help to reduce the number of potential security holes for your clock-in processes.
Somewhat more sophisticated than a simple password, biometrics ensure that only the assigned person can sign into a system. This is generally done through either fingerprint or facial-recognition access. While biometrics might seem expensive, they’ve actually come down significantly in price over the past several years. If you make use of a biometric time clock, you’ll be able to ensure that only authorized employees are able to sign into your systems. For some companies, going to this level of security might be the only way to deal with employees who are buddy punching. Biometrics do tend to have some issues in terms of reliability and up-time, but dealing with maintenance issues is usually preferable to dealing with any sort of payroll fraud.
Geofencing is a particular type of security technology that prompts a response whenever a certain GPS or RFID enabled device enters the area. Enabling geofencing makes it impossible for anyone to punch into your system unless the computer can recognize them as being in the proper area. These systems generally make use of either RFID-enabled badges or specialized phone apps to ensure that the employee signing in is where he or she is supposed to be. It’s not impossible for geofencing to be defeated by a clever employee, but it makes it much harder than a traditional time-clock system. Geofencing is a good choice for those businesses who have easily-defined work-spaces and don’t tend to have many employees working remotely.
GPS tracking is a fantastic alternative to geofencing if you have employees who work in remote areas. When you use GPS tracking, you can tell where an employee is located when he or she is clocking in. This will allow you to make sure remote employees are at the right job site and that those located in other locations aren’t able to sign in friends. GPS tracking generally requires either special equipment or phone apps, but it’s becoming more common among those who have employees at multiple satellite locations. While there are definitely pros and cons to the technology, it will help you to deal with the problem of buddy punching in an efficient manner.
As you might be able to tell, eliminating buddy punching generally means taking your payroll security to the next level. While it does often feel like you’ll have to trust your employees less, what you’re really doing is making sure that your honest employees don’t have to suffer for the choices of those who are committing fraud.
