Payroll Fraud: The Hidden Money‑Pit Most Companies Don’t See
Why this matters to you
Imagine a payroll system that’s supposed to handle your employees’ pay but ends up being a thief’s playground. New research from The Global Payroll Association (GPA) shows that each time payroll fraud sneaks in, the victim company loses about £40,000. That’s the kind of number that makes the accounting room sweat.
What the GPA Says
- Scope of the problem: GPA dug into Occupational Fraud data—frauds employees pull off against their employers.
- Three main culprits:
- Asset Misappropriation (the star of the show)
- Corruption
- Financial Statement Fraud
- Asset Misappropriation dominates: In a recent snapshot (Jan 2022–Sep 2023) it accounted for a staggering 89% of fraud cases.
- Within Asset Misappropriation, Payroll Fraud shines: Roughly 9% of these cases are payroll theft, but it lingers longer than any other type—averaging a whole 18 months before it’s caught.
The Cost Crunch
Think of it like this: every month a payroll fraud hides in plain sight costs a company about £2,217. Multiply that by 18 months and you hit something close to £39,907—almost the same as the £40,000 “average” figure the GPA derived.
Words From the CEO
Melanie Pizzey, CEO and Founder of the GPA, summed it up:
“Payroll is a cornerstone of every business, yet it’s the go-to spot for fraudsters. These crimes often go undetected longer than any other type of theft. While most cases average around £40,000 in loss, we’ve seen one employee siphon off £350,000 and another rampage that cost a company £120,000. It’s too high a price for most firms, especially SMEs, and usually because the lack of audits and leadership oversight leaves them vulnerable.”
Bottom Line
- Payroll fraud is not just a one-off scandal—it’s a creeping drain.
- It takes 18 months on average to surface.
- It wipes out roughly £40,000 each time.
- Pinpointing and interrupting these schemes early is key to safeguarding a company’s finances.
Take a moment, tie up your payroll audit coffers, and make sure your business is protected. After all, nobody likes paying the price for someone else’s mischief.
