Dean Forbes, CEO, KDS

With one quarter of corporate business travellers admitting to embellishing their travel receipts, Dean Forbes at KDS reviews how finance teams can ensure corporate expenses are accurately reported….

Dean Forbes
Dean Forbes

Corporate accountants have long been aware that fraud relating to travel and subsistence happens. According to the Association of Certified Fraud Examiners, a typical company loses 5 per cent of annual revenue due to fraud, 15 per cent of which is down to fraudulent expense reporting. There are plenty of opportunities for employees to ‘go rogue’ and inflate their expenses – exaggerating mileage claims, adding extra to taxi receipts, entertaining friends rather than clients for meals, and claiming for tips not paid are all firm favourites with employees looking to bump up their claims.

Travel fraud and expense abuse remains an enduring challenge for many organisations. As a recent KDS survey among business travellers revealed, a quarter admitted to embellishing their company expenses. The study, commissioned to investigate the attitudes, actions and behaviours of business professionals when booking work-related travel and reporting expenses, found that over one-fifth of respondents regularly round up business mileage and a quarter will falsify blank taxi receipts.

Despite the fact that the vast majority of employees are honest, some will take liberties when it comes to travel and expense claims. Most employees don’t maliciously set out to defraud a company – but inflating an expense claim is viewed by some as a fair ‘trade-off’ for the inconvenience of being on the road in the first place. It’s also the reason others find ways to ‘upgrade’ their travel and accommodation in order to compensate for time away from home. Whatever the motivation, expense abuse means many organisations need to address the issue of problematic or inaccurate receipts.

Enforcing timely expense submissions and excluding non-allowed items not approved for reimbursement can make a big difference when it comes to minimising the risk of employees ‘going rogue’ with business travel bookings and expenses. For example, what actions does a company take if a business traveller initially complies with established travel policies when booking flights and hotels, but upgrades without permissions at a later date?

When it comes to minimising the instances in which staff can ‘go rogue’ when it comes to logging, tracking and claiming expenses, there are a number of steps organisations can take:

  • Expense account policy and procedure

The expense account policy is an essential component in the fight against fraud. But over restrictive policies encourage rebellion, so adapting a travel expenses policy to make it fair and relevant should help reduce fraud incidents. Hotel night fees, for example, may vary considerably from location to location so a blanket rule may make it difficult for staff to do the right thing when it comes to booking a room.

Ensure all employees are well informed about the corporate expense policy and that it makes sense to the people that use it. For example, revenue generating roles such as sales may have far more freedom than back office staff. If this is the case, then make sure the reasons behind it are clearly understood so that grudges don’t build up.

  • Automate expense processes

Ensure that the travel expense process is intuitive and easy to use. Ideally, business travellers should be electronically logging and submitting as they go, rather than saving up receipts, estimating for ‘lost receipts’ or claiming for a trip they forgot to claim for n the past. Finance teams tasked with reporting, budgeting and reconciliation know that ad hoc claims make it difficult to balance the books.

Manual expense filing systems can be open to manipulation or error; furthermore, they eat up valuable employee time. In our recent survey, over 40 per cent of respondents confirmed they’re still using time intensive spreadsheets to track and submit their expenses, with 80 per cent saying they complete and file claims during working hours.

  • Speed up reimbursement

On average, it takes 17 days for an expense claim to be checked, processed and reimbursed. But employees who experience this type of ‘cash lag’ may be less motivated to engage in appropriate behaviours when it comes to expense submissions. Some may genuinely encounter financial difficulties as a result of reimbursement delays, all of which can incentivise expense inflation in the future.

Automated account management generates positive employee satisfaction feelings; reimbursement is immediate and encourages employees to be compliant and ‘do the right thing’.

  • Deal with ‘wrong doers’

Make sure managers that approve expense claims feel empowered to say ‘No’. Turning a blind eye encourages a culture of rogue expense claiming and, if left for long enough, can be viewed as an entitlement. Managers need to lead by example, encourage teams to stick to the corporate travel policy, and have the confidence to challenge suspicious claims.

Staff will need to fully understand the potential consequences of ‘rogue’ spend or falsified accounts. A good first step is to educate teams on the impact of staff expenses on revenue and profit. During training, staff should also be made aware that rounding up a mileage claim or falsifying a taxi receipt is fraud – and that this is a criminal act.

Ensure that all levels of personnel are subject to the same scrutiny; that includes senior members of staff and long-serving employees.

  • Smart supplier management

Wherever possible, insist on direct invoicing to the company; a good travel expense management tool will enable this more accurate and efficient approach that saves both time and money. Making the switch from manual to electronic expense reporting will also eliminate the risk of receipts getting altered and enables timely expense submissions.

Putting in place an automated expense management tool, designed with the mobile traveller in mind, not only speeds up accurate claim submissions. It’s also less likely to leave an employee ‘out of pocket’ should they lose paper receipts in transit or forget to claim for a taxi journey.

The Aberdeen Group estimates a typical company spends more than 10 percent of its annual budget on expenses related to business travel. No wonder then that travel and expense management is increasingly coming under scrutiny as ineffective and outdated travel and expense management systems put companies at risk of significant unnecessary wastage – with travel expenses being open to neglect at best, and abuse or fraud at worst.

Implementing an automated expense management tool not only gives organisations greater control of staff spend; it also generates real-time analytics and business intelligence that makes more accurate projections possible. Furthermore, a well administered company expense scheme is more likely to be compliant for tax and regulatory purposes.

With the right procedures and solutions in place, organisations can ensure employees are able to operate at maximum efficiency and adhere with ease to enterprise travel and expense policies.

To see a full report on the KDS Travel and Expense Survey findings, please visit:

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