The hidden inaccuracies of mileage expenses: are they damaging your bottom line?

Dafydd Llewellyn, MD of SMB, UK & France, SAP Concur

The power of the face-to-face meeting has not been diminished by the constantly connected, digital world. Despite a plethora of connectivity and collaboration tools – from email and social media, to video calls and virtual world hangouts – business travel has never been as prevalent as it is today.

According to the GTBA, £1.02 trillion was spent by business travellers worldwide in 2017, and it’s forecast to hit a staggering £1.31 trillion by 2022.

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The increase in business travel has meant that organisations across the globe are spending millions reimbursing travellers’ mileage expenses every year. For example, the average European business traveller drove for 1,978 miles and a hefty £170.70 million was paid out to UK employees in 2017. But, what if what is being paid in mileage expenses out is not a true reflection of what is being spent?

Separate research has revealed that over a quarter (27 per cent) of UK employees admitted that doctoring mileage claims to push their expense claims a little higher, would be their chosen way of gaining a little bit more money from their employer. Which can be surprisingly easy, given the fact that mileage expenses are rarely, or never, queried in the sign-off process. Across the UK, France, Germany, Finland and Sweden, a staggering 56 per cent of mileage claims submitted fell into this bracket.

There is also a distinct lack of concern with how accurate those being submitted actually are. Almost a third of respondents were still very confident in the results, with only 17 per cent ‘so-so’ or not very confident. However, only 27 per cent of respondents said that they analysed mileage claims ‘often’. With 34 per cent of respondents responsible for approving upwards of 50 mileage claims a week, it’s clear to see how much opportunity there lies for exaggerated claims.

Not having a 100% accurate view of mileage expenses, offers up the opportunity for those happy to slightly inflate the distance travelled a clear shot to claim back more money from their company than they should. It also means that bigger picture trends and data points are being missed by the vast majority of those entrusted to sign off expenses.

Mileage, at a handful of small change per mile, may seem like an unnecessary burden for those in finance to look at. But it adds up. An extra pound on each trip may seem insignificant on its own, but over the course of a year, in a company with hundreds of employees on the move, it can add up to a lot of money siphoned off a company’s bottom line. That’s something few businesses can afford to ignore. It can also make a massive impact on the difference between a flourishing and struggling business, especially for SMBs.

Aside from the financial impact of inaccurate mileage expense claims, there is also the issue of duty of care which can often be overlooked. Essentially, there is a need for an employer to make sure that those travelling on its behalf are kept safe, healthy and productive. This is something all too often applied only to international travel, but it also needs to cover those employees whose travel is ‘in-country’. For example, members of the sales team are often on the road each day driving travelling to and from customer meetings. They can be in the car for four hours, run an all-day meeting and then have to drive back home at the end of the day.

There is a distinct need for businesses to have a better understanding of the processes and checks in place when mileage is submitted. Not only is it vital to help protect a business from paying out more than they should, a properly analysed and tracked set of mileage expenses is essential to employee duty of care. It can give managers the insight into employees potentially at risk when travelling long hours in the car, and ensure that next time, they put them on a train.

Finance teams need toact and nip inaccurate mileage expense claims in the bud. Rather than a timely employee education campaign or policy review – both which could be implemented at a later date – the finance team needs to get its own house in order.

 For many businesses, mileage expenses are still submitted via a paper, spreadsheet and stapled receipt processes. Which gives us a clear indication of why it is easy to process claims that are exaggerated and why managers are unable to have a closer look at the money they are approving to be reimbursed to employees.

This seems archaic given the number of online or web-based tools available. Ones that, more often than not, come with the necessary checks and balances for mileage expenses needing to be inputted and ratified against the company’s mileage rates.

These tools also allow those in charge of signing off expenses to have a ‘single-panel’ view of the expenses they are approving – helping them stamp out false claims. For example, what if two sales managers are frequently visiting the same customer, but one is averaging an extra 15 miles of mileage claims per trip? Using these tools, that trend of inflated submissions can be quickly and easily identified – especially in comparison to tracking through an Excel document to find out who might be doing something similar.

Having the right tools in place makes the task of analysing mileage a doddle. And for the finance team, it is as simple as moving away from the spreadsheet and stapled receipt, to an easy to use online tool. Let’s hope in the next research results more than one third of respondents across Europe have access to an online or web-based expense tool. That’s how the travelling employee can continue to work efficiently and safely into the 21st century. And businesses can save money!

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