Many employees exaggerate their monthly expenses, without feeling that they are stealing companys money. Most actually feel that they work hard enough and are entitled to the extra pennies that they put on their expenses form.
It seems the attitude has changed with many employees believing that ‘everyone does it’ and that it is easy to get away with.
In the current economic climate where there is increasing financial pressure it is more likely that employees will inflate areas of expenses that they believe they can get away with.
A few miles added to mileage claims, soon adds up when each employee submits their expense claims.
Companies really could make considerable savings if they treated the issue more seriously. For small businesses it can be a crippling expense and one that could be easily avoided.
The most common types of employee expense fraud include:
· Extra miles added to journeys.
This is the biggest problem and easiest to do as the cost of petrol rises and Managers and Accounts Departments have limited amount of time to check. Also, employees that car share to venues/locations will each add the miles to their expenses form.
· Food and restaurant meals
As the cost of food rises, more receipts for food are included at a higher price
· Adding tips to restaurant bills when tips were not included
When employees add tips to their expense claims that they haven’t given.
· Claims for entertainment that are excessive and not within policy
For example leisure, alcohol and sports tickets submitted in the expenses
· Higher class travel that is not necessary or within the company policy
When first class tickets are bought, instead of economy
Unfortunately fraudulent expense claims are more likely to increase as a business grows as there are more employee expenses to check.
The easiest way to reduce the likely-hood of fraudulent claims is to have a clear expenses policy, which is communicated to each member of staff.
It should be written in a formal policy, that clearly outlines what staff are allowed to include in their expense claims and what they are not. It should be detailed and include information about travel and entertainment costs, business mileage allowances, taxi allowances, grades of hotels that can be booked and maximum levels of meals allowances.
All employee expense claims should be supported by receipts or other evidence, with a valid reason for every claim and permissions given before buying unusual or expensive purchases.
Employee’s should be made aware of who is accountable for approving their claim and they should be monitored by Senior Management and the Accounts Department.
Automating your system with expenses software will highlight fraudulent claims, simply and effectively. It will highlight unusual expenses, areas of high spend and not allow expense claims that go outside of company policy to be processed. It will also help to eliminate over inflated mileage costs at the point of entry, as it calculates the journey for you.
If you currently use a manual system it will take alot longer to check each line entry or sift through historical data to analyse the spending trends, but when using expense management software the reporting and analysis becomes much easier and quicker.