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Here’s How To Keep Employees From Misusing Expense Reports

  • Here’s How To Keep Employees From Misusing Expense Reports

    Here’s How To Keep Employees From Misusing Expense Reports

    Your expense reporting system offers one of the easiest ways for employees to steal from your business. Maybe they think they’re no harm in charging a few non-business expenses to the company card while on a trip. Or perhaps they’re making a deliberate effort to defraud your business. Whatever the scale of the expense report fraud, this is something you’re going to want to deal with before it becomes more of a problem.

    Travel & Expense fraud falls into the category of “asset misappropriation.” This term includes any activity that involves stealing from within the company. 83% of all corporate fraud cases involve asset misappropriation. Fraud like this usually starts small. A slightly inflated expense claim here, a flight upgrade to first-class there. But when a fraudster notices they’re getting away with something they become bolder.

    Left unchecked, expense report fraud can become quite a financial drain on your company. That’s why it’s vital that you learn to recognize the signs that someone is taking advantage of your T&E reporting system and take steps to combat expense fraud in the future.

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    Signs Employees Are Mistreating T&E

    We don’t want to think our employees could be stealing from us. But fraud is pretty common in the modern business world and you need to be on-guard so you can notice signs that it’s happening within your company. Managers and accountants responsible for approving and reviewing expenses need to be familiar with tell-tale signs of expense report fraud.

    Excessive Spending

    When one employee is spending more than the other employees, or more than they have in the past, it’s time to take a closer look. Maybe they are taking trips that legitimately cost more than other employees, but it’s important to double-check.

    Non-business Claims

    It’s important to check each item that comes through on a claim to make sure they’re all business related. Employees that claim non-business items might just need a refresher on your company policy, but they could have ulterior motives.

    Over-claiming an Expense

    Sometimes employees will claim a higher cost for a business expense than the actual price. And unless they’re submitting proper documentation to support their claims there’s no way you would know. Another problem that falls into this category is when employees upgrade their travel plans unnecessarily, such as booking first-class plane tickets or renting a luxury car.

    Claiming Twice

    Another fraud technique is to expense the same receipt twice. The employee has the receipt already and they’re hoping you don’t notice it’s showing up in two different categories or for two different trips.

    Exceeding Policy Limits

    Sometimes employees will try to get away with overspending a little here and there until the expense claim builds up to the policy limit. They may go over the limit, or always spend right up to the limit hoping it’ll slip through just under the approval threshold.

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    Here’s What To Do About It

    So what do you do when you notice there are expense reporting problems in your organization? It’s definitely something that needs to be dealt with, and you’ll need to take steps to prevent these issues from coming back in the future. But at the same time, you don’t want to make the expense reporting process harder on the honest people in your organization.

    The first step toward stopping expense report fraud is to establish a clear policy. Unfortunately, educating employees on your policy only prevents honest mistakes. On its own a policy won’t stop determined fraudsters. You’ll need to go a few steps farther.

    Automate Expense Reporting

    This is the number-one best thing you can do to keep employees from misusing expense reports. Not only is it going to make all the next items on this list a whole lot easier, but it makes the reporting process simple for honest employees as well. It’ll also speed up the expense reimbursement process.

    Enforce Policy

    Make sure that your policy governing travel and expense reimbursement is up-to-date and available to all your employees. Employees submitting claims and those reviewing claims must be familiar with the policies. Having a clear policy also lets you program a T&E automation system to enforce your company’s standards.

    Categorize Expenses

    You’ll want to have categories for acceptable expenses so it’s easy to tell at a glance if an employee is trying to submit non-business claims. Automated travel and expense software will automatically flag expenses that don’t match your policy.

    Require Receipts

    The only way to make certain that employees are claiming actual expenses is if they submit documentation. It really is easy to lose receipts, though, so take care of this problem by going digital. Employees can forward email receipts to the automation system. For physical receipts, they just have to snap a picture with their smartphone.

    Cross-Reference Receipts

    To prevent exaggerated and duplicate claims it’s important to cross-reference submitted receipts. This is time-consuming to do manually and may be impossible in larger organizations. But with T&E software the process happens automatically.

    Educate Staff

    While automated software is a great tool in the fight against fraud, there are still ways for clever fraudsters to get around it. Make sure you educate your staff on the signs of fraudulent activity and thoroughly train them in company T&E policy. Constance vigilance is one of the best tools you have in preventing fraud.

    Audit

    Audits are your last line of defense. If your audits are catching fraud, then you know something needs to change in the expense reporting system to stop that kind of fraud sooner. T&E software helps simplify audits by making record documents easily accessible and enforcing policy early on in the expense reporting process.


    By implementing NextProcess’ Travel & Expense automation software, you upgrade to a user-friendly system that supports honest employees while also fighting fraud. The system is easy to use, quick to learn, and highly configurable to fit any management system. Our system comes with unlimited user licenses and storage, plus we only charge for what you use so you see immediate ROI. Contact us today to get started.

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