One of the top expense management challenges for organizations is enforcing corporate travel policies. Ensuring compliance is especially important (and especially difficult) when it comes to executive spending, as illustrated by a recent article from The Wall Street Journal’s MarketWatch.
The article describes how problematic expense reports led to the CEO’s downfall at Polycom, a company that provides video-conferencing devices and solutions. Andrew Miller had been president and CEO since 2010, but he resigned in July after an audit revealed problems with his expense reports.
And it’s not just Polycom. Enforcing corporate travel policies is one of the top challenges organizations face in expense management, affecting 39 percent of organizations, according to a PayStream Advisors study. At these organizations, managers may find missed savings opportunities due to lack of spending visibility. Lack of enforcement also increases the risk of expense reimbursement fraud and of penalties for noncompliance with regulations.
An expense policy combined with automated expense management software like Chrome River EXPENSE can help organizations resolve these problems and reduce risks. Having an expense policy provides both employees and executives with consistent rules and expectations. Building these rules into an automated system helps ensure compliance. Instead of expecting employees and executives to remember all the rules, companies can integrate them into the expense management software — simplifying the compliance process for everyone.
Expense report software is especially useful when compliance regulations create uncomfortable situations. For example, an automated system can help companies avoid the difficult position of enforcing a policy after an employee has incurred the expense. When an executive submits an expense, policy enforcement comes from the system, not from a co-worker, who may feel intimidated trying to enforce the policy with an executive. De-personalizing the process can enforce compliance while improving employee relationships.
In the case of Polycom, the CEO accepted responsibility for his expense report problems, but the problem affected shareholders when the company’s stock fell 15 percent and eliminated $273 million in market capitalization. It’s a good bet that employee morale took a dip as well. Expense management software protects the interests of everyone, from CEOs to employees to shareholders.
As always, we appreciate your insights. What factors make executive expense reports susceptible to errors and/or fraud? Do you think an automated system would reduce these factors? Let us know by posting in the comments section!
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Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.