Many companies have employees who regularly travel for business. Top execs may need to be on-site to manage multiple offices, specialists may need to attend conferences and give workshops, and sales, customer service, and technical support reps may need to visit customers to generate sales and foster business-client relationships.
These ventures can require national or international travel, overnight stays, and high-priced business lunches. Travel is commonplace, and it should be built into the budgets of companies that depend on it regularly.
With T&E account growth also comes corporate T&E fraud. A few dollars here and there on dinners and ground transportation on regular trips can quickly add up. In other instances, bigger amounts from double charging hotel stays and airplane trips can cause losses of thousands of dollars at a time. Are expense reports audited according to role, title, or department? Perhaps they should be.
Travel and expense fraud can be a serious problem for companies, but it’s actually not as widespread as people may think. A minority of business travelers intentionally cheat their companies, according to a newly released report. The report was generated by Oversight Systems and analyzed information from 160,000 business travelers. Oversight found that a minority of travelers, 5%, committed a majority of the fraud, and companies stand to gain significant cost savings by addressing the problem of T&E fraud with this small group of fraudulent travelers.
A Big Hit from Corporate T&E Fraud
The report from Oversight Systems implies that accounting and finance managers would be wise to establish proper oversight when it comes to T&E accounts. Among the 160,000 individuals included in the study, 1 in 10, or 16,000, had records that included more than one violation of company policy. Such violations can include:
- Charging expenses that have no business purpose, like a taxi ride and entry fee to Disneyland;
- Charging expenses to the wrong account, for example a personal expense described as a business lunch;
- Falsifying receipts, where they show a greater value than the amount actually paid, in order to get a greater amount of reimbursement;
- Duplicating expenses, to get double the amount of reimbursement for a single charge. In fact, 20 percent of employees examined in the report had this type of T&E violation on their records.
A Few Bad Eggs?
A mere 5 percent of employees accounted for a whopping 82 percent of the value of the violations, meaning that 95 percent of employees contributed to only 22 percent of violations. It’s clear that most employees who travel for business are transparent when it comes to travel expenses.
Companies should take careful notice of these findings as they relate to their own T&E practices. T&E fraud can drain a company of funds if it goes unchecked. Reviewing policies and enforcement of those policies through expense management software, and revising company practices if necessary, can save companies from wasting money on T&E fraud.
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.