Fraud in plain sight: Why employees cheat on expenses

Who knows how exactly how much money is stolen from businesses by employees ‘tweaking’ expense claims in their favour? The answer is probably no-one – because expenses are not universally audited with any kind of vigour.

Why do employees cheat on their expenses? Quite simply, because they can. And they can do so with virtual impunity.

Take the case of the man who regularly entertained a major customer at blue chip sporting events, and was similarly entertained in return. No business was ever done, because these two men were close personal friends, and were manipulating the system to attend top events in fine style at someone else’s expense.

Or the man who habitually charged for a 90-mile round trip in his own car, for a journey of 86 miles. (And sometimes claimed for journeys he hadn’t actually made). The former is on a larger scale than the latter, but both are fraud. And since the proportions of any kind of expenses fraud will naturally grow based on how many people are employed, so will the financial implications.

Online expenses software can be a game changer
For any business owner turning the expense fraud ship around can’t happen overnight. And it starts not with rigorous expense checking, though that will come later, but with a redefinition of what’s acceptable and, more importantly, what’s not.

Good online expense management will provide support by helping you to define an expense policy, which draws a line in the sand. Just as a toddler or a teenager needs to know the acceptability limits of behaviour, so employees need to know it too, when it comes to their expenses. After all, they know the rules about health and safety, your attitude towards drugs and alcohol, and sexual harassment, to name but three. Why shouldn’t expense claiming be treated in the same way?

It’s not enough to have a policy drawn up, but there needs to be certainty that it’s been read. You’ll need to devise a system to show that the policy has been read and understood.

Then what?
With a policy in place, then is the time to start policing expense claims more thoroughly. This will start to address the widely-held belief that a degree of fiction is acceptable in making a claim. Start with the expense approvers. They need to be on board and working within the policy, so as to set an example. And the same rules should naturally apply to everyone.

Good business expense tracking software will help in stamping out that fiction too. Take claims for personal mileage as an example. GPS software will pinpoint exactly the distance between two ends of a journey, and calculate the correct expense automatically.

Other areas for action
Proper expense control to maximise the effectiveness of an online expense management software solution requires more than simply installing the software (though that’s clearly an excellent starting point.

  1. Lead by example: Everyone in the business must be working to the same rules
  2. Make it plain: Having clear policies and procedures makes it simpler for people to work within company rules
  3. Make it simple: Use language everyone can understand when writing your policies. Using complex language isn’t clever, and can serve to muddy the waters.
  4. Show who’s who: When it comes to approval of expense claims, make sure everyone knows who has authority – a task effective online expenses software should be doing fo you, leaving no margin for doubt
  5. Protect whistleblowers: They’re on your company’s side. If they’re highlighting behaviour outside the rules you’ve set up, you should be thanking them, not making them wonder if their jobs are secure enough to withstand ‘putting their heads above the parapet’
  6. Get some locks: Any system that needs to be secure, should be secure. Fit physical or electronic locks as appropriate
  7. Supervise: Left unsupervised, people find it easier to ‘massage’ expenses
  8. And check again: Why are both employees who went on an overnight business trip both claiming for their food? Did someone get a lift, but clain as though they’d made the journey themselves? This approach isn’t necessarily about detecting expenses overspends, but about reducing or eliminating them Once employees can see a rigorous process in action, they are less likely to take a risk.
  9. Lean on technology: Business expense tracking software will support you in many of these tasks. Indeed, even introducing it will put your expense management intentions on the radar, and may serve to reduce the levels of fraud you’re facing at the moment.

Don’t worry about the cost: Use of a Solo Expenses software solution isn’t expensive. You’ll pay only per employee per month, and that cost may well be smaller than the money you’ll save by achieving more accurate expenses claims. What’s more, it’s a feature-rich solution enabling you to control your investment in it by selecting individual features, and paying only for what you use – without a long-term contract. Check us out here.