Eliminating expenses fraud

Eliminating expenses fraud

By Adam Bamford, Expedite Services Director
16 January 2020

When it comes to expenses fraud one of the first things to realise is that not all dishonest employees commit fraud. There can often be a number of reasons behind these ‘oversights’.

The top main reasons your expenses spend could be higher than it should be are usually down to the following five areas.

• Duplicate claims
• Rounded up mileage
• Missing receipts
• Out of policy claims
• Missing VAT

Let’s take a look at each of these; to understand the reasons why they happen and look at the processes that can help to eliminate these.

Duplicate claims

This is one of the top ways in which you could be paying more on your expenses, so how does it happen? We’ve found that in most organisations where claimants use paper or excel spreadsheets to capture claim details and then submit to finance for payment; duplicate claims are in high volumes.

Reasons for duplicates include:

1. Delays or long periods between submitting claims and getting paid often encourage employees to submit them again, believing they’ve been lost or misplaced.
2. Employees knowingly submitting claims again.
3. Multiple people processing claims duplicating the processing and payment runs.

There are two key reasons manual expenses processes enable this to happen.

1. There is no way for the claimant to track the stage or progress of their claim. Whilst some organisations do have guidelines for submission dates i.e. submit all claims by a certain date to be reimbursed at the end of the month; if the claimant made the deadline and didn’t get paid they may assume it has been lost.
2. Manual paper systems make it incredibly hard for payroll teams to identify duplicate claims, without a way to automatically identify and alert teams to these, it’s easy to see why they slip through the system.

Rounded up mileage 

We mentioned before that business mileage is one of the biggest expense items for many companies. With high volumes of managers and representative out on the road, getting their mileage reimbursed quickly and easily is a must.

Reason for rounding up mileage include:

1. Claimant having to calculate their own mileage for journeys using whichever route planner or map system they choose.
2. Discrepancies in whether they use postcodes or street addresses.
3. Claimants having to add up many short journeys, which can be quite cumbersome, and easier to ‘guestimate’.
4. A straightforward round up of mileage to add a few more miles, knowing that this is not validated.

Along with rounding up mileage, another way your travel bill may be higher is if you do not take into account the usual journey the employee would do between their home and the normal office of work. Many organisations deduct this for employees who are generally office based.

There are two key reasons manual expenses processes enable this to happen.

1. No system in place to automatically populate and calculate journeys.
2. No system in place to accurately validate the mileage submitted against the journey length.
3. No easy way to capture large numbers of short journeys throughout a day.

Missing receipts

Receipts are crucial to the expenses process. They provide evidence to support the claim and they also allow the organisation to validate the accuracy of the claim through dates and locations as well as providing details of VAT for successful reclamation and keeping the tax man happy. Not only are the HMRC interested in the expense form and the receipts they’re also interested in the entire process.

There are many reasons for missing receipts which include:

1. Lost receipts.
2. No receipts e.g. taxi fares.
3. Damaged receipts.

However, what is important is again how your manual process has allowed these claims to be processed.

1. No system in place to enforce a receipt is attached before the claim is submitted.
2. No system in place to accurately check the attached receipt matches the claim.
3. No system in place to check the receipt itself isn’t a duplicate.

Without a receipt you’re not only allowing un-validation claims in the system, you’ve also no way to ensure you’re fully reclaiming the VAT back.

Out of policy claims

This is one area many organisations struggle to manage. It’s all very well having a policy in place to provide guidelines of what can and can’t be claimed for and how much. However, if your process makes it difficult to reference the claims with the policy, you may find that you’re reimbursing employees over their limits for items they’re not allowed.

Reasons out of policy claims are reimbursed include:

1. No actual expenses policy.
2. No system in place to check employee allowances against claim items.
3. No system in place to check claim amounts against limits.

Missing VAT 

This directly links to the point regarding missing receipts. If you’re not collecting receipts then you’ve no way to calculate how much VAT you can claim back, and for many organisations this represents thousands in lost reclamation.

If you’re interested to learn how to:

• Eliminate duplicate claims.
• Ensure accurate mileage validation.
• Have fully auditable receipts.
• Enforce expenses policy.
• Maximise your VAT reclamation.

Get in touch today and start your free trial of digital expenses.