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How to prevent expense claim fraud in your organization



No matter the number of employees or the amount of expenses generated each month by your company, expense reimbursement fraud is a major problem. Without a clear way to detect and prevent this type of fraud, you will continue to see increasing costs, while you and your financial teams try to figure out the source of your inflated expenses. Know the fraud schemes and methods and learn how to prevent them - you might be surprised how many of your employees benefit from your lack of control.

Fraud schemes and methods

Fictitious or overstated expenses and multiple reimbursements are all fraud schemes and methods used by employees to get more money than they actually spend.

Your employee claims reimbursement for fictitious expenses when the claim refers to:

  • Personal use items (a mischaracterized expense like gas, accomodation, meals with family / friends);
  • Travel expenses that were canceled or were not materialized;
  • Items like client's gifts that were not purchased;
  • Group receipts or other bill paid by employees that travel together;
  • Falsified and manipulated receipts.

You know that you are dealing with claims reimbursement for overstated expenses when the employee:

  • Exceeds the per diem approved by your corporate expense policy;
  • Includes the tips that are already on the receipt or a tip that is over the amount of money left for the restaurant's personnel;
  • Chooses a more expensive alternative even though more cost effective ones were available;
  • Reports higher mileage figures for the business trip taken with the company's vehicle.

When your employees know that you and your financial team do not control or check the figures in the expense reimbursement report, there might be several duplicated reimbursements and many companies discover that their employees have been using the type of methods and schemes above for more than 12 months.

It is complicated to manage the company's expenses manually, with or without fraud practices in your company. Looking for expense report fraud can be very tiring for your financial or travel team when all the work is done manually.

Prevention methods

Finding duplicates or comparing the data in the receipts with the data in the reports can lead to many human errors and you will never be able to actually gain control over your expenses without an expense management software. So, making sure you have the right solution for expense management is a big step towards corporate travel and expense policy compliance.

Improved corporate expense policy

If you want to eliminate expense reimbursement fraud, you need to ensure that every employee knows the rules and that the policy is equally applied among your company. You employees need to have constant access to a copy of the latest corporate policy. This is where technology makes everything much, much easier for your company. You can integrate the corporate expense policy with your expense management tool and make sure the actions of your employees are compliant with your policy.

Automation for pre-approvals and approvals

As mentioned before, expense policy should be equally enforced among your company, so automating all of your expense pre-approval and approval processes is a guarantee that this principle is applied. Automated pre-approval and approval processes help you prevent fraud no matter where your employees, at what hour they reclaim a certain expense or what type of expenses they are trying to reclaim. Automation saves you a lot of money and allows you to be 24/7 aware of what it is happening with your expense reimbursement reports.

Leading by example

How do you want your employees to be fair and thoughtful about the way they spend company money if you an other managers do not show that you are compliant with the company's expense policy? You and the managers of other departments should lead by example and you will rapidly see that employees are more motivated to save money during trips and that they understand that reducing expenses with furtherly transfor in benefits for all of them. You can even motivate them by offering a prize or a certain amount of money to the ones that succeed to obtain the best costs for their business trips.

Expense reimbursement fraud is bringing your company a lot of risks. You are currently assuming that your employees are trustworthy and do not check the reports unless there is some susspicion, but you need to adopt a proactive attitude towards this fragile subject and take clear actions to prevent expense reimbursement fraud.

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