“I don’t claim for anything crazy, just add a few extra miles onto journeys.”
This is how one of the respondents in a recent global survey on expense fraud justified submitting false mileage claims. It’s one of many similar comments from employees who admitted to routinely “rounding up” travel costs.
The research, commissioned by webexpenses, found dishonest mileage claims to be the number one cause of expense fraud with 47 per cent of UK office workers admitting to having exaggerated or falsified road journey costs.
It highlights a major challenge faced by any growing company – the need to control the business travel costs of an expanding workforce. It’s a failure to do this that contributes to the £100m lost each year by UK companies to expense fraud.
It’s a threat that can seem insignificant when businesses are small and only low-levels of mileage claims are being processed. But as an organisation scales-up, a multitude of marginal losses creates a major cumulative drain on resources.
While many of the survey respondents admitted to exaggerating distances by “small” amounts of between five-ten miles, others were more brazen with false claims in excess of 250 miles. Others admitted to completely fabricating road trips; a common strategy was employees sharing car journeys and then each making individual fuel claims.
The research found that UK employees typically made 11 dishonest claims each year. With most businesses processing expenses on a monthly basis, it shows how fraudulent behaviour can become regular and routine.
One of the findings which helps to explain how mileage fraud has become so commonplace is that 84 percent of respondents said they had never had a claim challenged or rejected. The lack of adequate policy enforcement acts only to embolden employees and normalise mileage fraud, allowing it to embed itself within a workplace culture.
But mileage fraud is something that no growing business has to tolerate. The inability to control these costs is a legacy of outdated ways of managing mileage, relying on employees to provide estimates of distances travelled.
The time and resources required to check the accuracy of each road journey, often having to rely on manually entering postcodes into a services such as Google Maps, has meant that only the most obvious of fraudulent claims are likely to ever be challenged.
The solution has been provided by digital technology and the emergence of next generation expense solutions which are able to track and record the exact route and distance of any business related road journey.
A system such as webexpenses does this by equipping employees with a smartphone app which uses tracking technology to record precise travel data – to within meter accuracy. If a distance hasn’t been travelled – it can’t be claimed.
In addition, the accurate data allows finance teams to distinguish between those elements of a journey which are for legitimate business purposes and any superfluous distances that are for personal purposes.
By equipping finance teams with effective ways to monitor mileage claims, the risks faced by dishonest employees are significantly ramped up. Employers have the data required to robustly challenge and reject any illegitimate claims.
To reinforce this approach, digital systems allow mileage policy reminders, “nags” and checks to be delivered to claimants via on-screen notifications. These ensure that workers are always aware of their compliance responsibilities.
Automated checks can also be made which trigger an alert whenever a mileage claim breaches any pre-defined limit that has been set by the finance team. It allows suspicious claims to be identified and investigated instantly.
The cloud-based nature of a digital set-up means that it’s completely scalable – just as effective managing the mileage costs of five or five hundred employees. It provides the flexibility required to handle the demands of any growing businesses.
So with the right digital tools and a fresh approach, today’s smart businesses can lead the fight against mileage fraud. While older businesses have to deal with the legacy of outdated processes and old attitudes, mileage fraud no longer has to be tolerated in a modern workplace.
Webexpenses provides a better way to manage employee expenses and handle the demands of scaling-up. Find out for yourself by requesting a demo.