T&E expenses - plenty of blame if you get it wrong

T&E expenses are still an area beset with problems – from lost receipts, accusations of favouritism to outright fraud.  On top of this, there’s the added issue of employees claiming that they simply "didn't know" whether they were able to claim for certain items or not, so just included them amongst their other receipts and hoped for the best, or didn't include anything at all.  Clear knowledge on what is a legitimate expense claim and what isn't is common across many organisations. The issue was confirmed in a recent report by Capital One, where it found that up to 45% fail to make any claims, at an average personal cost of more than £350.

While there should always be a certain flexibility in order to account for different situations, all organisations should have a T&E document available which an employee can refer to. If there are any grey areas, it’s imperative that an employee is able to clear them up in writing prior to the trip – particularly if it’s likely to be an extended one. Expenses which have already been incurred, but which fall outside of the expected remit, can cause bad feeling and embarrassment on either side. On top of this, they can mask: 

Fraud

While not common, unfortunately where it does occur, it’s frequently carried out by long-term, trusted employees whose managers may not feel inclined to question a claim which is higher than expected. In many cases the T&E fraudsters took advantage of their organisations time and again – each time becoming bolder. Eventually, many become so bold they get caught – but far better to be prepared and to have the systems in place to prevent it occurring in the first place.

While there is little praise or glory when things run smoothly, there is plenty of blame if things go wrong – especially if like the parliamentary expenses – it turns into something which shows the organisation in a bad light. With the growth of T&E solutions and a more general awareness and acceptence of technology, an increasing number of organisations are turning to automation to take some of the strain.

Credit cards

A growing number of organisations provide their travelling employees with T&E specific credit cards to use for company business. These cards remove any pressure on the employee to use their own credit card and remove the risk of ad hoc personal expenses appearing on the corporate card.  From an employee’s point of view, having a company credit card is the modern equivalent of the old system of providing a cash advance, but for the employer it has the added advantage of transparency, and ease of reporting.

Automation

Organisations are now able to run reports that show who has spent how much on what. In addition, they are able to highlight policy non compliance. In fact, some products go further by simply not allowing employees to enter reimbursement requests outside the set policy limits. Take Coupa for example, the release of version 8 includes expense management features which allows people to easily create expenses and import itineraries from mobile travel organizer, TripIt, while on the go. On top of that new mobile capture technology from vendors like Kofax mean that lost receipts can be a thing of the past, with the capacity to flow line item detail directly into an organisation’s ERP or accounting system.

Self Service T&E

This can be both a blessing and a curse.  Most employees now book their own travel arrangements directly online, putting the power and negotiation firmly in their hands. However, this also gives some unscrupulous employees the opportunity to siphon off a few pounds with relative ease, or to be tempted into spending more than the accepted maximum for travel and accommodation.

Corporate Culture

It’s very difficult to provide a “one size fits all” set of rules, as although all organisations have to work within government legislation, there will always be a certain amount of leeway as to what’s allowed from one organisation to another. For example, while all may agree that taking clients to the best nightclub in town and ordering champagne all round is unacceptable, others may well see that booking the best restaurant in town, and ordering a few bottles of expensive wine, is perfectly within the bounds of the necessary. In order to make the job of those approving the expenses easier, it’s best to simply have legislation drawn up to reflect the culture you’re in.

Line Manager v AP Manager

Many managers will simply sign off an employee’s expense report – particularly if that employee has had a lucrative and successful sales trip. The manager wants to keep the employee happy, and in turn, the employee may well have a sense of entitlement, and see a somewhat dubious claim as recompense for a job well done. While some may have some sympathy with this – it doesn’t help the AP Manager who has the unenviable task of questioning a claim which has already been approved by a line manager. With an online electronic T&E model, this sort of problem can be avoided. The best policy is one which is generous enough to deter  non-compliance, within budget enough to satisfy the CFO and one which is applied throughout the organisation – including the CEO. As Rob Bernshteyn, CEO of Coupa puts it;

“I think if a customer of ours fully gets on board with Coupa and embraces our own mentality, top sales directors and CEOs will be frugal when booking travel. Coupa has a transparency aspect – which can reveal who is making what purchases to designated approvers – and that’s key. No one wants to be “outed” as the big spender – it has deep ramifications to their reputation and even their career progression. Additionally, the same Facebook concepts that have connected millions of users and counting – like transparency, cloud sourcing, peer psychology – are increasingly infiltrating actual business applications, so this idea already has been proven as effective and has the “pull” instead of “push” mentality to become ubiquitous.”

He went on to say; “spending policies for our employees apply to everyone: top sales directors, executives, and me included..We work hard to create a culture of frugality so that everyone feels empowered to save money when and where they can. Instead of a hierarchal, corporate structure, we pride ourselves on having an open, “bottom-up” and accountable culture.”

Finally, remember that expense reporting is like any aspect of your business – you get what you measure. If you do decide to automate the function, you need to calculate what you need to know from the outset. Make sure that the solution provider you choose configures expense report categories, approvals and alerts to capture the precise information you need. With more and more business taking place on a global scale – with increasingly complex transactions across currencies and cultures, it’s simply good practise to investigate the solution options available to make your life that bit easier.