Insurance companies are essentially for-profit institutions who specialize in disaster relief and recovery. If you start an insurance policy, just about nothing will happen unless something goes wrong, at which point the policy will pay out an appropriate amount to fix what broke, up to the policy’s limit. This may mean fixing a dented fender after a collision, replacing personal belongings that burned up in a fire, or providing a large check to a grieving family assuming the person who passed away didn’t “cheat” somehow.
It’s that exception at the end that makes insurance such a tricky field. Insurance companies have to make a profit, which means their premium income has to outweigh their claim payments, but they also have to keep their premiums low enough to attract customers. Companies will offer special discounts and free perks to make themselves stand out from the crowd, but one big way they keep their costs low is by making sure that they only pay out when they absolutely have to.
Police detectives and private eyes may get all the prestige, but insurance investigators are among the best in the world. That’s because insurance companies are willing to pay top dollar for men and women who can read people and hunt down every scrap of evidence, because the insurer only needs a whiff of fraud for the company to start lowering their payout.
While your company probably isn’t as centered around expense claims as an insurer, it still makes sense to do a little investigating now and then to see what your employees are spending your money on. Depending on how your expense claim system is set up, you may be able to get a sense of which merchants and businesses they visit based on who charges your business expense card, but in other cases you may have to trust that they’re reporting their expenses accurately.
It’s a good policy to trust your employees when possible, and for the most part they’ll reward your trust with honesty, but you should always keep a lookout for the inevitable error. It may be an honest mistake, it may be a forgotten rule or a forgotten activity, or you may simply have a bad egg working for you, but sooner or later your expense claims aren’t going to add up properly and you’ll need to figure out why as quickly as possible.
So when it comes to your business expense claims, follow the example of the insurance companies: keep the maximum range reasonable, pay out when it’s appropriate, but at the same time don’t take everything you hear for granted. It’s not that you shouldn’t trust your employees – it’s that you shouldn’t trust human nature to always get everything right.