Do you believe that one of your employees is abusing his power and taking advantage of the expense management process? Sadly, it’s totally possible. Expense reimbursement fraud makes up about 15 percent of business fraud. This leads to an annual loss of about $26,000 according to a study conducted by the Association of Certified Fraud Examiners. On top of this, the study points out that employers won’t pick up on these types of fraud for up to two years! When discussing an employee’s potential abuse of expense reports, consider the following information.
- Non-business related items: While certain sales people may need to have some flexibility on their spending, other positions in the company probably don’t. Regardless of their role in the company, a full hour body massage at the hotel probably doesn’t fit within the confines of your business’ expense policy. In order to prevent these types of spending from happening, you and your company executives need to write up and enforce what trip expenses should be charged to the business. Make sure that you sit down your employees and go over these procedures. Managers should also be trained on how to approve these expense reports.
- Overcharging the company card: While company credit cards can help consolidate expenses made on these business trips, they can also be abused and used in very unnecessary ways. When the company credit bill arrives in the office, make sure you go over every single purchase made before signing. You have to make sure that your employees aren’t using the card as a source for fun money. There is an effective method to solving this problem. Rather than providing a company card, give the employees prepaid debit cards. That way, you can set up a spending budget for upcoming trips, and force your employees to be conscious of their spending. You will most likely see the unnecessary fun activities disappear from your expense reports.
Keeping track of expenses over the course of time can be hard to track and provide major headaches. As a business owner, you need to worry about other major obstacles that your company is faced with. By following the two methods above, you can prevent employee overspending, and make it easier to catch the people who abuse the rules. Many business owners have also turned to automated expense software in order to combat this problem with expense reports. This is another great option to consider. If employee overspending is crippling your company, talk with your team and see what can be done.