What is Expenses Fiddling & How Can You Prevent it?
Did you know expenses fiddling costs UK companies over £100m each year?
It may seem like a harmless term, yet expenses fiddling can spell disaster for a small to medium-sized business. Keep reading to find out exactly what this fraudulent activity is, as well as how you can prevent it from happening in the first place.
Table of Contents
- What is Business Expenses Fiddling?
- How Can You Prevent Your Employees from Expenses Fiddling?
- What Should You do as an Employer if You Catch Someone Fiddling with Their Expenses?
What is Business Expenses Fiddling?
Expenses fiddling is when an employee exaggerates their expense claims in order to reap more monetary benefits from their organisation. Unfortunately, this problem is more widespread than you may think.
In a survey by Moore Kingston Smith, more than 40% of UK workers admitted they would claim for the mileage to a client meeting and back to their house, rather than their company’s headquarters, if it meant being able to claim more money.
According to the same survey, 25% of employees admit to business expenses fiddling, with one in five admitting to feeling no shame about their actions. What is most surprising, however, is the fact that 70% said their expenses claims had never been questioned or refused by their manager.
How Can You Prevent Your Employees from Expenses Fiddling?
Bosses aren’t pleased to accept these losses; rather, they’ve felt powerless to stop them from occurring.
Here are the top 3 ways you can prevent your workers from exaggerating their expense claims.
1. Use expense management software
Prior to the emergence of automated expense management, few businesses had the time or resources to successfully monitor and maintain an expense policy. Since they lacked the means to adequately address the issue, businesses took a more pragmatic approach towards expenses fiddling. Additionally, finance teams were simply too preoccupied with processing a monthly stream of paper-based expenses to effectively identify and reject suspicious-looking claims.
Thankfully, expense management software such as ExpenseIn minimises the risk of fraudulent expenses claims. Employers can easily configure guidelines within the software that regulate expense claims. From limiting the maximum claim value, to adjusting the requirements for the presence of a receipt, it’s easy to configure rules and apply them to groups within your business.
With features such as receipt scanning, automated policies, advanced approvals, and real-time reporting, it brings everything you need to create, approve, and report on expenses into one easy-to-use package.
2. Have a clear expenses policy
A clear expenses policy outlines the responsibilities and duties of an employee and their company in regard to expenses. It lays out a clear direction for every employee to follow in order to keep their expenses accurate and acceptable. It also assists them in exercising sound judgment while spending and reporting company expenses.
An expense policy also identifies and describes the types of costs that must be reported by workers. It goes through each area in depth and explains how to track and report that specific company expense.
For more advice on how to create a clear expense policy, check out our in-depth guide.
3. Reinforce that expenses fiddling is a criminal act
Rather than being viewed as a criminal offense, expenses fiddling has become normalised and legitimised as something that everyone does. Even the phrase “fiddle” downplays the act, making it seem inconsequential.
With the capacity to rigorously oversee and monitor expense claims, there’s no excuse for allowing these old mindsets to persist among managers or staff.
What Should You do as an Employer if You Catch Someone Fiddling with Their Expenses?
Using expense management software, having a clear expense policy, and understanding that expenses fiddling is a criminal act can all help to prevent this fraud from occurring within your business. Yet, what should you do if you were to discover an employee fiddling with their expenses?
1. Collect as much information as possible about the fraud
Try to determine:
How much money was there in fraudulent claims?
How long has the employee been submitting falsified expense reports?
What is the employee’s degree of performance?
How essential is the employee’s position in your company?
Will you be able to put your faith in him/her in the future?
2. Seek professional advice
Employment law is complex and easy to breach, therefore you should get expert guidance as much as possible before proceeding.
When you discover evidence of expense fraud, you should immediately consult HR about it. If you don’t have an internal HR department, there are many qualified external practitioners who can assist you.
Generally, you will be advised to do one of three things: fire the employee, take legal action or request that they reimburse the company.
3. Arrange a meeting with the employee
Once you have clear advice on how to move forward, arrange to sit down with the employee in question. Be sure to establish the objective of your conversation and write down some notes on what you specifically need to discuss first.
Once with the employee, make it clear why you’re meeting with them. Don’t express opinions or accuse the worker of fraud. Instead, keep your communication fact-based and to the point. Reiterate your company’s values in relation to fraud, then let the employee reveal his or her side of the story. After your conversation, write down all that was said. This will be required if you need to file a lawsuit.