The smart way to manage mileage expenses

The Road to Better Expense Management

The danger posed by expense fraud is ‘death by a thousand cuts’. It’s the cumulative impact of multiple small losses over time which can deliver so much damage to business efficiency.

And the most common cause of these types of losses is company mileage expenses.

A global report, commissioned by Webexpenses, identified that while fraud patterns vary greatly between different nations, the common factor they share is the dominance of mileage fraud.

Traditional management approaches have proved incapable of shielding our businesses from exaggerated and falsified travel claims. In many cases, companies have seen no alternative but to grudgingly tolerate these losses.

It’s an endemic problem which contributes to the $2.9 trillion which is being lost by businesses each year as a result of fraudulent workplace activities.

Changing Direction

But this is a problem that no longer needs to be tolerated.

Digital expenses management has transformed the way we’re able to manage and monitor mileage claims. Combining cloud-based software with automated processes and checks, we now have the tools needed to effectively manage mileage costs.

For employers, these tools are reducing processing time, helping to ensure legal compliance and acting as a powerful shield against errors and fraud. For employees, they provide a simple, quick and hassle-free way to ensure they’re fairly reimbursed for any legitimate road journeys.

This guide provides an overview of the challenges faced when managing mileage claims and a look at how an automated solution can help your finance team to start regaining control.

The Cost of Mileage Fraud

To understand how the old ways of managing travel expenses have failed to handle fraud, it’s worth looking at some practical examples. Here are five scenarios, based on real-world cases, which highlight the various ways travel claims are routinely abused by employees:

Falsification

Scenario:
An employee has to make regular journeys to another of the company’s regional offices - a return journey of 420 miles (675km).

Fraud:
By checking the company rota, the worker identifies days when his office manager is away and claims for travel on these days. It’s a fraud which remains undetected for more than five years, with these occasional ‘phantom’ journeys hidden amongst genuine claims.

Cost:
Estimated losses are in excess of £18,000 ($22,540 USD/$32,259 AUD).

Exaggeration

Scenario:
A manager at a small manufacturing company makes a weekly trip to one of their main suppliers. There are multiple routes that can be taken - ranging from 15 to 23 miles (24 to 37km) in length.

Fraud:
The employee uses the shortest possible route but consistently claims for the longest distance - a 50% increase on the actual distance he travels.

Cost:
As a weekly claim, this costs the business around £2,000 ($2,504 USD/3,584 AUD) each year.

‘Rounding Up’

Scenario:

A carer working for a health agency makes an average of five to six journeys each day to visit patients.

Fraud:
The employee routinely ‘rounds up’ all of these journeys by one or two miles. With expenses being processed on a monthly basis, it’s prohibitively time-consuming for the finance team to check the accuracy of each estimate.

Cost:
This results in an additional £2,000 each year ($2,504 USD/3,584 AUD).

‘Offsetting’

Scenario:
An executive at a marketing agency is required to attend a monthly morning meeting at a branch office. They travel directly from their home to the meeting location; a 12 mile (19km) return journey. After the meeting has finished, the employee returns to their main office.

Fraud:
The employee submits a regular monthly claim for the full journey. The mileage reimbursed, therefore, includes their regular commute from home to office, which is not a legitimate expense.

Cost:
The annual cost is in excess of £240 ($429 AUD).

‘Ghosting’

Scenario:
Two employees regularly travel to the same set of annual business events. This typically requires a round journey of around 240 miles (386km). They share a car for these trips, travelling in one vehicle.

Fraud:
While the driver submits a legitimate claim, the passenger also submits a report for separate fuel costs - purporting to have travelled to the events independently. It doubles the costs, amounting to yearly losses of £420 ($526 USD/$753 AUD).

Scale of Fraud

The true scale of the problem can be seen when these kinds of regular losses are multiplied across an entire workforce. Over time, even the smallest of ‘rounding up’ abuses can accrue to substantial losses.

Unless it’s tackled, this is a problem which only gets worse over time. Once travel expense abuse takes hold, it becomes a self-perpetuating problem. Employees become emboldened by each and every fraudulent expense which is processed.

It gives rise to a business culture in which even the most honest of workers can feel comfortable submitting ‘creative’ travel claims.

Effective Travel Expense Management

The fundamental problem faced by finance teams when it comes to controlling travel expenses is the lack of accurate information. It’s the grey area caused by having no effective way of knowing exactly how, when or where an employee has travelled.

In the past, costs have been based on claimants providing estimates of any distances travelled, with no simple or accurate way to properly verify the details submitted. Even when claims are supported by paper receipts, it provides minimal additional information.

The process of having to manually check each estimated claim is prohibitively inefficient and time consuming. Challenging a cost is difficult to justify when there simply isn’t definitive proof to show a claim is illegitimate.

It gives rise to a situation in which only the most blatant and obvious mileage exaggerations or falsifications are likely to be queried. Dishonest employees learn over time what’s required to stay safely ‘under the radar’.

But there is now an effective solution.

Digital expenses management completely changes the way that businesses are able to manage and monitor employee travel expenses. Cloud-based software, linked to a smartphone app, provides the basic tools required for companies to start regaining full control of mileage costs.

How it works

Expenses software provides a fast, efficient and cost effective replacement for outdated paper-based and manual processes. Webexpenses uses point-to-point mileage tracking which uses postal codes to provide instant accurate journey distances.

This can be done from a smartphone app or anywhere the user had an online connection. The expenses app also serves as a receipt scanner - converting any paper receipt to support a fuel claim into a digital format.

It creates a fast, simple and accurate paperless process.

By automating the process, it removes the inefficiencies which have been exploited by dishonest employees. If an employee wants to claim for more than the point-to-point, the claim gets flagged with an explanatory note required.

Flexible System

One of the key benefits of this approach is the ability to configure a system to the specific needs of a business and to comply with external regulatory requirements. The way travel expenses are handled will vary greatly ]depending on a company’s size, structure, policy and location.

This flexibility allows the system to easily cope with a company which operates internationally and needs to manage different kinds of internal policies, rates, limits and compliance rules.

The way travel is handled may also vary within a business, with different departments requiring individual set-ups. The power of a good expenses management system is the ease with which it can handle this kind of administrative complexity.

Webexpenses allows companies to configure multiple set-ups to cater for up to five different types of mileage need. Different limits can be set for separate categories and flags set to alert account managers whenever a limit is breached.

Automated Checks

Whenever a mileage claim is submitted, the system can be configured to carry out automated checks. If a cost breaches any specified limits, an alert is triggered. This can either prevent the claim from being submitted or simply flag the report for the benefit of the finance team.

In a similar way, Webexpenses can also be set-up to provide on-screen mileage policy reminders and notifications, providing information on travel policy guidelines and the agreed rates for different types of vehicle and engine size.

Management Visibility

A major benefit of a digital management approach is the accurate data that’s automatically generated. Combined with integrated reporting tools, it allows the finance team to monitor mileage expenses in ways not previously possible.

The data can be used to spot patterns and trends over time and to identify any particular mileage claim ‘hotspots’ within a company. It also provides an invaluable tool when it comes to submitting information to external authorities - particularly when dealing with the intricacies of tax submissions.

Summary: Driving Change

The simplicity and efficiency of a digital expense management approach allows any business to start effectively managing and monitoring mileage costs. It cuts down processing times and reduces the risks that are posed by errors and fraud.
But the long-term benefits delivered by switching to a digital solution go even deeper.

By regaining control, a company is able to start ‘detoxifying’ the whole area of mileage expenses. It strips away the old world of guesstimates and crumpled paper fuel receipts, that created the perfect environment for workplace fraud.
Replacing this with a fresh, simple and digitally connected way to manage cost allows workplace attitudes towards mileage expenses to change. It gives finance teams the tools and confidence needed to challenge claims and to properly enforce policies.

Submitting exaggerated or fictitious claims is no longer the norm with a significant risk of dishonest actions being identified. It allows mileage claims to become what they should always be - a simple and efficient way to fairly reimburse employees for business-related journeys.

About Webexpenses

Webexpenses is a leading global provider of cloud-based travel and spend management software to businesses of all sizes. The company’s flagship expense management application provides automated financial processes and reporting for a
seamless digital workflow across company teams. The company’s product line also includes corporate travel management, invoice processing, online payments, and expense audit. The Webexpenses suite can be used as stand-alone products or
bundled for a multi-faceted solution.

With a client retention rate of over 98%, Webexpenses is now tried-and-tested with
over 1,500 companies throughout the world, with over 250,000 users. By using Webexpenses, companies typically see savings of up to 10% in travel and expense costs and up to a 25% reduction in processing times.

Webexpenses was founded in 2000 and has offices in the United Kingdom, United States, and Australia. For more information, visit webexpenses.com