Research reveals why businesses need to get a grip of mileage costs
A recent survey found that 47% of UK office workers, 55% of US office workers, and 42% of Australian office workers admit to having exaggerated or falsified their car expense claims, making it the number one cause of expense fraud.
The findings help to highlight the way that ‘rounding up’ of travel costs has become normalised within our workplaces. One of the comments from a respondent, typical of employee attitudes to mileage fraud, was:
“I don’t claim for anything crazy, just add a few extra miles onto journeys.”
It was seen as being normal; something that everyone does. Many justified it as amounts were minimal and would ‘hardly be noticed’ by their employer.
The failure to control these costs contributes to the £100 million loss each year by UK companies to expense fraud - with the US seeing $2.8 billion in losses and Australian companies, $345 million in losses. Even the smallest of losses, when multiplied across the number of mileage claims made with business, become a major drain on resources. It not only stifles business growth but significantly increases the risk of external compliance breaches - supplying government entities with inaccurate and false business travel information.
Major Losses
While many of the survey respondents admitted to exaggerating distances by ‘small’ amounts, usually between five to ten miles; others were much more brazen, admitting to false claims in excess of 250 miles.
A common strategy that respondents admitted to was sharing a car journey to a business meeting or event and then each employee making a separate fuel claim, multiplying costs two or threefold.
The research found that UK employees typically make 11 dishonest mileage claims each year. With most businesses processing expenses on a monthly basis, it shows how this fraud can become part of an employee’s routine.
A key finding that helps to explain how mileage fraud has become such a problem is that 84% of respondents have never had any claim challenged or rejected. This lack of effective policy enforcement emboldens employees, minimising perceived risks and allowing the practice to embed itself within workplace culture.
Fighting Expense Fraud
Mileage fraud is something that businesses no longer have to tolerate. The problem we face today is a legacy of outdated expense management processes which rely on employees to provide estimates of their distances travelled.
The time and resources required to check the accuracy of each estimate, with finance teams having to manually enter postcodes into a service such as Google Maps, means that only the most obvious fraudulent claims are likely to be identified.
The solution is provided by digital technology and the emergence of next-generation expense systems which can track and record the exact route and distance of any business related road journey.
A system like Webexpenses expense management software equips travelling employees with a smartphone app which uses tracking technology to record precise mileage data - to within meter accuracy. If a distance hasn’t been travelled - it can’t be claimed.
In addition, the information allows finance teams to differentiate between those elements of a journey which are for legitimate business purposes and superfluous distances that are not - such as visits to family and friends.
By equipping finance teams with effective monitoring tools, the risk of getting caught is ramped up. Finance professionals have the proof they need to robustly challenge and reject any false or embroidered claims.
Active Expense Policy for Protection
To reinforce policy, digital systems allow mileage policy reminders, ‘nags’ and checks to be delivered to employees via on-screen notifications. These ensure that claimants are always made aware of their compliance responsibilities.
Automated checks can also trigger an alert whenever a mileage claim is found to breach any pre-defined limit that’s set by the finance team. It allows suspicious claims to be identified and investigated instantly.
The cloud-based nature of Webexpenses makes it completely scalable - just as effective when used to manage the mileage costs of five or five hundred employees. It’s a flexibility that can handle any demands of a growing business.
So with the benefits of digital tools and a fresh approach, today’s businesses can become a part of the fight back against mileage fraud. It’s an outdated practice that no longer needs to be tolerated in a modern workplace.
Webexpenses provides a better way to manage employee expenses and handle the demands of scaling-up. Find out for yourself by requesting a demo.