Why do businesses tolerate mileage expense fraud?
A study commissioned by Webexpenses in 2017 found that 47% of the employees surveyed admitted to having exaggerated or falsified their mileage claims. While the individual amounts dishonestly received are often small, the cumulative impact the losses can have on a company can be serious. In addition to the drain on finances, there are the compliance risks created by submitting inaccurate and false mileage expense details to government entities.
The perennial problem with manual management of expenses
What’s remarkable is not just the scale but the fact that it persists within businesses despite the emergence of tools that can effectively stamp it out. The majority of employees surveyed (62%) were at companies that are still using paper-based and manual methods to manage expense reimbursements.
This means mileage expenses are handled in the traditional manner, with employees providing estimates of the road distances travelled for business purposes. It’s a system that leaves finance teams struggling to verify that mileage expense claims are accurate. If a cost looks reasonable - it’s likely to be approved.
Business mileage tracking solution
The weaknesses of this traditional approach no longer have to be tolerated as digital and cloud-based expense management systems remove the need to rely on employees’ honesty. A system such as Webexpenses provides a mobile expense app which integrates with Bing Maps to allow instant recognition of travel destinations and automated point-to-point mileage calculations.
It virtually eliminates all of the most common strategies used to make dishonest claims - from ‘rounding up’ distances to the practice of ‘ghosting’ in which car passengers submit claims. It provides finance teams with the accurate data they need to start properly policing mileage expense claims - challenging and rejecting illegitimate costs.
Mitigating expense fraud
Fighting mileage fraud, however, requires more than just the right set of management tools, it also requires a change of attitude towards a fraudulent practice that has become the norm within so many businesses. The 2011 Leveson inquiry into the standards and ethics of the British press revealed the way that mileage fraud wasn’t only accepted in newsrooms, but often actively encouraged.
The hearing heard evidence of senior managers advising reporters to use ‘creative’ mileage expenses as a kind of unofficial bonus system. The custom was particularly prevalent in local newspapers where mileage expenses were viewed as a way to underwrite comparatively low basic wages. While this kind of practice may have been limited to newsrooms, it does highlight a more widespread attitude towards mileage expenses; one that helps to explain why the problem is so ingrained in business culture.
While ineffective management processes are no longer the limiting factor which prevents businesses from fight mileage fraud, it’s tolerant and accepting attitudes that remain the fundamental barriers. In 2018, there is little reason why any company should still allow these losses and those companies who fail to take action are significantly damaging the potential of their businesses to grow.
Webexpenses provides a smarter way to manage and monitor employee costs. Find out how it can virtually eliminate the threat of mileage fraud by requesting a demo.