Wherever employees are using their own vehicles for work purposes – there’s the threat of mileage fraud. A 2017 global study, commissioned by webexpenses, found that 47 percent of business travellers admit to having falsified or exaggerated their travel costs.
It’s a situation which has allowed mileage fraud to embed itself deeply within business culture. It has become commonplace for claimants to routinely ’round up’ distances travelled.
It creates a self-perpetuating problem – the more prevalent the practice is, the more normalized it becomes within a workplace. A typical comment from a survey respondent, was, “I don’t claim for anything crazy, just add a few extra miles onto journeys.”
But even the smallest individual losses, when multiplied across a company, accumulate to become a serious drain on company resources – stifling growth and heightening the risk of compliance breaches.
And ’rounding up’ is just one of the mileage fraud strategies that’s being used. The four most common methods are:
1. Falsification
This is a claim for a journey that simply didn’t happen. Typically, a business will require only a reason for travel and a mileage estimate. As long as these details look legitimate, the reimbursement is likely to be approved.
2. Exaggeration
The most commonplace example of this is ’rounding up’. This is where a legitimate journey has taken place but the claimant falsely extends the distance. An eight mile journey will be rounded up to become ten miles.
3. Offsetting
This is where legitimate mileage claims are offset against non-work related components of a journey. An example would be submitting mileage costs for attending a conference based on travel from an employee’s home, rather than their workplace.
4. Ghosting
If three employees share a car journey to a meeting, ‘ghosting’ is when the two non-drivers will also submit mileage reports – as if they had each travelled separately.
All of these methods have proved so effective because of the inadequate methods business have used to manage road travel costs. This has mainly been a question of trust with claimants providing estimates of distances travelled.
With little way of verifying the accuracy or legitimacy of this information, finance teams have been unable to stem the tide of mileage fraud. But there’s no longer any reason why this problem should be tolerated in 2018.
Eliminating mileage fraud
Digital expense management, smartphone apps and cloud technology have combined to provide the tools needed to regain control of fuel reimbursements. A system such as webexpenses provides travellers with a smartphone app to digitally record and track the exact route and distance of each car journey.
For employees, it means no longer having the hassle of manually submitting claims with accurate information instantly available. For employers, it means finally taking back control of mileage costs.
If a journey hasn’t been made – it can’t be claimed. And finance teams have all the data needed to check the validity of each part of a journey. If a business trip includes a long non-work related detour, it’s easily spotted.
With data managed digitally, it also allows finance teams to start tracking and monitoring costs in a way previously not possible. With integrated reporting tools, webexpenses allows data to be easily filtered and manipulated – shining a light on problems.
So mileage is one area of expenses that every business has the power to tackle in 2018. With companies typically losing five percent of their annual revenue to workplace fraud, this is an achievable way to minimize the risks.
Webexpenses provides a better way to manage employee expense reimbursements. Find out more by requesting a free demo.
