How to stop employees abusing your expenses policy

March 22, 2017
How to stop employees abusing your expenses policy

Image by Sergey Nivens / Shutterstock, Inc
Expense scandals are often associated with politicians. For example, in 2010 the Daily Mail reported on 389 MPs were ordered to pay back £1.1million in wrongly-claimed expenses. And more recently, the BBC talked about how the Conservative party was fined £70,000 for incorrectly reporting their campaign expenses during 2014 and 2015.

But behind the headlines, expense abuse exists deep within the private sector. Employees often look for weak spots where they can exploit their company’s expenses policy for their own personal gain. And it is a big, expensive issue.

How an employee affair nearly cost senior CFO thousands

Bob Shoyhet is a senior Chief Financial Officer, who has spent 25 years helping struggling companies turn themselves around from the brink of bankruptcy.

“The most glaring case I uncovered involved a sales rep who, for many months, expensed $250-$400 lunches and dinners” recalls Bob. “The employee in question claimed that he was entertaining several prospects at a time during these dinners. But during an audit, I randomly matched his calendar to dates of meals on his expense report – only to find his calendar empty. How can a rep not use a calendar to manage his busy schedule?”

By calling up the restaurants on the sales rep’s receipts, Bob quickly discovered that these expenses were nothing to do with entertaining several guests at all. In fact, it turned out that they were all receipts for lavish meals served to a romantic table for two. And evidence of an illicit love affair!

“We told him to pay back all funds, or we would be forced to press criminal charges”

“I immediately informed HR, and investigated meal expenses for the past twelve months” says Bob. “The total amount of abuse was in the thousands. There was no choice to go easy on him, as how we dealt with this situation would set the tone to other employees. We told him to pay back all funds, or we would be forced to sue him for damages, and press criminal charges.”

Sometimes, there is no other way than to make an example of somebody’s wrongdoing. But ideally, you should be taking every measure possible to avoid this situation in the first place.

“You must ensure managers are not just rubber stamping ‘Approved’ on any submitted expense report” advises Bob. “Make random calls to ask what expenses are for – even if they look legitimate! When employees know they may be questioned, there is high probability they will stay honest.”

Not all expense abuse is malicious – but it still requires action

Dorris Hollingsworth, of Evergreen HR Group, is an experienced HR leader and talent executive. Her role is to help businesses get better results through engagement and talent management. During her many years of experience, Dorris has witnessed more than her fair share of expense abuse stories. But she is quick to reassure us that not all expense abuse is necessarily malicious.

“One situation I encountered, was an employee who was so alarmed at the amount he had spent on a group dinner, that he decided to add a few extra employee names to the expense report” she tells me. “Unfortunately for him, those employees had submitted their own expense reports for the same meal. The abuse was therefore quickly brought to light by the account staff, who spotted the duplication.”

In Dorris’s story, the employer recognised that the employee was not trying to ‘line his own pocket’. Rather, he was trying to cover up a bit of a mistake. And so, although the employee in question was dismissed – his employer no doubt felt he had to send a message to the rest of the team that expense abuse is unacceptable – he was given time to find a new job before the termination took effect.

“To help identify and prevent abuse, companies can train accounting clerks to check names on meal receipts” advises Dorris.

Three easy ways to prevent employee expense abuse

While there are plenty of ways to tackle expense abuse after it has happened, prevention is always better than the cure. Here are three things you can do to reduce the instances of expense abuse within your company.

  1. Create a clear expenses policy

The more you leave your expenses policy open to interpretation, the easier it is to abuse. By making sure your expenses policy is clear, specific, and easy to understand, you’re preventing abuse in two unique ways.

Firstly, there will be fewer instances of accidental expense abuse – because your employees understand your policy. Not all expense abuse is done with the intention of defrauding your company out of money. Sometimes, an employee might be claiming an expense that he or she believes is permitted.

But secondly, it helps because the clearer your policy is, the easier it is to “police” it. You can more easily state whether or not an expense claim is valid – and therefore, an employee who might otherwise try to find a loophole, will have a harder time exploiting it.

  1. Reimburse your employees quickly

ExpensePoint® advises that you should be reimbursing employees quickly. Why? Because if you’re dragging your heels, employees might find themselves struggling to pay personal bills. This leads to a lack in desire to build new business – and an increase in desire to take advantage of any loopholes or weak spots they can find.

Reimbursing employees quickly takes away the “bad taste” of having to pay for company equipment or travel out of their own pocket. They know they can rely on a speedy bank deposit at the end of the week.

And when you’re fostering good, trusting relationships like this, employees are more likely to respect your business – and less likely to take advantage.

  1. Request a signature

According to Fox Williams, asking employees to countersign their expense claims can help reduce fraud and abuse. In part, this is because it prevents claims being submitted by one person, under another person’s name. But also, when an employee is required to make a signed statement agreeing that an expense has been incurred for “legitimate business use”, they might think twice before submitting an expense claim for personal spending.

If you’re still processing expense claims using paper files, then make sure your expense forms require a signature. Alternatively, you can find expense apps online that will let your employees take photographs of their receipts, and sign and submit their report via their phones – great for making sure expenses are done quickly, and at the time they are incurred.

How to download the People® expenses app for iPhone and Android

If you are an existing People® customer, you can download our dedicated smartphone app. The app lets you access many key features of our core HR system, including expenses management.

To download the app, please visit the following links.



Once you have switched mobile on in your core People® settings, encourage employees to download and use the app too – for faster HR that engages a moving workforce.

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