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Expense reporting: Lessons learned from leading Fortune 500s
Does your company have a problem with expense reporting?
Maybe you are constantly reviewing policy with your employees about the certain kinds of expenses they can incur while expecting to be reimbursed and how to submit for reimbursement. Maybe it takes you months before your company repays employees who are owed money. Maybe you’re forced to regularly combat expense reporting fraud. The list goes on and on.
While there are a number of things that can cause problems for your expense reporting program, the good news is that—by making the right changes—you can strengthen your program, easily adhere to policy, and reduce the chances that any headaches occur in the first place.
Here are four lessons you can learn from the way leading Fortune 500s manage expense reporting.
1. Be adaptable
Companies have traditionally covered their employees’ transportation costs. So any money spent on airplanes, buses, trains, car services, and taxis was virtually certain to be reimbursed.
But these days, more and more professionals are using modern transportation services like Uber and Lyft to get from Point A to Point B. After initially refusing to reimburse the costs of getting a car through one of those platforms, many leading companies have gradually adapted to cover Uber and Lyft rides.
According to a 2015 New York Times article, 20 percent of businesses—including Morgan Stanley—had updated their expense reporting policies to enable employees to use the new ride-sharing services. An additional 20 percent planned to do so as well. Based on our projections, we can assume that both of those numbers have increased in the ensuing years since the article was originally published.
Bottom line? In today’s technology-driven world, everything is always evolving. Companies need to keep pace with these changes to ensure their employees are able to use the relevant products and services that make their lives easier when they are on the road.
2. Be on the lookout for fraud
You might think that you can trust all your employees to abide by your expense reporting policies and only submit receipts that are for company-approved purchases and travel expenses. Unfortunately, that’s probably not the wisest approach.
According to one study, companies collectively lose more than $1 billion each year due to fraudulent charges. The median loss—which goes undetected for two years—is $30,000. The same study said that 16.5 percent of expense reports submitted by employees at companies with 100 or fewer employees are fraudulent, while 13.1 percent of reports at companies with more than 100 employees are fraudulent as well. Fraud isn’t only confined to lower-level employees, however. Recall when Hewlett-Packard was forced to let then-CEO Mark Hurd go after it was revealed that he authorized more than $75,000 in payments to an occasional contractor.
Be aware that fraud is an expense reporting problem that affects organizations big and small. Keep your eyes open for expenses that look sketchy.
3. Use modern systems
Those who have traveled for business for several years know how annoying the traditional expense reporting and reimbursement policy can be. You’re flying from city to city, hopping out of cab after cab, and eating meals with client after client. Being expected to keep track of all those receipts—while taking care of all your work responsibilities—can be quite challenging, to say the least. For this reason, many organizations are upgrading to modern expense reporting systems that enable them to manage reimbursements much more easily. Instead of having to hang on to receipts, employees can simply use their mobile devices to take pictures of them—thereby eliminating the stress associated with misplacing receipts and filing cumbersome expense reports.
If you’re still relying on an old expense reporting system, your process is inefficient and subject to abuse. It’s that simple.
4. Accelerate payments as much as you can
No matter how fast your expense reimbursement turnaround is now, chance are your employees don't think it's fast enough. When your traveling employees are forced to cover expenses out of pocket, they end up tying up some of their income in business expenses that may be needed to cover their day to day expenses.
Once employees submit expense reports, it is critical that companies do everything they can to make sure those expenses are repaid quickly. Otherwise, employees may find themselves in unfavorable financial situations when they’re simply waiting for the cash their employer owes them.
By repaying your employees quickly, you help build a trusting relationship with your staff. No longer do they have to worry about when they are going to be paid back; they know the money will be in their wallets soon enough. This encourages them to continue to absorb travel expenses out of pocket when they’re on the road the next time. On the flip side, employees might think twice about covering business expenses if they expect it will take a lot of time before they are paid back.
There’s no sense in letting your expense reporting policy become a source of headaches. By creating a clear, adaptable policy that’s fair and by using modern technology to facilitate reimbursements, your company can remove the frustration and fraud from expense reporting—giving you more resources to continue growing your operations.