How to Stop Employee from Doing Expenses Report Fraud

In Business Skills, Management Skills
Prevent Employee Expenses Report Fraud

There are many employee expenses report fraud cases to cheat when they are on duty or reporting per diem receipts. Every employee has the right to claim their expenses during an out-of-pocket travel, fuel cost, airline fees, meal allowance, etc. It could be easy for employees to fake their expense receipt reports. But what if too many employees are abusing your expenses policy? If so, your business is definitely not efficient at all and fail in managing your employee expense reports.

Whether it’s a private sector or government agency, there are many employee expense abuse cases happened. But in general, all types of expenses report fraud aren’t much different. Most employees are likely looking for weak points with an aim they would like to exploit the expenses policy on a company where they work for. Generally, they fake their expense report for their personal takes up. They mark up the expense receipts or may also be editing those receipts using Photoshop. That is absolutely a fatal issue.

How Employee Expenses Cost You Tens of Thousands Dollar

You can find many expenses report fraud cases from HRM textbooks, newspapers, or trusted sites. Some of them tell a true story about how an employee was troubled a company prone to a bankruptcy. But expense reimbursement fraud case study below illustrates how an employee may a company about tens of thousands dollar per month.

— Case Study 1: Employee Expenses Report Fraud

A CEO finds out that a salesperson claimed her $300 – $450 restaurant receipts for months spent for meals. And she reported that she was entertaining some prospects in the course of dinners for months. But the audit the accounting staff matches the meals receipts’ dates to the salesperson’s calendar. Then, by calling up the restaurants contact numbers from the receipts, the accountant found out that those expenses had nothing to do with entertaining the prospects. Apparently, all of those receipts are from sumptuous meals dished out on a table for a couple. In fact, those receipts are a proof of a love affair.

The CEO then asked her to pay back all of the reimbursement which is already given, otherwise, she will be accused of a criminal charge. And the CEO then immediately notified the HR manager and found out the total cost of fake meals receipts for 10 months reach tens of thousands dollars.

Question: If you are the owner of the company, how do you deal with this type of employee expenses report fraud?

Such case, there isn’t action to be soft to that fraudulent salesperson, because how managers deal with such situation will become a lesson for the other employees. The CEO must ask her to pay back all of the funds.

Sometimes, there’s no other way to explain how to stop employees from doing expenses report fraud than learning from the realistic expenses report fraud case that happened. But essentially, you should take the most likely step in choosing how to stop employee expenses report fraud early.

Every manager shouldn’t only provide an ‘Approved‘ stamp on any reported expenses report. But a better way to prevent employees from doing expenses reports fraud is by making random calls to make sure whether expenses spent on work – even if it looks like original receipts. Therefore employees will know that they would be questioned and they will most likely be honest.

Why Employees are Looking for Loopholes for a Personal Gain in a Shifty Way

Sometimes some employees have to fake receipt report for reasons that make sense. But all forms of fake expenses reports require assertiveness.

To be a good leader, in this case at a company, facing expenses policy abuses can be used for lessons to proof your assertiveness. The role managers are to help the company grows through mindfulness and talent management. You may have been leading a company for years and had faced various expense report fraud cases. From they, you must be figuring out that not all receipt abuses are really malicious.

— Case Study 2: Expense Report Abuse

An employee is very jumped about the total expenses he made at an occasional gathering dinner after work dinner with the team. He then decided to include some other employee names into his dinner expenses report. Bad luck for him that the other employees have submitted their own expenses report too – with the same menu. Therefore, such expense report abuse was quickly notified by accounting staff for discrediting and excluding of other names other than his name on the abused expenses report.

Question: If you are the owner of the company, how do you deal with this type of expense report abuse?

To deal with such expense report abuse case, you as a leader must be knowing that the employee didn’t mark up his expense amount. And the employee was looking for a loophole to salve his jittery due to over expending. At that time all the menus were the same. But how bungling he was by trying claim her colleagues along with his instead of claiming his expenses honestly. Thus, even if the employee must be dismissed due to his expenses policy violation – you as the company leader shouldn’t hesitate to send a message to all team of the others listed on his expenses report that such abuse is unacceptable. And for such violator should be given time to look for a new job before the termination takes effect. Because the abuse of the expenses report doesn’t significantly endanger the company.

To help identify and prevent employees from doing expense report abuse, you as the owner of the company need to train your accounting staffs double check the names listed on every meal expense receipt.

Three Easy Ways to Prevent Expenses Report Abuse

There are many ways to follow up the misuse of employee spending. However, prevention is always better than cure. Here are three things you can do to reduce fraudulent employee spending reports.

1. Make Employee Expenses Policy as Clear as Possible

If your employee expenses policy needs interpretation to be understood, the easier your employees to abuse it. By ensuring the cleanliness, specific, and easy to understand expenses policy, automatically you prevent your employees from expenses abuse in two ways.

Firstly, with clear and targeted expenses policy, it minimizes the unintentional practice of expense abuse. Because your employees understand the prevailing policy. Not all employee expenses abuses are done with the aim of deceiving the company to take the personal gain. Sometimes, there are employees who claim expenses that they believe are allowed but are actually not.

Secondly, it is really helpful as the policy is easy to understand clearly. So, you can easily state whether the expedience of reimbursements. Therefore, any employee who wants to try to find a loophole will be harder to exploit.

2. Repay Your Employee Expenses Quickly

To support that you can quickly reimburse your employee expenses, you can use a receipt scanning and tracking app like Shoeboxed. Then, to process the reimbursement quickly, you can facilitate your accounting staff with an accounting software program designed specifically for companies, especially one which is equipped with payroll features.

Why is promptly employee expenses reimbursing good? The most thinkable reason is that late reimbursement is very likely making employees will struggle to pay their personal bills and everything other than work affairs. This causes lack of desire to be proactively growing your business. Automatically, employee productivity and loyalty will decrease. And not to rule out also that they will find and use the policy loophole to make personal gains.

Quick employee reimbursement eliminates employees complain about having to pay for company’s equipment or to out-of-pocket travel using their own money first. But a quick way to reimburse employees expenses claim to make it possible for them to rely on their ATM as it would be paid off at the weekend.

And moreover, such good relationship and trust make your employees more likely to appreciate your business and less likely to look for a weak pain for personal gain.

3. Ask Your Employees to Sign Their Expenses Report

Logically, asking employees to sign their expenses claim can help reduce abuse. For example, preventing a claim from being submitted by someone else on behalf of another person or vice versa. In addition, if your employees are asked to sign the statement and agreement that the expenses are disbursed legally for work, they will think twice before submitting an invalid expense claim.

If your company still use paper employee expenses report, you must explain that a signature column is required. But now there’s a more efficient and accurate alternative, which is a kind of expenses management app that will allow your employees to snap for taking expense receipts, signing it on their smartphone’s screen and submit the partial or final expenses report online.

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