How to combat fraudulent travel expense claims with technology

- Finance - Sep 12, 2016

With business travel spend projected to reach heights of $318B in 2016, the potential for expense fraud has never been so high. From personal items such as petrol and hotel accommodations, to billing for travel and expenses such as cancelled airline tickets and event registration fees, that never materialised, fictional expenses have been causing businesses to haemorrhage money for years.

However, new advances in travel expense management technology combined with more stringent internal controls can help businesses reduce the risk of fraud and control their travel costs, saving them huge amounts of money that in the past might have slipped through the cracks.

So which fraud schemes are transpiring and how can we curtail them with smart applications of technology?

Mileage padding

An employee might write that they drove from Manchester to London, UK. However, they might claim mileage from north Manchester to south London (244 miles) when they actually drove from south Manchester to north London (215 miles). Make that a round trip and there is a difference of nearly 60 imaginary miles.

With new expense report apps that have GPS capabilities, employees can tell their smartphones when they are starting and ending a trip and it will record and claim for mileage based on the distance travelled. Technology reduces the fraud potential, however businesses must back up the technology with a policy of only accepting mileage submissions that come in through GPS tracking.

Faking expenses

Another way for businesses to ease the burden of expense reporting for employees has been to only ask for receipts over a certain amount. Let’s say the no-receipt limit for breakfast is £15. If the employee stays for a week at a hotel, eats the daily free breakfast and then submits a reimbursement for £14 every day, the employee makes a quick £70 in five days.

These days technology has simplified receipt management so that businesses can ask employees to take a few seconds to snap a picture of a receipt with a smartphone and upload it to an expense report. Need to quickly link this back to technology stopping fake expenses.

Last-minute flight booking schemes

Typically, the closer to travel time tickets are purchased, the more they cost. Most major airlines no longer determine frequent flier miles by the total miles flown, but instead determine it by how much is spent on the ticket. So technically fliers could score upgrades and rewards through last minute bookings.

One way to limit this is through embedded analytics, which can pull information from the day purchased and day travelled fields on expense reports and flag to managers when there is a pattern of habitual late booking. 

Additionally, technology has made approval workflows so much smoother that it’s now practical to require pre-trip approval. Before the employee can book a flight, they must provide an estimated cost for the trip.

Fraudsters are perpetually creative, but opportunities in travel and expense reimbursement are becoming fewer and further between. Anyone looking for profits and perks from expense report fraud will have to look elsewhere if their company uses smart expense report technology.

By Donna Wilczek, Vice President, Product Management at Coupa

Read the September 2016 issue of Business Review Europe magazine. 

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