Track Travel Expenses

By Ken Walker

Is your business tracking expenses of traveling employees and reimbursing them efficiently? If not, you may be setting yourself up to become the victim of employee fraud. Business travelers tend to report their expenses in one of three ways, but there is really only one proper way to submit expense reports.

Employees create expense reports whenever they remember.
This might seem like an extremely unprofessional way to manage expense reports, but it happens at more businesses than one would think. Small businesses tend to have a more relaxed method of reimbursing employees. Accounting or human resources at these types of businesses process expense reports, but don't really stay on top of them. The problem with tracking expenses using this approach is that there’s no real accountability or proper record keeping for auditors to base their work upon.

The "when I get around to it" method makes it difficult to know if employees are submitting proper expenses. Any receipt that falls within the time period specified on the report could end up being reimbursed. The reality is that this could open the business up to fraudulent claims by employees. 

Without proper management and accounting oversight for each claimed expense, it becomes very easy to let receipts that should not be expensed slip through the cracks. This approach lends itself to fraud because it's easy to lump in a lost receipt or bogus claim after enough time passes.

Employee creates an expense report for every purchase.
While this is a more accurate way of submitting expense reports, it does create an inordinate amount of paperwork and record keeping. There is also the chance that employees may submit receipts multiple times, and if accounting doesn't keep extensive records of what expenses have been paid, the chance that employee may be reimbursed again increases. Consider a scenario in which a business traveler might have a meal at a restaurant on a Monday. On Tuesday, they fill out a quick report and submit it for repayment. At checkout two weeks later, this same meal appears on the hotel receipt folio. When the hotel bill is submitted separately, accounting might not know that portions of that receipt have already been expensed.

Employee creates an expense report for each trip.
Expense reports submitted at the end of a trip is the most efficient way of reimbursing employees. This avoids the nonchalance of submitting expense reports and limits the amount of paperwork that can lead to confusion. One itemized expense report per trip makes it easy for accountants and auditors to look at the expenses for an entire trip. It also makes it easy for management to run metric reports that calculate things like “average trip expense” or “average cost per day." Tracking expenses this way is a win-win for everyone.

It may not seem like much of a mistake to let an occasional meal or incidental receipt slip through. But the cumulative total of all of these types of mistakes can really make accounting difficult for the department who is responsible for tracking expenses. Additionally, employees who are tempted to commit small acts of fraud may think that nobody is watching what they do, and that could lead to bigger problems. Set up procedures to properly reimburse employees for expenses and audit the process as needed.