It’s been a long and stressful conference. You’ve been out of the office and away from the kids all week and even had to fly out on a Sunday morning. Plus you had work dos on every night. Surely you’re entitled to a couple of glasses of fine champagne with dinner at the end of it all, charged to the company card? As a member of the finance team, you may disagree – or maybe not. But chances are many employees would think the expenses in this case is justified.
The thing is, while the rules may be there, there are a number of reasons why employees may decide to go around them. It’s not as uncommon as you think either. YouGov research shows that 20% of users polled said it’s acceptable to exaggerate their expenses from time to time. That’s one in five! And this figure jumps to 28% for Millennials between 18-24 years old, indicating that it could be a rising trend. So why might this be happening in your company and how can you put the brakes on?
Reason #1 Making up for lost time
Travel can be a very emotive subject for employees who find themselves away from home, family and all comforts. As with the scenario above, it may seem a fair swap considering the inconvenience the employee has endured. But time off in lieu is not the same as Dom Perignon; it won’t help with your budgeting, reconciliation and reporting – or cut the mustard when HMRC auditors pay you a visit.
Reason #2 I forgot to claim in the past
“I’ve lost so many receipts along the way, I’ll make up for it in this report.” That may be true. But unrelated, ad hoc claims don’t help the finance team with their planning and reporting either. And this could be a real concern for your business, as 68% of respondents gave this as the top reason why they inflated their expenses, according to the YouGov study.
Reason #3 It’s an extra source of income
An unhappy or financially strained employee is also a lot more likely to fiddle the books. In the same survey, 32% said they would inflate their expenses because money is tight and 13% said they would supplement what they perceive to be a low salary by claiming extra. Besides salary, it’s the only other time many employees see money coming IN to their account, so for some, it could be deemed as an opportunity to pad out their income.
Reason #4 Everybody does it
If the prevailing corporate culture is conducive to policy flouting, no matter how honourable the employee, you can be sure that transgressions are sure to follow. When it becomes the company norm and employees see their managers breaking the rules, it lends little sanctity to the company policy. 18% of employees in the YouGov poll said they exaggerate their expense claims simply because they knew they could get away with it.
Reason #5 The policy needs updating
For the most part, employees actually want to do the right thing by the company. So in many cases, exceptions to a policy may indicate more of a need to update old rules or rethink the way it’s implemented rather than to punish the ‘violators’. For instance, a hotel night fee may vary from £40 in Scunthorpe or Swansea to £140 in London. Your employees may be trying to do the right thing, but are having no luck with a blanket rule.
This offers just a small insight into the reasons why employees may be non-compliant. If you’d like to take a broader look at both internal and external expense compliance best practices and what it means for your business, we’ve created a helpful resource: Cracking the Code on Expense Compliance. If you have any questions, we’d also be glad to hear from you 01628 645 100.