Why Employee Use of Personal Cards is a Gamble

If your organization still allows employees to use their personal cards for business expenses and then get reimbursed, it is worth another look. Have you considered the risks lately? Early last year, I wrote about a couple ways in which fraud might occur with this approach. Namely, the employee could benefit financially by submitting the same expense more than once or by cancelling a business trip, but still pocketing the reimbursement for a reservation (e.g., airfare, conference registration). Now I am adding another type of fraud to the list. Keep reading to see if your organization is aware of the following risk.

The Receipt Risk

When an employee seeks reimbursement by submitting a receipt that the supplier provided electronically, the employee can change the dollar amount. It doesn’t matter if the receipt is an email (no attachment), such as what Uber provides, or if the receipt is an emailed PDF attachment, such as what a hotel sends. Both can be edited; I verified this firsthand.

When I edited a PDF from a hotel, a pop-up message alerted me that the file was read-only and had to be saved as a new file. Just one easy, extra step…

The Answer

While receipt tampering can happen regardless of the card used—personal card or company card—use of company cards (Commercial Cards) with corporate liability/corporate pay offer controls. Since there are no reimbursements to employees, there is no motivation for an employee to change a dollar amount on a receipt. Accounts payable uses the card issuer’s central bill to initiate payment for all cardholders’ transactions.

If the program has an individual liability/pay arrangement (as some Corporate Travel Card programs do), your organization still has the ability to independently view and verify actual transaction amounts through the card issuer’s technology. It would be possible to catch receipt tampering prior to reimbursing the employee. However, this is a mostly manual exercise that could quickly consume significant time.

The bottom line is, to prevent employee fraud, it is critical to have transaction visibility and to eliminate employee expense reimbursements to the extent possible.

Related Resource

The other fraud risks that I mentioned in the introduction above are described within the 2017 blog post, Why Mandate Card Use for T&E. It also includes another drawback of not having a Commercial Card program for business travel.

Is your organization willing to gamble (and lose) by allowing employees to use their own cards and get reimbursed?

Is your organization willing to gamble (and lose) by allowing employees to use their own cards and get reimbursed?



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About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

3 travel policy recommendations to boost employee peace

Two things are clear about business travel. First, based on the results of the travel policy survey by AP Now and PDG, it can be challenging for organizations to manage the related expenses and applicable policies. As the lead researcher for the survey project, I am seeing firsthand the pain that reimbursement teams often encounter. Besides regular battles over missing receipts and other infractions, there are, at times, outrageous expenses to address. More on this below. The second thing about business travel emerged during a lively weekend dinner party with friends. In short, travel is not pleasant (my friends used stronger language) and employers’ policies can make things more difficult on travelers. What can organizations do to help alleviate everyone’s sore spots? Keep reading to learn more, including some insights into the survey results.

Characteristics of a Strong Travel Policy

Consistent enforcement should be a given. Beyond that, here are three elements that appear to be lacking in some organizations, based on the survey results I’m currently analyzing.

Regular Reviews and Updates

Your policy should keep pace with the changing travel landscape. Reviewing it at least annually and making updates as necessary can prevent headaches. The survey results reveal there is room for improvement; for example:

  • Only 56% of organizations have reviewed their policy within the past 12 months
  • 72% have not updated their policy to reflect employees’ use of Uber, Lyft, and similar

Unfortunately, even the diligent organizations can overlook things. Among those who have done a review within the past 12 months, 60% said the policy does not address Uber, Lyft, and similar. 

Clarity and Specificity

It is not possible or recommended to try and address every potential situation within a travel policy. There are too many variables. However, many survey respondents—from the perspective of someone on a reimbursement team—expressed a desire for more details in their policies to minimize conflicts and debates with travelers. I completely agree.

While reviewing outrageous expenses described by respondents, I took the liberty of compiling a list of what an organization could specify in a “prohibited expenses” section of the policy.

ABC Company will not reimburse/pay for: 

  • tickets for driving violations or parking infractions
  • personal car repairs
  • gifts for family and/or friends
  • personal services (e.g., spa services)
  • personal items (e.g., clothing, medicine)
  • personal entertainment (e.g., concert tickets, gambling)
  • pet care or child care
  • expenses incurred by non-employee guests of the traveler
  • expenses occurring during non-travel days

Based on this list, you can imagine what respondents shared!

Help bring some peace to both your reimbursement team and travelers. Make your travel policy current and clear, but also flexible.

Help bring some peace to both your reimbursement team and travelers. Make your travel policy current and clear, but also flexible.

Flexibility

This third piece may sound like a contradiction to consistent enforcement. What I mean by “flexibility” is to allow reasonable exceptions when approved by an appropriate management member, especially when the traveler saves the organization money overall. For example, a traveler taking a red-eye flight when it is the cheapest option, but then purchasing a seat upgrade to be more comfortable. It also saves the cost of another night of lodging. 

I know “reasonable” can be subject to interpretation, which is why it is important to be clear about prohibited expenses (things for which exceptions are not allowed), as well as train your management-level travel approvers in order to convey your expectations. Having the flexibility within your policy to make things a little better for travelers can ease their stress and increase job satisfaction. 

Webinar Opportunity

If you are not a survey respondent, but want to hear more about the survey results, AP Now is offering the related webinar for a fee. Please visit http://www.ap-now.com/products/item126.cfm

See also travel-related resources offered by Recharged Education.  

 


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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A travel expense headache.

Does your travel policy invite issues by leaving too much room for employee interpretation? A big headache for those who manage travel and entertainment (T&E) expenses—often accounts payable—is employees who incur unreasonable or out-of-policy expenses. Keep reading to see one such example (it involves alcohol) plus what your organization can do to minimize these headaches. Finally, if you’re wondering whether your organization is typical when it comes to what is and is not allowed related to T&E expenses, you can take an easy survey to find out; see link below.

They Did What?

The Travel & Entertainment Policy Survey going on now, sponsored by AP Now and PDG, includes a question about the most outrageous expense report situation encountered. One respondent shared that two employees purchased a $350 bottle of wine at dinner (no customers were involved) and requested reimbursement. The employees thought it was completely reasonable. 

Speaking of alcohol, early survey results show a notable percentage of organizations don’t reimburse for liquor. It is too soon to tell if this will remain the most common answer.

What Your Organization Can Do

Regardless of which scenario below applies to your organization, travelers and approvers alike should receive related training and be held accountable for their respective role. If there are no consequences for outrageous expenses, then nothing will deter them from being a repeat offender. In the case of the $350 bottle of wine, I have to wonder about the manager who approved it. 

Scenario 1: Employees Submit Reimbursement Requests

When employees pay for T&E and submit reimbursement requests, the way to prevent issues is by using per diems. Employees can spend what they want, but your organization only reimburses “X” amount, based on your per diem rates. Personally, I am a fan of this approach, as it eliminates battles about what constitutes a “reasonable” expense. However, travelers may feel too restricted by per diems, even when they are adjusted to accommodate higher costs in large markets. 

Scenario 2: Organization Pays for T&E Directly 

When employees use Commercial Cards (e.g., Corporate Travel Cards) for which the bill is paid directly by your organization, it is even more critical to specify, within your policy, what is and is not acceptable. For out-of-policy expenses on a card, the traveler should be required to reimburse the organization.  

With both scenarios, the caveat is AP must spot an out-of-policy expense first in order to take action against the traveler and/or approver. The use of some type of auditing technology can really help. 

Take the Survey

As the lead researcher for the T&E Policy Survey, I’m eager to see what organizations are doing. Survey respondents will receive an executive summary of the results and be invited to a complimentary webinar to see more results, including some best practices. Click here to take the survey.

No need for pain reliever when your organization has a comprehensive travel policy that it consistently enforces.

No need for pain reliever when your organization has a comprehensive travel policy that it consistently enforces.

How Comprehensive is Your Travel Policy?

Does your current policy prevent outrageous expenses? While “comprehensive” is subjective, AP Now’s 2016 T&E survey (www.ap-now.com) revealed that the majority (44%) of respondents rated their policy as comprehensive. Others were more negative; 37% said it is somewhat comprehensive and 11% said not at all. Does your policy overlook certain topics? Take the current survey to help you begin to evaluate your policy status.

See also travel-related resources offered by Recharged Education.


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

Subscribe to the Blog

Receive notice of new blog posts.