Survey Shows Sluggish Card Mandate for T&E

There are many cons to not mandating card usage for employees’ travel and entertainment (T&E) expenses. Yet, new survey results from AP Now reveal only 43% of card-using organizations have such a mandate. In 2016, it was 41%, so the needle has hardly moved in the right direction. What does your travel policy say on this topic? If you are among those that make Commercial Card usage optional, or if you require employees to use their own cards, you should reconsider. Take a look at the list of cons below and share with your internal decision makers. Some of them might be resistant to a policy change because they want to earn rewards associated with their personal cards. However, lack of a mandate could be costing your organization.

Source of above statistics: AP Now’s Accounts Payable in 2020 Survey, www.ap-now.com


Cons to Not Mandating Card Use for T&E

Fraud Risk

I have previously written about the types of games employees can play for their own financial gain when requesting reimbursement for out-of-pocket travel expenses. Two examples are:

  • Submitting the same expense more than once; for example, after making an airfare reservation and again after the trip is complete

  • Altering a receipt to receive more back than what is truly owed

In addition, while not outright fraud, an employee may take more business trips than what is necessary in order to earn more rewards through their personal cards.

All of the above amount to financial hits to your organization.

Lack of Visibility into Expenses

When employees use their own cards, you cannot view or verify their expenses. This hampers fraud prevention and detection efforts. Further, lack of visibility means your organization cannot easily identify expenses ideal for strategic sourcing initiatives.

Tedious Expense Reimbursement Process

Instead of making one monthly payment to the card issuer, accounts payable (AP) has to make separate payments to each employee. Depending on your organization size and the number of business travelers/trips, this could amount to hundreds of payments each month. A card mandate could save your organization time and money.

Losing Out on Potential Rebate 

Commercial Card programs of all types are often eligible to earn revenue sharing incentives (i.e., rebates). When there is not a mandate to use the cards, spend is not maximized. If you have a card program today, work with your card issuer to estimate what your rebate could be if all travel expenses shifted to the cards.

Employee Hardship

Finally, when a company card is not available at all, it can be a real problem for any employees who do not have the means to pay for their travel expenses up front. It creates an embarrassing situation for them and more work for your organization to find a solution.

Related Resources

Lack of a mandate for Commercial Card usage for travel expenses can cause numerous headaches for your organization, including financial hits.

Lack of a mandate for Commercial Card usage for travel expenses can cause numerous headaches for your organization, including financial hits.



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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

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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