Seven deadly expense frauds and how Neo can help

Neil Parkes | September 9, 2019

Cheating on expenses used to be something of an art form, but these fraudulent activities created a huge hidden cost for employers.

This was particularly prevalent in the days of paper receipts and manual expense processing.  Fortunately, automated tools are making it easier to spot fraudulent expenses claims – or often just honest mistakes – made by employees.

Here are some of the most common types of fraudulent or exaggerated claims, and how Neo can stop or reduce them:

1 – Mileage

Employees overclaiming mileage when using their own cars has long been a problem – especially as it does not require a receipt directly relating to the trip. For the employee it may feel harmless to add a few extra miles here and there, but the costs soon mount up as it is very difficult to identify and prevent when expenses are done manually.

Neo solution: An automated mileage calculator based on an address or postcode, using Google Maps, accurately calculates the mileage between two locations. But the benefits go both ways because the system also gives employees confidence that their claim is correct with a visual representation of the journey. Also, if the driver must change their route – because of a blocked road or having multiple meetings in different locations – Neo allows them to easily include several legs of a journey within one trip.

2 – Duplicate claims

Claiming for the same receipt twice may occur as an honest mistake with manual processes as it’s not easy to know if an expense has already been claimed.  Even with tools that allow a traveller to scan receipts with their phone, a duplicate claim error is easy to make. A few weeks later, with the same paper receipt, they may mistakenly resubmit it. It may be an attempt to fraud as well,  but either way it is still a problem.

Neo solution: The calendar-based system allows travellers to easily check if an expense has already been claimed. Neo can also flag up duplicate claims with financial audit teams by checking for expenses made for the same expense type on the same day. This takes away the need for a human check to identify duplicate claims.

3 – Cheating credit controls

Most corporate cards come with a specified limit for transactions or even types of merchants. But some crafty travellers could cheat this limit by splitting a transaction across two or more payments with the same supplier.

Neo solution: The system will compare transactions to identify any receipts with the same time and supplier. It also looks for frequent low-value transactions and flags them to the financial audit team for further investigation.

4 – Two employees claiming the same expense

When claiming for meals for multiple employees or guests, one employee may pay for the entire meal on their corporate card, while a colleague makes a separate claim on the same bill. For a large party, it is also difficult to track compliance with per-head spending limits.

Neo solution: For a meal with multiple diners, the claiming employee lists all colleagues and external attendees. Neo then analyses if the expense falls within the per-head spending policy. If a colleague tries to claim the same meal, Neo will spot it and flag it as a potentially fraudulent expense.

5 – Double claiming

With multiple types of travel and per diem (per day) allowances common in many European countries, it’s possible to double claim through different expense types. An employee could claim mileage on a journey and then also put in a receipt for petrol. Or a traveller who is automatically paid a per diem, makes a separate expense claim for items already covered by the per diem payment, such as a dinner bill.

Neo solution: Double claiming is identified by examining expense type and flagging it up as non-compliant to the approver and through the audit process. The system also includes all the data about any applicable per diems.

6 – Foreign exchange manipulation

Savvy fraudsters may manipulate the exchange rate by changing a few decimal points in the transaction rate. While this may seem minor, if a traveller is able to claim an extra £50 per trip by doing this, it soon adds up.

Neo solution: Neo automatically analyses forex data daily and sets thresholds so travellers are unable to dramatically alter the rate to boost their claims.

7 – Taking advantage of separate T&E systems

Travellers can take advantage of travel and expense systems used as two standalone tools. For example, they could book a hotel room within policy in the travel system. Then add extras such as breakfast or a room upgrade at check-in, which is then reimbursed in the expense system. The combined costs would take them over their limit, but this is not flagged because the systems are separate.

Neo solution: The Neo unified T&E platform is one tool for both. It looks at the total trip cost including the travel booking and all associated expenses to give a single view of the cost. If a traveller overspends, whether on travel or expenses, it will be flagged up as being over budget.

Battling fraudsters is an ongoing challenge, but automated and integrated travel and expenses solutions can reduce or eradicate many ways of cheating on expenses and make it easier for travellers to avoid honest mistakes.

To err is human, but technology can help companies and employees catch it out.