Accounts Payable News^®

Expenses. The word itself now conjures up images of politicians attempting to justify the whys and wherefores of their claims. However, many of them have said that they simply "didn't know" whether they were able to claim for certain items or not, so just included them amongst their other receipts and hoped for the best. Morally correct or not, undoubtedly one of the major faults the scandal highlighted is a common one across many orgainsations - clear knowledge on what is a legitimate expense claim, and what isn't.

Whilst there will always be a certain flexibility in order to account for different situations within Travel & Entertainment (T&E), all organisations should have a document available which an employee can refer to. If there are any grey areas, it’s imperative that an employee is able to clear them up in writing prior to the trip – particularly if it’s likely to be an extended one. Expenses which have already been incurred, but which fall outside of the expected remit, can cause bad feeling and embarrassment on either side. On top of this, they can mask:

Fraud
While not common, fraud is most frequently carried out by long-term, trusted employees whose managers may not feel inclined to question a claim which is higher than expected. According to the Association of Certified Fraud Examiners, 22.1% of all fraudulent disbursements were expense reimbursements. In many cases the T&E fraudsters took advantage of their organisations time and again – each time becoming bolder. Eventually, many become so bold they get caught – but far better to be prepared and to have the systems in place to prevent it occurring in the first place.

While there is little praise or glory when things run smoothly, there is plenty of blame if things go wrong – especially if the story ends up in the national newspapers! Therefore, organisations everywhere are starting to wake up to their flimsy T&E practises.

Credit cards
A growing number of organisations provide their travelling employees with T&E specific credit cards to use for company business. These cards remove any pressure on the employee to use their own credit card and remove the risk of ad hoc personal expenses appearing on the corporate card.  From an employee’s point of view, having a company credit card is the modern equivalent of the old system of providing a cash advance, but for the employer it has the added advantage of transparency, and ease of reporting.

Automation
Organisations are now able to run reports that show who has spent how much on what. In addition, they are able to highlight policy non compliance. In fact, some products go further by simply not allowing employees to enter reimbursement requests outside the set policy limits.

The Internet
This can be both a blessing and a curse.  Most employees now book their own travel arrangements directly online, putting the power and negotiation firmly in their hands. However, this also gives some unscrupulous employees the opportunity to siphon off a few pounds with relative ease.

Corporate Culture
It’s very difficult to provide a “one size fits all” set of rules, as although all organisations have to work within government legislation, there will always be a certain amount of leeway as to what’s allowed from one organisation to another. For example, while all may agree that taking clients to the best nightclub in town and ordering champagne all round is unacceptable, others may well see that booking the best restaurant in town, and ordering a few bottles of expensive wine, is perfectly within the bounds of the necessary. In order to make the job of those approving the expenses easier, it’s best to simply have legislation drawn up to reflect the culture you’re in.

Line Manager v AP Manager
Many managers will simply sign off an employee’s expense report – particularly if that employee has had a lucrative and successful sales trip. The manager wants to keep the employee happy, and in turn, the employee may well have a sense of entitlement, and see a somewhat dubious claim as recompense for a job well done. While some may have some sympathy with this – it doesn’t help the AP Manager who has the unenviable task of questioning a claim which has already been approved by a line manager. With an online electronic T&E model, this sort of problem can be avoided.