Expense Reimbursement Fraud: 10 ways to Protect Your Organization

The silent specter of occupational fraud and the damage it can cause hangs heavy over the business world. In 2024, the Association of Certified Fraud Examiners (ACFE) estimated that organizations lose 5% of their revenue to fraudulent activity, with the median financial losses per case estimated at $145,000. Of the many different forms occupational fraud can take, one of the most common is employee misuse of business reimbursement systems, otherwise known as expense reimbursement fraud. 

Expense reimbursement fraud manifests in different ways depending on the business and its reimbursement tools. Claiming personal expenses for reimbursement, altering or doctoring receipts, duplicating expense reimbursement claims, and inflating reported expenses are a handful of ways your organization could be losing thousands of dollars annually due to dishonest reporting. 

To help counter this often elusive enemy, we’ve compiled ten practical strategies for identifying, preventing, and addressing expense reimbursement fraud and the different forms it takes within your own workplace. 

Factors Contributing to Expense Reimbursement Fraud

While an organization can’t be blamed for the actions of dishonest workers, it can be held accountable for hanging on to workplace processes and procedures that make it easier for fraudulent behavior to go unnoticed and unchecked. If an organization has unclear, overcomplicated, or nonexistent reimbursement guidelines, it might be difficult to prove that an employee who committed fraud did anything wrong at all. 

Lackluster processes create a workplace environment in which fraud can flourish. Weak, inconsistent auditing systems can encourage noncompliant behavior by making employees feel that they’re unlikely to get caught, or that even if they are caught, they won’t be sufficiently penalized. 

This extends as well to reimbursement processes. Is your workplace still using manual workflows, or relying on odometer readings and other outdated methods for mileage tracking? Inefficient, error-ridden systems, combined with limited oversight, make it all too easy for fake reports or altered receipts to pass through reimbursement workflows unnoticed. 

Ten Key Strategies to Protect Your Organization 

If you’re ready to step up to protect your business from expense reimbursement fraud, these ten tips will help point you in the right direction.  

1. Implement a Clear Expense Policy

We’ve said it before, and it’s worth saying one more time: weak expense policies allow expense reimbursement fraud to thrive! Your business should implement strong policies governing workplace expense reimbursement. Include examples of prohibited behavior, limitations on amounts, if any, and regularly communicate these policies to all relevant employees. 

2. Require Itemized Receipts and Supporting Documents

Strong recordkeeping is crucial! Require itemized receipts and any other documentation for expenses to be submitted alongside expense reports, and kept alongside other records for audit purposes. 

3. Introduce Digital Reporting Systems

If you currently use a manual system for expense reimbursement, you’re likely all too aware of its pitfalls: slow processing, human error, and a lack of oversight. By embracing digital tools, you can head off expense reimbursement fraud more effectively by standardizing processes, reducing the need for human involvement, and improving oversight. You can even take it a step further by automating workflows, freeing up employee time and resources even more.

4. Enforce Audits and Spot Checks

It’s important to stay vigilant. Enforce regular audits of expense reports and other records to ensure that workers are meeting established company guidelines, and that documentation exists to match requested expenditures. While digital and automated tools are helpful for catching signs of fraud, they shouldn’t replace regular human oversight and accountability. 

5. Training and Awareness

Make sure workers know all company guidelines around expense reimbursement, and provide them with training and other resources in case they have questions, concerns, or suggestions. Be sure as well to educate employees about expense reimbursement fraud, the forms it takes, and the consequences for employee fraud. 

6. Provide Anonymous Reporting Mechanisms

In their occupational fraud report, the ACFE noted that 43% of workplace frauds were detected by internal tips. Within your workplace, make sure employees always have a way of reporting concerns about concerning and possibly fraudulent behavior, without fear of retribution. 

7. Manage Time Efficiently

Your hardworking employees should spend the vast majorities of the workday doing their jobs, not fiddling with archaic, time-consuming reimbursement processes. Whenever possible, prioritize organization and efficiency in workflows, without sacrificing accuracy or attention to detail. The more efficient a process is, the less likely employees will be to cut corners to finish it. 

8. Track Trends and Outliers

A good way to fend off expense reimbursement fraud is to stay informed on trends in reporting data. Outliers in those trends could be a telltale sign of duplicated reporting, inflated reporting, or other noncompliant behavior. Regularly question expenditures that stand out as extraordinary or abnormal; waiting for a larger problem to build will only be more difficult and expensive to resolve later. 

9. Enable Real-Time Policy Checks

Monitor and enforce the policy compliance of your workforce in as close to real-time as possible. With up-to-date data on employee travel and expense tracking, reporting, and approvals, you can proactively enforce compliance and quickly spot any irregularities. Real-time monitoring makes it easier to pinpoint the source of discrepancies—like inflated mileage or suspicious reimbursements—before they escalate into larger issues.

10. Follow Through

When potential policy violations arise, they should be promptly and thoroughly investigated in accordance with your organization’s expense policies. If violations are confirmed, it’s important to apply the outlined consequences consistently. Taking appropriate action not only reinforces accountability but also sends a clear message that compliance matters, which will help defer future misconduct. 

The Long-Term Effects of Implementing Fraud Prevention Systems

Besides its immediate impact on organizations that utilize T&E reimbursement processes, investing in strong systems and policies for preventing expense reimbursement fraud will also incur several long-term operational benefits. 

Better Financial Decision-Making 

We’re all aware of the obvious fact that expense fraud is…well, expensive for impacted organizations, and that curtailing avenues and opportunities for expense reimbursement fraud saves companies money that would otherwise end up in the pockets of bad actors. But on a more extended timeline, introducing strong policies and processes for expense recording, reporting and reimbursement can bolster a business’s overall financial health in ways besides just helping avoid fraud-related losses.

Utilizing strong, intuitive expense tools that emphasize accurate, accountable expense logs and reporting empowers businesses to make better-informed financial choices, such as budget forecasting and resource allocation. After all, it’s much easier to confidently make important financial decisions and plan for the future when an organization is basing those plans and decisions on actual company data, instead of on numbers that could be tainted by fraudulent expense reporting.  

Likewise, reduced fraud means reduced risk in several financial arenas for a company. When an organization has strong systems in place to catch and prevent expense fraud, they’re much less likely to experience sudden budget shortfalls or financial discrepancies caused by fraudulent claims. 

Streamlined Operations

Digital tools for expense reimbursement and reporting also pave the way for more streamlined processes on every level. The automated workflows that prevent duplicated reports and curtail inaccurate data also reduce time-consuming, tricky manual tasks for employees and managers. By minimizing human error and accelerating routine processes, these tools deliver speed without sacrificing accuracy.

A business that prioritizes accurate, proactive T&E reimbursement will see a lasting productivity boost in its processes for reporting, approval, and auditing. The end result? Fast, error-free reimbursement payments, and a happier, more compliant workplace culture.

Help Prevent Fraud with CompanyMileage

There are several steps a business can take to protect their operations from expense reimbursement fraud. The final one is to invest in a smart, intuitive tool for managing T&E reimbursement while keeping employees accountable. SureMileage, CompanyMileage’s software solution for mileage reimbursement, automates every step of the process while safeguarding efficient, accurate reimbursements.

SureMileage sets itself apart from other expense reimbursement solutions with its unique point-to-point calculation method. Instead of requiring employees to calculate mileage totals using odometer readings, or even using GPS tracking for travel estimates, SureMileage logs the starting and end points of employees’ work-related trips. 

It then takes those points and calculates the best distance between them for reimbursement, eliminating the risk of employees falsifying or padding their mileage totals. This process also automates mileage logging, reducing the time employees need to spend managing reimbursements to minutes a day. 

Using our mobile app, SureMobile, employees can edit, compile and submit expense reports right from their smartphones, even while on-the-go. Our QuickCapture feature takes this one step further, allowing employees to record important mileage data with the tap of a finger. 

Once submitted those reports move through a digitized workflow, customized to meet the unique needs of your business. Our systems also integrate with all major and payroll accounting systems, to guarantee fast and efficient reimbursement payments. 

Fend off fraud with better, smarter, expense management software. To find out how CompanyMileage can help, and even save you money in the process, contact us for a demo today!