Conquer Expense Fraud with Expense Tracking Software

Any business, large or small, can prove susceptible to the intentional misrepresentation of business expenses by employees for their own personal gain, otherwise known as expense fraud. Industry giant Amazon, for example, made the news in 2023 when an employee exploited them to the tune of over $350,000 in fraudulent expenses, including luxury cars and handbags. While most instances of occupational fraud aren’t quite that lavish, expense fraud still poses businesses a considerable threat.

That danger is reportedly on the rise, as well. According to Experian’s March 2025 Commercial Pulse Report, since the onset of the COVID-19 pandemic, financial fraud against small businesses has risen 70%, totaling annual losses in the billions. With fraud so prevalent, it’s crucial now more than ever that your organization takes steps to protect itself from bad actors misallocating company funds through dishonest reporting.

In this article, we’ll take a closer look at how travel and expense reimbursement processes can fall prey to instances of occupational fraud, the forms it can take, and the best ways to safeguard your business. 

What Expense Fraud Typically Looks Like

Expense fraud committed by employees against a company tends to fall into four categories.

• Mischaracterized expenses: This occurs when personal expenses are submitted to the company as business expenses. If, during travel for work, an employee takes a side trip to run an errand and then submits those miles traveled as a work-related trip, that is considered a mischaracterized expense.
• Fictional expenses: This type of expense fraud occurs when an employee tries to claim reimbursement for an expense that was never incurred at all. Perhaps someone played around a bit on Photoshop and made a convincing receipt, or they claimed a trip in their mileage log that they never took. In both instances, the expense is fake.
• Overstated expenses: In this case, the expense that submitted for reimbursement is legitimate, but the cost has been inflated. For travel reimbursements, this is often referred to as mileage padding. 
• Multiple Reimbursements: This type of expense fraud exploits a company’s clogged processes by submitting multiple reimbursements for the same expense. It’s understandable that confusion or inadequate processes may cause this to happen by mistake, but an employee is obligated to return reimbursements they mistakenly received. By not returning the extra money, they are defrauding their employer.

Expense fraud of any type is much less likely to impact an organization when that organization actively has strong policies and procedures in place governing expense reporting and reimbursements. With vigilance, administrators could use these systems to catch mischaracterized expenses or multiple reimbursements coming down the pipeline. 

Red Flags and Warning Signs

Staying vigilant in the fight against workplace expense fraud requires careful attention, keeping watch for red flags and warning signs that could indicate dishonest reimbursement reporting. These signs may appear in expense reports in the form of reimbursement requests with unusually high or frequent claims, especially if those claims all come from the same employee. If reporting numbers seem out of the ordinary, or too good to be true, there’s a good chance they are, and those reports may warrant further investigation.

Discrepancies in mileage logs, supporting documentation, and expense reports are also signs of reimbursement fraud. Mismatches between receipts and reports, such as dates and amounts that don’t match up from the same trips, could indicate that an employee is trying to inflate mileage for reimbursement, or that they’ve falsified documentation. Possible telltale discrepancies include duplication, such as claiming the same expense multiple times, multiple submissions of the same reports, or repeating sequential receipt numbers in those reports. 

Unusual or noncompliant employee behavior can also be a warning sign of fraudulent behavior. Stay on the lookout for employees who resist audits, avoid questions regarding reporting inconsistencies, and only submit vague justifications for those inconsistencies. Workers who aren’t active participants in clear, honest and straightforward reporting are, at best, noncompliant with company standards for T&E management. At worst, they could be attempting to hide evidence of fraud. 

Consequences of Expense Fraud

When it passes unprevented and unnoticed, expense fraud costs companies, in more ways than one. There are, of course, the financial losses incurred, which can severely impact a business’s profitability and budget allocations. 

However, there are consequences of expense fraud besides its financial impact. A company that ignores instances of fraud and allows the submission and reimbursement of false reports could open itself up to legal and regulatory trouble, such as sanctions and fines. There’s also reputational damage to consider as well. Even minor instances of fraud can weaken a company’s reputation, especially once made public or discovered by clients. 

Just as letting fraud run rampant will make a company seem less trustworthy in the eyes of the public, it will also lower its esteem in the eyes of its employees. Discovery of internal fraud has the potential to lower employee morale and erode workers’ trust in an organization, its leadership, and the systems it uses.

Taking Action Against Expense Fraud 

Establish Firm Reimbursement Guidelines

Having unclear or nonexistent expense reimbursement policies leaves your company exposed to employees taking advantage of the confusion. Your organization needs to be clear about what constitutes a reimbursable expense and what doesn’t, or a few individuals will exploit this gray area you’ve created. For instance, alcohol is usually not a reimbursable expense, but miles driven in a personal vehicle usually is.

For mileage reimbursement, create clear processes for recording, reporting and receiving travel reimbursements to prevent instances of mileage padding and unauthorized side-trips. It’s vital that employees keep a mileage log of the distance traveled for each work-related trip. To ensure that mileage totals are accurate and only include eligible travel for reimbursement, your organization may consider using a mileage tracking app, automating the process of recording mileage and the route traveled.

Develop an Organized Reimbursement Process

Companies that lack a standard procedure for submitting and reviewing expense reports, make it all-too-easy for fraud to slip through the cracks. So there’s no confusion, create guidelines for submitting expense reports, and for the review process. 

Make sure the review process contains at least two employees – for example, an employee’s direct supervisor and someone in accounting – before reimbursements are approved. Two sets of eyes are better than one, and you will have a greater chance of catching instances of duplicate reimbursements or mischaracterized expenses. Remember, no employee should ever be in a situation where they’re put in charge of approving their own expense reports. 

Penalize Fraudulent Employees

Your organization should set a definitive tone that fraud will not be tolerated. By penalizing or punishing employees who have attempted to defraud your company, you set a precedent that you take expense fraud seriously and are diligently looking for it. Develop clear policies outlining what practices are considered fraud and how incidents will be handled once discovered.

These policies should also keep in mind that accidents will happen! Human error is inevitable, and it’s not unlikely that employees will forget a receipt or submit a reimbursement twice by mistake. As long as employees are open and honest and return any extra money, these occurrences should be treated differently than fraud. Following through on your own rules and proving that you’ve maintained vigilance in these matters will be a deterrence in itself.

Leveraging Technology

In your fight against workplace reimbursement fraud, arming yourself with the right tools can make all the difference. Manual processes, such as using odometer readings to calculate mileage totals, or keeping paper mileage logs, are slow, time-consuming, and have a high margin for human error. What’s more, manual reimbursement workflows lack oversight, making it hard to hold employees accountable, and easy for fraud to pass unnoticed. 

We live in the future, so why not act like it? Software solutions for expense management automate the process, making expense reimbursement more streamlined, more efficient, and more accurate. Digital reimbursement workflows also help prevent expense fraud, making it harder to submit fraudulent reports, or try to claim reimbursement payments for ineligible mileage such as side trips and commuting mileage.

Automated reimbursement tools also help management and supervisors monitor reports for noncompliant behavior, without requiring that they painstakingly wade through paper logs or digital spreadsheets, double-checking facts and figures. Instead, systems immediately flag behaviors, such as duplicated reports, that might slip past a manager otherwise. The right reimbursement software might be just the solution your organization needs to maintain strong, fraud-free travel and expense management, while giving your workforce the time and space they need to do their actual jobs. 

Curate a Fraud-Free Environment with CompanyMileage

Let CompanyMileage provide that solution for your business! SureMileage, our mileage reimbursement software, automates mileage tracking and reporting, granting employees both accountability and ease of use. Rather than relying on odometer readings or GPS tracking, our system calculates the distance between point A and point B to ensure employees aren’t overestimating or padding their mileage reimbursements. 

With SureMileage, mobile workers no longer need to maintain a mileage log throughout their workdays, significantly reducing the time spent each day managing their expense reimbursements. SureMobile, our mobile app, gives employees the ability to compile trip data on the go, no matter where they are. Our QuickCapture feature takes this one step further, letting employees log important trip data with the literal tap of a button.

At the end of the day, employees simply need to take a few minutes to add, edit, and organize data, take pictures of relevant receipts or other documentation, and then they can submit expense reports from their smartphones. Once submitted, those reports move through a customizable, automated approval workflow. After approval, workers are guaranteed fast and accurate reimbursement payments, as our systems integrate with all major accounting and payroll software. 

Tackle expense fraud with a software designed to help both employees and employers manage the reimbursement process more effectively. Request a demo with CompanyMileage today!