Business travel expense fraud estimated to cost $1.9B annually
Based on a survey of more than 1,200 business travelers in the U.S., U.K., and Australia conducted in April and May 2018, expense fraud could potentially cost American organizations $1.9 billion per year.
Chrome River’s survey shows business travel expense fraud is more likely to be committed by:
- Younger employees: 82.9 percent of expense fraud was committed by those under the age of 44
- Manager-level and white-collar, non-managerial staff: 58.1 percent of those who said they cheated were mid-level employees, while VPs and SVPs had the lowest fraud rate at a combined 6.2 percent
- Males: Not only were males nearly twice as likely to commit business travel expense fraud, but they were more than four times more likely to pad an expense report by $1,000
- Companies using manual reporting procedures: Employees who submit expenses using hard-copy receipts and spreadsheets are more than twice as likely to commit fraud than employees using automated expense management solutions
Other takeaways from the survey include:
- Over one-third of those admitting fraud reported padding each report by amounts ranging from $100 to $499, with males doing so at a rate 60.5 percent higher than females
- Conversely, females were 30.8 percent more likely than men to misreport amounts under $100
- Males were 62.2 percent more likely than females to believe they wouldn’t get caught falsifying expenses
- One-quarter of respondents reported being caught committing expense fraud
- Over 75 percent of respondents caught for expense fraud said a warning was the most serious consequence
- Males reported receiving formal warnings at a rate 31.6 percent higher than females
“Most people are inherently honest, and they don’t intend to defraud their employer of huge amounts of money. More often, they’re just committing small acts that they don’t even view as ‘fraud.’ And they do it because it’s possible, and they don’t think anyone will notice,” commented Chrome River Co-founder and CEO Alan Rich.
“The best thing a company can do to protect itself is make it easier for employees to do the right thing, such as by implementing an automated expense management solution that can, for example, alert employees if they are trying to submit the receipt twice. This type of gentle reminder can often be all that’s needed for employees to remain honest throughout the expense submission process.”
