Following years of heightened cost-consciousness among corporate travel and expense managers, business travelers feel T&E policies tightening, according to a survey released last month by American Express.
Of more than 500 business traveler respondents, divided equally among the United States, the United Kingdom, France and Germany, nearly half said their companies have adopted stricter corporate travel policies, specifically those related to expense reporting. Of those polled, 45 percent said policies for expense reimbursement have become "somewhat" or "a lot" more stringent within the past three years.
About one-quarter of respondents said that, compared with the relatively freewheeling days of the past, they have in varying degrees grown more conscious of T&E policy adherence.
According to the survey, 37 percent of travelers claimed employers have become more careful in reviewing expense reports, showing that the enforcement of stricter policies has affected travelers' perceptions.
Mark Webb, senior vice president of American Express' global client group, which oversees the agency's top customers, cited both Sarbanes-Oxley and the continued proliferation of more advanced expense reporting tools as reasons for the evolution in traveler policy perception. "Increasingly, corporations are stepping up efforts to track and halt out-of-policy spending and tighten their grip on T&E," Webb said.
"It's very difficult to generalize the entire business environment. There are some organizations and industries that have been doing very well and have approached this very differently," Webb said, "but I would say that, within most organizations, there's been a confluence of two driving factors. One is the desire for organizations to get more out of every dollar they invest in T&E. Secondly, in this environment of greatly heightened sensitivity toward corporate governance, you have organizations placing a much higher emphasis on compliance and control."
Despite the growing crackdown on expenses and awareness among travelers, more than one-third of respondents said it was "somewhat" or "quite" common for expense filers to submit reports containing "one or more completely false or bogus charges."
That sentiment was most common in the United Kingdom, where 42 percent said it was common for travelers to submit false charges. Restaurant charges topped the list of the most likely to be abused when filing for expenses, as 58 percent of all worldwide respondents said such expenses, more than others, are likely to be fraudulent. "The top three types of abuses expense charges are restaurants, tips and taxis. Type of abuse varies by country. Tips are particularly abused in the U.S. and to a lesser extent in Germany; taxis in the U.K.; restaurants in France," the survey said.
"I was not surprised to see restaurants as the area designated as the most rife with abuse," Webb said. "Within certain company cultures, people begin to think of that as an entitlement. Some may have convinced themselves that whether or not they decided to have dinner, the company owed them $25 anyway. The practice of submitting a meal whether you had it or not became the norm, or became acceptable within certain company cultures. Some may say, 'It's my decision whether or not I have dinner, but the company owes me that no matter what.' "
Many travel and expense managers concur that expense abuse problems continue. When BTN surveyed 236 corporate expense management professionals for its first annual Expense Manager Survey, 28 percent said they caught an employee fraudulently filing expenses in the past two years
(BTN, Dec. 6, 2004).In the Amex survey, 10 percent of the respondents said they know someone in their company who was dismissed due to fraudulent T&E expense reports.
Meanwhile, a report released in July by the Association of Certified Fraud Examiners showed the cost of fraud has grown among U.S.-based businesses
(BTN, Aug. 2, 2004). The report showed the average cost of expense fraud has increased to $92,000 and comprises about 14 percent of occupational fraud. The association in 2002 released a report in which the cost of T&E schemes averaged $60,000 and comprised 12 percent of all corporate fraud cases
(BTN, Aug. 11, 2003).As a counter-trend to fraud, the Amex survey noted 59 percent of the respondents across the four countries have paid for expenses out of pocket without being reimbursed, and 8 percent said they pay without reimbursement "quite often."
"On the surface, it may look like good news, but in reality, it's bad news," Webb said. "Folks that are put in that position will often try to find it somewhere else."
Webb said a corporate card program and automated expense systems can help curb such abuses—and many agree, according to BTN research. "I was surprised that folks believed that padding still existed to such a significant extent," Webb said. "There's no reason a firm should put up with that because to have a corporate card program or expense management system is not rocket science."
Yet, penetration remains shallow for electronic expense systems, as confirmed by BTN's Expense Manager Survey. According to Amex's findings, about 24 percent of business travelers said they use an electronic or online system to submit reports, while 37 percent still file and submit expenses with paper.
Just as paper continues to dominate the expense reporting process in every country, many companies continue to rely on travelers that use personal plastic for business expenses. Of all the respondents in the four countries represented by the survey, only 23 percent of the travelers said they use a charge card issued by their company. Travelers in the United States had the highest penetration of corporate card usage and the United Kingdom the lowest, with 31 percent and 17 percent, respectively.
"It was quite low and I attribute that to the fact that the net was thrown very wide and went from the sole proprietor all the way to the multinational," Webb said of the respondents. "If the segment was all large multinational companies, I would have expected the number to be double or triple that."
Business travelers in the United Kingdom who use corporate-issued plastic for T&E expenses were more likely to face a mandate for its use than were U.S. corporate cardholders. About 77 percent of U.K. cardholders and of 59 percent of U.S cardholders reported a mandate.
For the survey, American Express contracted market research firm Synovate to conduct research for the business traveler study. Amex said that a total of 508 Internet-based interviews were conducted with business travelers in the United States, the United Kingdom, Germany and France—125 interviews in each country. Amex said half of the respondents were male, half were female. Each took at least one business trip in the past 12 months. Amex said only one traveler per company was surveyed.