Expense managers are tightening policies in response to the economy, including more thorough audits and stricter requirements for receipt submission, according to Business Travel News' sixth annual Expense Manager Survey.
Download a PDF of Expense Manager Survey charts here.
The survey found that more than three-quarters of 200 expense manager respondents set their receipt threshold no higher than $30, and more than half of that subset require receipts for expenses less than $20. Craig Fearon, senior product director for expense applications at expense management supplier CyberShift, said companies this year are making those requirements even more stringent.
"We're seeing a trend with companies where they want receipts for everything," Fearon said. "They want to be able to verify that a $5 coffee was actually a $5 coffee."
Part of that stems from what happens in difficult economic times, Fearon said. While unintentional fraud—employees making mistakes on their expense reports or spending outside of company guidelines—often declines in tough times due to employees wishing to toe the policy line as closely as possible, there also are more instances of employees padding expense reports with a few extra dollars here and there to make up for their own financial shortfalls, he said.
Austin-based Sematech has maintained a receipt threshold of $25, said manager of corporate travel and meeting services Bill Davidson, although there's always some disagreement over the issue. "Part of us did want receipts for everything," he said.
CyberShift's Fearon said virtually all of his clients have moved to receipt imaging, which eases the submission process. Christopher Juneau, senior director of segment marketing for expense management supplier Concur, said mobile technology also spurred that trend, such as a tool Concur launched allowing travelers to take photos of receipts with their mobile devices and file them immediately.
While many companies do not require receipts for transactions imported to expense reports from corporate cards, some now require all receipts even when the card is used, Fearon said. Others are using the receipt requirement to push travelers to use their corporate card for all possible purchases, according to Kevin Phalen, global head of Bank of America's commercial card programs.
"We see receipts being required for smaller dollar amounts when cash is used," Phalen said. "The companies might set the threshold at $25 or $50 for a corporate card transaction but require all cash receipts, which drives behavior to the card."
BTN's survey also found that expense managers are auditing most or all of their employee's travel and entertainment expense reports. A plurality, 41 percent, said they audited every expense report submitted, and more than half audit 75 percent or more of the reports (see chart, p. 1).
Sematech's Davidson said his company follows 100 percent audit guidelines. "It's not so much to catch things malicious in intent," Davidson said. "It's more to catch things like missing receipts or things that need to be provided to meet audit requirements."
For companies Sematech's size—it processes between 100 and 125 expense reports weekly—or companies that still report expenses by manual means, auditing all expense reports usually is necessary. For larger companies, however, industry experts said seeking a more focused audit generally is a best practice.
Both Concur's Juneau and CyberShift's Fearon said when companies first implement a new system or policy, it's a good idea to audit 100 percent of reports. From that, expense managers can determine which policy points need adjusting and which departments and specific travelers have spending habits that might need the highest rate of surveillance. With that sort of data in place, Juneau said systematic audits of 20 percent to 50 percent of receipts usually are sufficient. Only 7 percent of survey respondents audit 25 percent to 49 percent, however.
"This gives you visibility into spending and lets you get your 'cowboy list'," Juneau said. "You can also look at employee spending behavior before and after automation, and then go look back at their old paper submissions."
Bank of America's Phalen also said he's seeing an increasing number of companies outsource T&E audits. Not only does the practice relieve some companies' exhausted employee resources, but having an impartial third party monitor the reports might give insight that cannot be found in-house.
Bradley Seitz, president and CEO of Topaz International, handles T&E audits for some companies and said his clients usually are looking to correct some specific behavior.
"They might hire us because they feel like employees aren't using corporate cards as much as they should, making rebates smaller than they could be, or they might be looking for things falling into that dreaded miscellaneous column," Seitz said. "They usually go in with the idea that something is going on."
Newly tightened expense policies likely will endure when the economy rebounds, Fearon said. "We're definitely going to see newfound scrutiny on employee expense reporting, and people's eyes are being opened," he said.