Companies are not enforcing their policies on paying expenses even when employees make travel bookings which are outside policy.
A survey carried out by expenses specialist Concur found that 99 per cent of all employee expense claims in the UK were approved “regardless of whether they meet the business’ expenses policy or not”.
The study, which looked at 12 million individual expense claims by around 200,000 UK-based employees, found that less than 1 per cent of all claims were even queried and 94 per cent of those questioned were eventually paid.
Concur said that a “more robust approach” was needed by businesses when approving expenses, especially for higher priced items such as travel, hotels and entertainment, as this could lead to “substantial savings” for firms.
The report said: “Managers are hugely reluctant to reject expense claims that are ‘out-of-policy’. This can add up to significant costs for a company, especially where expensive items such as air fares, train tickets and hotels regularly exceed approved levels.
“Managers do not scrutinise claims that are ‘in policy’ and check whether they are genuine or not. Furthermore, managers sign-off plausible claims with few, if any, questions.”
The study found that UK businesses paid an extra £1.2 billion in expenses during 2012 compared to the previous year with the increase being caused by employees making more claims for smaller expenses such as food and drinks. Concur estimates that UK firms paid out a total of £8.2 billion in expenses in 2012.
David Vine, Concur’s managing director of UK SMB (Small Business), said: “There is a big black hole in financial visibility that is costing UK business dear, especially in a business environment where every penny counts.
“It’s hardly a surprising situation though when a recent survey by Amadeus revealed that 51 per cent say they don’t understand their company’s travel policy fully. Much is still to be done by businesses to enforce their travel policies and educate their employees about expenses.”
Concur said that employees made an average of 36 expense claims last year adding up to a total of £2,054 in payments each.
“In a tough economic environment we see a culture shift in spending on expenses,” said Vine. “For example, the average bill for client entertainment dropped by 20 per cent, in real terms over the last two years, implying that employees are aware that they may be frowned upon if they act extravagantly.
“While we’re not sounding the death knell for the decadent business lunch, there’s clearly been a trend towards smaller but more frequent expense claim submissions in the last couple of years.”
For more details on the report, click here