Small companies are footing the bill for excessive and incorrect expense claims due to the nonchalant attitude of line managers and accounts departments, according to the employee expenses benchmark report.
The report examined 3,530,000 individual expense claims from over 60,000 companies and found that £1.3bn is paid out to employees every year for money supposedly spent on behalf of the company.
According to employee expense service provider GlobalExpense, which commissioned the report, successful claims included money spent on lap-dancers, condoms and cat-food while one manager even allowed an erroneous claim for £570m for a £4.70 bridge toll – where the employee had entered the VAT number instead of the amount – to get through.
The report also found that small and medium-sized companies were more likely to let staff get away with excessive spending, with the average claim £99 in companies with under 50 employees and £103 at firms with 50-249 members of staff. This compares to just £66 at companies with more than 250 employees.
“Sometimes company expense policies don’t reflect reality and need to be updated,” said David Vine, managing director at GlobalExpense. “But far more frequently they aren’t followed because employees are unaware of them and because managers don’t bother to enforce them.
“For many organisations, employee expenses is a black hole,” he added. “They have no idea how their employees’ spending measures up to others, making it difficult to judge if too little, or too much, is being spent on any one area or by an employee.”
Separate research for GlobalExpense revealed that a quarter of staff thought it was acceptable to exaggerate expense claims, meaning that of the £5.2bn paid as expenses last year, £585m was due to fraudulent claims.
The company estimates that the combined cost to UK businesses from ‘out-of-policy claims that were approved anyway and other expense fraud is £1.284bn, about £500 per expense-claiming employee.
Around 40% of claims were for £10 or under, the survey added, with 45% falling in the £10-£99.99 bracket and just 12% for items worth £100 and over.