Jul 6, 2022

How To Prevent Employee Expense Fraud

Alex Roha

Insights & TrendsReturn to blog

As much as companies would like to give full spend control to those they hire, statistics show that a surprising percentage of employees have been loose with company expenses. Roughly 75% of employees have admitted to imperfect expense processes at least once, with nearly one-third of the cases lasting more than five years.

The psychology behind these employees' poorly managing expenses ranges from innocent mistakes to a littany of personal or financial pressures. Still, the results are always the same—businesses reconcile imperfectly, and funds go unaccounted for.

What is Expense Fraud?

Fraud is any activity that relies on deception to achieve a gain, according to the Association of Certified Fraud Examiners (ACFE). Sometimes called occupational fraud, the act becomes a crime in the workplace when an employee, manager, or executive deceives the organization with inflated or fictitious expenses.

What Are Different Types of Expense Fraud?

Depending on the policies, fraud will look and occur differently for every company. Common examples of fraud include:

  • Fabricated expenses: Employees may attempt to submit doctored expense reports and fake receipts with expenses that never occurred for personal reimbursements. These purchases may look like they are in policy; however, there is no actual exchange of a product or service.
  • Non-business-related expense claims: Even with a policy in place, employees may try to find a workaround for that book or charger they bought at a bodega while on a business trip. These personal expenses can hide in receipts that aren’t itemized. Mischaracterized expenses can also pass through approvals without proper internal controls.
  • Overcharging company cards: As business travel continues to rise post-pandemic, many employees are on the road with a company purchasing card (p-card) or credit card in hand. If these cards don’t have built in-policies, employees may be left to their own devices to pay for unsanctioned seat upgrades, extra room service, or overtly expensive rental cars.
  • Double expense submissions: While out on business trips, employees could incur legitimate expenses and submit them twice for double the reimbursement. One reimbursement covers the cost, while the other is pocketed for an extra pay-out.

These fraud schemes can lead to accounting errors, asset misappropriation, and employers scratching their heads over how to control employee spending. To solve this, companies can implement controls and technology ahead of time to smooth out gaps and prevent fraud rather than removing an employee‘s ability to purchase business expenses altogether.

How Can Companies Prevent Expense Fraud?

Since every misappropriated dollar can affect a company’s bottom line, it’s important to limit opportunities for fraud or misspend before the swipe even takes place.So how can businesses prepare?

  • The Issue: Overcharging, double submissions, non-work-related expense submissions, and fabricated expenses.
  • The Solution: Expense management solutions ingrained with controllable expense policies, and company cards with built-in safeguards and real-time monitoring technology.

Rather than seeing charges when the expense reports flood in at the end of the month, businesses should implement technology integrated with a fair but transparent expense policy that leaves no room for ambiguity. This includes set per diems that match current market trends for travel expenses.

With frequent travelers, look for an expense management solution that immediately implements these controls and flags out-of-policy expenses so employees and companies can keep track of spending in real-time.

Finance teams don’t want to be flying blind, so having expense technology with accounting dashboards for spending activity means admins get a front-row seat to watch employee purchases. Company cards with built-in controls have unique numbers programmed for each employee, so repeat offenders are caught earlier and more frequently.

Requiring employees to submit receipts through optical character recognition (OCR) and fuzzy matching technology leads to proper documentation, and finance teams have proof of purchases. If the technology is truly efficient, it will also catch double submissions of receipts through matching processes and flag them for review. This process means reimbursement requests can be proven legitimateexpense-reimbursements with immediate documentation.

Random spot audits of expense reports can also help uncover problems and encourage accurate compliance.

Expense Management That Protects Against Fraud

Whether human error or malicious intent, companies without the proper controls are vulnerable to misuse of funds. So why risk it?

With TripActions, companies can define spending in whatever configuration best suits their unique needs. Whether for everyday needs around the office or to set parameters for travel, TripActions cards provide an instant view into every swipe—physical or virtual.

TripActions leverages AI spend auditing technology and internal controls to monitor for any indications of suspicious transactions. TripActions also boasts the industry’s only auto-itemization feature that splits transactions into multiple line items and attributes individual expenses to specific policies.

Thanks to policy controls that finance leaders can tailor to a granular level, TripActions customers can achieve up to a 90% reduction in out-of-policy spending—and 100% peace of mind.


TripActions solves the most major problem associated with using legacy corporate purchase cards by giving you control over your company's entire spend ecosystem. Ready to start using TripActions today? Get up and running in 5 mins.

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