When I was a wee intern at the beginning of this decade, I used to collect receipts from freelance writers, fit them on a piece of paper, staple, scan and send to accounts payable to reimburse the expenses. “I think [Hotshot Writer] billed us for his back medication,” one of my editors told me one time. But those were the days when the AP departments of big magazines didn’t bat an eyelash at anything.
The above anecdote is really just to illustrate what a pain expense management used to be, not to gloat about how much money magazines had at their disposal back in the day. I was reminded of it while reading a recent article in the Wall Street Journal about how new technology is making travel expenses much easier, reducing “one of the biggest headaches business travelers face: keeping track of receipts, submitting expense reports on time and facing questions about the legitimacy of certain charges.”
The article showed charts from Certify Inc.’s Dec. 2016 survey of chief financial officers, controllers and finance professionals in the U.S. Among companies with fewer than 100 employees, 64% used manual means of managing expenses, which could include pen and paper or Excel spreadsheets. That fraction falls to 20% for companies with at least 1,000 employees.
Employees of those companies must not travel very much or count very, very organized interns among them.
Recently I talked to Mike Bassi, director of partnerships at Runzheimer, a provider of mobile workforce solutions that works with more than 1,300 companies. One of Runzheimer’s areas of expertise is mileage spend, and I was curious to hear about technological advances in expense management from a provider’s point of view — as well as ask about how common low-level expense fraud is.
Spend Matters: What do companies look for when they come to you for help?
Mike Bassi: Businesses tell us [that mileage is] number one or certainly one of the top five total volume expenses that companies are paying now, and yet there’s almost no control over it. It’s all based on people entering logs, and those logs are seldom accurate. When you look at trying to control your costs, having an audit trail is important, and mileage reimbursements almost never include audit trails.
SM: What new technologies do you recommend clients?
MB: More and more companies are asking their travelers to [use] Google Maps. Like, here’s where I started, 123 Maple Street, my trip ended at 500 Main St. Google Maps will then create a route, say, 27.5 miles would have been the optimal route. The next best practice is to use GPS technology to actually do that for an employee.
On our app — and there are other apps out there that do something similar — you turn on the app in the beginning of the day and it automatically captures your starting point, it automatically tracks your exact route, and then it captures your end point. So you have a very accurate mileage log, and the user doesn’t have to do anything but turn the app on in the morning, turn it off at night, and hit the submit button. And the mileage gets transmitted. Letting the technology do its work is your best bet in getting clean records for reducing spend and reducing opportunity for fraud.
SM: Let’s talk about fraud for a moment. Do clients come to you suspecting internal fraud?
MB: Most clients that come to us won’t say that they suspect fraud. They say, “Our drivers are reporting their mileage… well, you know how good that is.” They roll their eyes. No one wants to say [their] employees are crooks.
We think that most of the inaccurate mileage logging is just due to busy schedules, laziness and difficulty. We also know that everyone rounds up. If I go on a trip and it’s an 85-mile round trip, I might round it up to 100 miles because it’s easy to do the math. So it’s not evil fraud; it’s lazy fraud. No one’s going to round an 85-mile trip down to 80 miles.
We’ve found that our clients that used to use a manual logging process who then moves to a GPS-based process, they’re reducing their mileage claims by 10%, in a couple cases to more than 25%. Now if your logs are 25% off, that’s probably on purpose. But a 10% pad is probably innocent.
SM: So the employees are generally on board? Is there ever a backlash from people who, say, might have been benefitting from low-level fraud?
MB: Absolutely. The few who are padding their miles don’t like it at all. We find that if we roll out a program to 100 employees, 90 of them are going to say, “Yeah we like this, [even if] we’re still figuring it out.” There’s 4—5% who are either truly having trouble with it or they’re claiming to have trouble with it because it’ll uncover the fact that they’ve been padding [their mileage] on purpose for quite a while. If their mileage dramatically falls the first year they go on this program, it’s kind of obvious what was going on.
SM: Do any employees express unease with the tracking aspect of these apps? I remember the headlines from last December, when Uber decided to track users’ locations even after their rides are finished.
MB: Some people don’t like the micromanagement. They don’t want people looking over their shoulder. Bu with a really good app, the driver has complete control over the mileage and the tracking, and they only submit to their management team after they’ve had a chance to review. So it’s not like management can see [you] as a little blue dot on a screen.
SM: Let’s say you’re working with a new client, and you think there is fraud going on. What do you do?
MB: We usually don’t have to tell them because it becomes pretty obvious. For those people who were padding in the past, the message that clients [usually tell them] is “Look, what happened in the past happened in the past. We may not be happy about it, but we’re going to look forward.” I don’t think they do this because they want to catch somebody and slap their wrist. I don’t think uncovering fraud is their main goal. It’s a nice side effect.
SM: Senior executives and upper management are most likely to commit fraud, perhaps because they have more funds in their control. Who have you found is more likely to pad their miles?
MB: If you’re on the road four times a week and you visit five customers a day, and each trip gets rounded up 10%, then it starts to add up. It’s the higher-activity drivers who are more likely to have excess mileage.
This interview has been edited and condensed.