Fraudulent travel claims affecting these 5 top industries

Government regulations tell all expenses associated with travel must be paid by the employee traveling except for airline tickets and some taxi billings.

Reimbursements

Reimbursement is the act of compensating someone for an out-of-pocket expense by giving them an amount of money equal to what was spent (Dictionary meaning).

Travel reimbursement

Travel is a part and partial of the most organization. When you hear the word travel in your company, it’s obvious that you come across the word reimbursement.

Any claims or reimbursement that an employee should get for traveling at their expense for the purpose of business is termed as travel reimbursements.

Each organization has their own calculations for reimbursing the travel claims. Companies usually pay an employee by the mode of travel i.e. by the type of vehicle used by the employee to travel to their business destination.

The amount to be reimbursed varies on the mode of travel; an employee traveling by public transport may show his tickets or bills to claim reimbursement. The company may give fix an amount for employees own vehicles; for instance, one may fix Rupees 6 for two-wheelers and Rupees 20 for four wheelers, irrespective of the model of the vehicle used by the employee.

Types of frauds in travel claims

Mischaracterized expenses

These are the expenses incurred by an employee for his personal travel but claimed as a business trip.

Over-stand expenses

These are the falsifying expenses made by an employee by submitting a false report of travel distance or combining the distance with that of personal travels.

Fictitious Expenses

These are the expenses that are wrongly claimed by an employee for non- existent trips. Your employee can claim a travel reimbursement for which he has not traveled at all. This kind of reimbursements can be directly related to time theft activities.

Multiple reimbursements

These are the claims submitted for same travel for the multiple times. Your employee can claim the distance traveled for cash reimbursement repeatedly month after for the same travel.

Industries that gets affected by fraudulent claims

Research says that organizations can save at least 5% of the money they spent on reimbursement by detecting and stopping fraudulent travel claims.

Following are the 5 type of businesses that are affected by fraudulent travel claims.

Pharma

This is the one sector where all types of fraudulent travel claims occur, an average. With continuous travel and client meetings, Pharma sector is a definite prone to fraudulent travel claims and time-theft.

Microfinance

 

It is a sector which again requires continuous travel. In this sector, Employees has more chance to commit mischaracterized, overstand expense claim and multiple reimbursements.

Logistics

With the advancement of online sales this is the sector which is growing rapidly and so are the fraudulent travel claims.

Laboratory

It is one field where your employee has to visit the client for sample collections and reports. Here the over-stand and multiple reimbursements take place.

Insurance

 

Just like microfinance sector, in this sector Employees has more chance to commit mischaracterized, overstand expense claim and multiple reimbursements.

Consumer products

 

Consumer goods have to be moved from manufacturer to wholesale and from wholesaler to retailer to reach the customer. This usually done by agencies of fleet management and there is the chance of wrong claims from fleet agencies which incur the loss to the producer.

Reasons for fraudulent claims

  • Lack of proper management of the on-field employees.
  • Use of manual processes to operate, deal and calculate the travel claims.
  • Lack of proofs for the data of travel.
  • Keeping travel claims and regular payroll system separate.

Solution

  • Enrollment of a system that ensures proper management of on-field employees.
  • Using of software’s that automates reimbursements.
  • Using GPS based tools that can calculate the distance and submit the report automatically to the concerned department.
  • Integration of payroll and travel claims data.

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