Even more astounding than employees who claim items such as lap dancers and cat food as business expenses is that most employers approve them.
Around 12% of employee expenses fall outside of corporate policy, though managers reject only 0.5% of claims, according to a report from expense management provider GlobalExpense. The report draws on nearly 5m individual expenses claimed by 100,000 UK-based employees from 140 companies over the past three years. In 2007, UK-based firms doled out £1 billion (€1.3 billion) for false and out-of-policy expenses.
Nearly a quarter of hotel bills claimed did not comply with company policy, according to GlobalExpense. One such claim was for new lingerie after an employee “lost” hers on a business trip. One in six entertainment claims, meanwhile, also fails to comply with policy. Examples of irregular expenses in this category include the purchase of 20 bibles, and a betting slip submitted as a receipt.
David Vine, managing director of GlobalExpense, calls expense management “the Achilles’ heel” of companies, which overlook stricter control of claims even though, after salaries, T&E is often the second-largest category of controllable costs. Besides “throwing away money,” signing off dubious claims can also damage a company’s reputation, he notes.
According to research by polling firm YouGov, 30% of British employees admit to having “fiddled” expense claims in the past. If the lax management of employee expenses continues, it will be directors — and shareholders — who will be red in the face.