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A few weeks ago, Oversight announced its first-ever Spend Analysis Report. For this compilation of data Oversight analyzed 10 million transactions, a total of $1 Billion in spend, made by a group of 160,000 travelers. There has been lots of interest in the results, and we’ve been recapping the highlights from the report here on our blog.
In our first blog post in a three-part series, we covered the most “salacious” topic: fraud. Last week, we discussed the most avoidable costs: duplicate submissions and waste. For the third and final week we are going to discuss policy misuse and what instances of that may look like in your own company.
20% of the travelers in this study had at least one non-compliant transaction on their expense report. If 5% of these folks are the fraudsters, that means the other 15% are making errors, but aren’t maliciously attempting to defraud the company.
11% of the travelers in the study had a transaction flagged as policy misuse: purchases that are compliant with company policy, but made outside of normal business hours or under suspicious circumstances.
Suspicious Out of Pocket Expenses
A large number of policy misuse comes from what we call, “Suspicious out of pocket” expenses. From our study, 2.8% of 10 million transactions were flagged as suspicious out of pocket. This was the largest percentage of transactions for any one category and more than the exceptional purchases for both duplicates and fraud combined. This doesn’t surprise us, as out-of-pocket purchases are the least controlled of T&E Purchases.
16,000 travelers (or 10%) had a suspicious out of pocket expense on their report.
Example: A traveler submits an unusual number of “out of pocket” expenses just under the $25 receipt limit. He doesn’t need proof the transaction occurred, and there is a statistically unusual pattern of occurrences over the course of 90 days. This could be either outright fraud, or policy misuse. Out of pocket expenses are happening more than you think.
What Does Policy Misuse Look Like?
Say a traveler routinely puts expensive items (like airline tickets) on their personal card, for the points, instead of on the corporate card. While this example isn’t fraud, as he/she is traveling on behalf of the company, the misuse of policy creates a vulnerability that can be exploited by the more nefarious travelers.
We also had a client who had a “no in-room” movie policy, which several travelers continued to break. The company was frustrated by the policy misuse, until they learned that travelers who purchased in-room movies spent less on trips overall than those who did not. They re-shaped the policy to include in-room movies and experienced significant cost savings.
We love this example because we believe that detecting non-compliant spending isn’t just about catching those attempting fraud. Looking at traveler behavior also helps shape policy so everyone—travelers and company leadership alike—can feel comfortable about where their money is going.