| | The inaugural Employee
Expenses Benchmark Report
2007, released by
employee expenses service
provider GlobalExpense,
shows that British
organisations are
frittering away around
£1.3bn on employee
expenses as a result of
lax managers and employee
expense fraud.
The report is the
largest ever research
into this area (based on
over 3.53m individual
expense claims by over
60,000 employees from a
wide range of UK-based
organisations) and is
definitive – being based
on what employees
actually claimed (as
opposed to what they said
they claimed) and the
payments actually made by
employers.
Approved unusual
employee expenses claims
ranged from lap-dancers
to hostesses, from
condoms to cat food,
replacement lingerie to
Valentine's presents. One
sleepy manager approved a
£570m claim for a £4.70
bridge toll!
Based on its research,
GlobalExpense calculates:
? Across the UK
economy (private and
public sectors) around
£5.2bn was paid to
employees as expense
claims. However, 15%
(about £800m) of this is
for payments approved by
managers that are "out of
policy" (i.e. for items
or levels disallowed by
their employers' expenses
policies so payments
should not have been
made).
? GlobalExpense
estimates that each year
four million employees
claim expenses from their
employer. Separate
research for | |
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| | them and because managers
don't bother to enforce
them. The extra costs of
higher-than-policy claims
can quickly add up,
particularly in areas
such as hotel
accommodation where over
20% of claims are outside
policy.
"For many
organisations, employee
expenses is a black hole.
They have no idea how
their employees' spending
measures up to others,
making it difficult to
judge if too little, or
too much, is being spent
on any one area or by an
employee. The report
provides insights on
where companies should
focus attention to make
sure that profits are not
being lost. It will also
help them to compare
costs with similar
organisations, by size or
industry sector."
Unusual employee
expense claims recently
received by GlobalExpense
include: a receipt for
£1,000 from Spearmint
Rhino for 'Client
Entertaining' (approved
by the employer); a
claim for expensive
lingerie because the
employee had 'lost' hers
(approved by the
employer); a claim where
a man wanted to be
reimbursed for a
Valentine’s day gift (not
approved by employer); a
claim for 'Durex Play' –
expense type 'Daily
Allowance' (approved by
the employer); a claim
for a book called Ever
Dated a Psycho? In
justifying it, the
employee said it was “a
book for my psycho ex”.
A toll claim was
approved for over £570m
by a sleepy manager – the
employee entered the VAT | |
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| | number instead of the
actual amount of the
receipt. (The error was
intercepted by
GlobalExpense and the
correct amount of £4.70
was paid to the
individual).
Other claims of a
sexual nature, include
one for over €400 for a
'hostess in
Greece'(approved by the
employer) and another for
condoms. The employee
categorized the expense
type as 'Tools, Test and
Other Equipment'
(approved by the
employer).
Lastly, a tin of cat
food was claimed under
the 'Restaurant Meals'
category by an employee
(approved by the
employer).
The report identified
a number of trends and
statistics:
? Entertainment claims
are less generous at
large businesses with
average costs of nearly
£66 compared to £103 and
£99 at medium and small
firms respectively.
? In 2006 the average
expense-claiming employee
requested payment for
35.9 separate items as
expenses. Their average
approved claim was
£49.87, and they received
£1,668.88 in total for
expenses.
? The average employee
who claimed expenses will
have received £313.26 in
2006 for hotel
accommodation, £209.60
for entertaining, and
£644.01 for business
travel.
? For the typical
company, around 40% of
items claimed by
employees are under £10.
Around 45% of claims are
for between £10 and
£99.99, and at least 12% | |
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| | are for items worth £100
and over.
? In 2006, the largest
single approved claim by
an employee was for
£30,781 to cover training
and conference costs for
a team.
? The largest total
claimed by an individual
during 2006 was £142,709
– more than six times the
national average salary
of approximately £22,500.
? 20.5% of mileage
claims do not have a
valid receipt, meaning
businesses cannot claim
back the VAT. A business
with 190 employees
claiming an average of
5,000 miles could be
losing about £9,000 in
unclaimed VAT. This will
come straight out of a
company's profit. In
sectors with margins of
10%, this would require
around £100,000 of sales
simply to cover the cost.
? Business travel
expenses – air fares,
rail fares and mileage –
is the largest expense
category accounting for
around 40% of claims by
value from 2004-2006,
followed by accommodation
(typically hotels)
accounting for around 20%
of claims.
? The number of claims
for business class air
fares has fallen by a
quarter and first class
by over 10%.
? Women are more
likely to spend more on
hotel accommodation
(£157.02) than their male
colleagues (£148.44). But
a man is a better bet for
a good meal as they
typically spend a third
more on entertaining than
women and make twice as
many claims.
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| | GlobalExpense revealed
that a quarter of them
believe it is acceptable
to exaggerate their
expense claims (although
most employees that think
inflating their claims is
acceptable only feel
small exaggerations are
warranted). This means
that of the £5.2bn paid
as expenses last year,
£585m was attributed to
expense fraud by
employees (about 11% of
all expenses payments).
? GlobalExpense
estimates that the
combined cost to UK
businesses from approved
"out of policy" claims
and other expense fraud
is about £1.284bn – about
£500 per expense-claiming
employee.
GlobalExpense is the
UK's largest payer of
employee expenses. It
analysed payments of over
£156m between 2004 and
2006, based on over
3,530,000 individual
expense claims by over
60,000 employees from a
wide range of UK-based
organisations (covering
approximately 1.5% of the
UK workforce). It covered
all categories of expense
claim including those
incurred by UK employees
while overseas in 152
countries.
David Vine, managing
director at
GlobalExpense, said:
"Sometimes company
expense policies don't
reflect reality and need
to be updated. But far
more frequently they
aren't followed because
employees are unaware of | |
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