Corporate travel and expense (T&E) policy compliance is a constant headache for the business travel industry.
And while using corporate expense policy manual as sticks to enforce short-term comopliance, it doesn’t address the underlying issues of why business travelers and employees in general don’t always adhere to policy.
Not to mention that everyone, including business travelers, prefer carrots to sticks. Don’t alienate your business travelers, who you’re relying on to close critical deals or execute client work, by imposing stifling and hard-to-follow regulations that reduce productivity and create frustration.
Why does non-compliant spending happen at your organization?
Why do most employees deviate from corporate spend policies in the first place? There are really only two possibilities.
On one hand, some employees simply don’t know or remember their organization’s spend policy.
For example, one of the biggest challenges is that policy compliance and traveler comfort don’t always go hand in hand. When you’re jetlagged and functioning on little-to-no coffee, you also might forget which hotels are on your company’s whitelist. By the time you wake up in your comfy double bed, the company card is already on file.
On the other hand, some employees are deliberately and knowingly violating spend policies because they know they can get away with it.
But even though business expense fraud is estimated to cost companies about $2.8 billion per year in the U.S. alone, the truth is that 95% of employees are honest about their expenses.
Want to know what both groups of employees have in common? They’re expected to follow incredibly long-winded, unreasonably obtuse, or hyper-specific spend policies that no human being not named Einstein would ever remember.
So do your organization a favor. To really minimize out-of-policy spend, companies need to find the middle ground between enforcing an overly restrictive policy that alienates staff and coming up with a solution that everyone can easily follow and adhere to.
Further reading: Expense best practices to delight your employees AND your CFO
Here are five ways that organizations are minimizing spend leakage, maximizing compliance, and keeping their workforce engaged.
1. Help them to help themselves
More often than not, spend violations tend to be a result of a lack of oversight rather than deliberate and intentional fraud.
The solution is simple: educate your employees on spend compliance policy and give them tools that remind them how to stay within the guidelines.
There are even automated expense management solutions that remind business travelers of your corporate spend policy while they are building their trip pre-approvals from the office all the way to their next client dinner in the U.K.
2. Learn the “Who” and “Why” of policy violations
Analyze your team’s travel bookings and expense reports to see who the biggest culprits are on a regular basis. You have to build up a case first, after all.
But before you try to force anyone to adhere to your spend policy, find out why they bend it at all. There could be a very good reason—or at least one you hadn’t thought about. And with more knowledge comes the opportunity to refine your compliance policy.
Spend management software with built-in audit filter capabilities work hard so you don’t have to work as hard, automatically keeping track of (and flagging) transactions, spend categories, and employees.
3. Build a policy that you would actually want to follow
They say that great writers review their drafts by asking whether they’d give their own work the time of day if they hadn’t written it. Since compliance policies are written, the same rule applies.
It’s easy to automatically take ownership of (and be proud of) a compliance policy you spent days or even weeks writing. It’s much harder to be honest with yourself about whether you, as an employee, would want to follow it—or even be able to without constantly double-checking (hint: nobody is going to do that).
Instead, focus on creating an easy-to-follow policy that works for all parties. If needed, build in tolerances for specific traveler groups to ensure that spend policies don’t negatively impact team productivity or business success.
If you need a good starting point, feel free to use this Expense Policy Template which you can fine-tune for your organization’s needs.
4. Offer a carrot…
Although sticking to policy should be everyone’s goal, providing financial incentives to adhere to spend rules will also improve compliance. The right incentives could save your organization much more than they cost you.
For more info on how to weave employee perks into your spend policy, take a gander at this handy whitepaper: 10 Expense Management Best Practices.
5. …and a stick
Obviously it’s better for staff to voluntarily comply with your travel and expense policies. But that’s not to say that the stick doesn’t need to exist. You just shouldn’t have to use it too often.
Automated spend management solutions can help with that. Technology can help you track policy violations and even lock employee cards so they cannot continue to make purchases or submit out-of-policy expenses for reimbursement—all while you’re sleeping.
If you want to learn more about how to keep your travelers happy while also keeping a close eye on your company’s bottom line, download our latest white paper: Charting the Course Between Compliance and Contentment: Managing Cost Control While Maintaining Employee Happiness.
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Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care.
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic.