Submitting expenses on behalf of your company can be a pain in the neck, but they’re a necessary adjunct to business travel. And as Hans Christian Andersen, the Danish author, who gave us wonderful stories like The Emperor’s New Clothes and The Little Match Girl, once remarked “to travel is to live.’ But expense reporting can be plagued with pitfalls. Here are a few you should look out for.
- Unfamiliarity with Company Travel Policy
- Claiming Non-Reimbursable Business Expenses
- Omitting to Record Cash Expenses
- Failing to Make a Note of Expenses
- Omitting Business Purpose of Meals and Drinks
- Losing or Misplacing Receipts
- Failing to Claim an Expense
- Failing to Track Mileage
- Inaccurate Travel Details and Amounts
- Using Flawed Expense Tracking System
1. Being Unfamiliar With the Company Travel Policy
If you’re unfamiliar with your organization’s travel policy, you’ll be flying in circles when it comes time to submit your travel cost report. There’s a chance you’ll make mistakes while submitting expenses, which, even if inadvertent, might be misconstrued as attempts at fraud on your behalf.
Even if you’re cleared of wrongdoing, there could always be a cloud of suspicion hovering over you. So to ensure compliance with procedures and protect your reputation, get a copy of your organization’s travel policy and peruse it carefully. At the very least, you’ll find (i) guidance on the types of expenditures that are reimbursable by your organization; and (ii) a description of the process for filing reports and getting a reimbursement.
2. Claiming Travel-Related Expenses that Don't Qualify for Reimbursement
Understanding the travel-related expense system can be confusing, so it’s easy to claim an expense that doesn’t qualify. Meal expenses are one area in which errors can creep in. For example, while expenses incurred for meals are usually reimbursable, the classification may depend on whether the meal was taken alone, with colleagues of the same organization, or if a third party was present. Some organizations will reimburse payments made for tips, parking, toll fares, and laundry services, while at the same disallowing baggage insurance, in-flight headsets, lost baggage, and parking tickets, fines, or traffic violations.
3. Omitting to Record Cash Expenses
While it may be easy to include expenses backed by a receipt or other document in your expense report, cash expenditures like tips, for example, come with no such source document. This increases the chances that such expenditure will not be recorded. It is a risk that increases with time, since with nothing to document their occurrence, such expenses may be completely forgotten.
Not as bad, perhaps, but equally irritating, is remembering you gave a tip but not being able to remember the amount. Or being unable to remember if you gave a tip… this time. It’s particularly difficult to remember repeat occurrences clearly when you’re submitting expenses. If you’re in the habit of using a particular hotel for accommodation, memories of your trip this time tend to merge into those from previous trips.
4. Failing to make a note of expenses
As we have noted, cash expenses can fall by the wayside as time passes. The best remedy then is to make a note of them right away. A note on a piece of paper or even a napkin will suffice as a “source document.” This is actually a good approach to adopt for all expenses.
Many times, there are details that need to be included to support the claim for reimbursement, which may, as time passes, be forgotten and omitted. A lack of these details may give rise to a related error, such as when the business purpose of the expense has been omitted from the report.
5. Failing to Record the Business Purpose of Qualifying Meals and Drinks
An expense report app will generally require descriptions of the expenses to ensure that expenditures are truly for business purposes. For example, in the U.S., for an expense reimbursement policy to be compliant with the guidelines set by the Internal Revenue Service (IRS) so as to qualify as an “accountable plan”, the expenses being claimed must:
- in connection with the performance of services as an employee;
- the expense must be substantiated or deemed substantiated, i.e. there must be receipts and invoices that document the nature and amount of the expenditure; and
- employees must return to the employer amounts in excess of substantiated expenses within a reasonable time.
Consequently, where company policy requires adherence to tax law (very likely), failure to include any of those details may invalidate your claims.
6. Losing or Misplacing Receipts
Receipts and other source documents are the elements that anchor a reimbursement system. Without them, reimbursement may degenerate into disbursement, where the funds paid out exceed actual business costs incurred. One caveat: the source document – invoice or receipt – must be the original. Allowing copies may result in more than one claim for the same expense.
7. Failing to Claim an Expense
We’ve touched on this before but it’s an issue that’s important enough to merit further examination. In the expense reimbursement universe, if you don’t ask, you don’t get. You won’t and can’t be reimbursed for an expense you didn’t claim. So it’s vital to ensure the list of reimbursements requested in your expense report is comprehensive.
There are a variety of hurdles that may stand in the way when you are submitting expenses, as they make their way to the reimbursement stage. The most common reasons why qualified expenses are not claimed are when they are cash transactions that have no receipt, when the receipt is lost or misplaced, when there is a mistaken belief the expense does not qualify, and when the expense is not tracked in the first place.
8. Failing to Track Mileage on Customer Visits
Failing to track expenses might most often occur with the mileage. While other expenses are associated with unique events or occurrences, mileage expenses may depend on an odometer reading. If so, it can be difficult, while driving and focusing on business matters, to keep checking the odometer reading. Of course, there’s no need to record odometer readings manually. There are many digital apps and travel & expense management systems that will do the job for you.
9. Providing Inaccurate or Misleading Travel Details and Amounts
Expense amounts can be recorded incorrectly, for as the poet reminds us, “to err is human.” Hopefully, the errors would have been made unintentionally. Some travel expense management systems can reduce the incidence of such errors. They will flag such occurrences because of their built-in checks and automated warnings, as, for example, when a user overwrites the readout amount. Providing accurate descriptions of expenses is essential. Only then can they (i) be classified correctly and (ii) be assessed to see if they qualify.
10. Using Flawed Expense Tracking System
Many problems can arise from an antiquated expense system or one that has flaws. If you’re still using a system that relies a great deal on manual input at various stages, there will be a greater likelihood of errors.
Manual systems, using at best an electronic spreadsheet, are very time-consuming. Today, automated expense reporting systems can save time for more valuable activities. A good expense tracking system offers SaaS functionality, is mobile-friendly, is operable internationally, and, most of all, is easy to use.
For more information about automated travel expense management systems and the benefits they provide, read What Makes the Best Business Travel Expense Apps.
Just Rydoo it!
If you are tired of the burden of submitting expenses manually, it’s probably time for you to ride the technology wave and migrate your expensing process to a digital tool. Rydoo offers everything that you need and much more when it comes to travel and expense management. Book a demo with one of our specialists and find out everything you need about your next favourite digital tool.
