British companies failed to control costs from employees’ expenses during the recession, new research from GlobalExpense has revealed.
In 2009 over £8.8 billion was paid out by UK organisations to reimburse their employees for expenses incurred, but around £2.1 billion of this should not have been paid as it was for fiddled and out of policy claims, estimates GlobalExpense.
The findings come from the new GlobalExpense Employee Expenses Benchmark Report 2010 which draws on 7.7 million expense claims made by over 250,000 UK-based employees between December 2006 and November 2009. It covers
£427 million in payments to employees and it provides the definitive picture of what employees really claimed and received in expenses over the last three years.
Employers also failed to reduce the number and value of expense claims made by employees during the most severe recession for over 30 years, despite claims by some 38% of employers in an Institute of Personnel and Development survey in 2009, saying they had cut business travel expenditure, with 60% saying they had cut international trips, 69% saying they had cut the expenses staff are allowed to claim, and 55% saying they had cut client entertaining.
According to the report, the average expense-claiming employee in the UK made 30 claims in 2009 (compared to 32 in 2008 and 30 in 2007 before the downturn) and the average expense claim in 2009 was for £55.50 (compared to £57.14 in 2008 and £55.34 in 2007).
“Overall, businesses have cut their employee expense bill by around 9%, but this is almost entirely accounted for by the reduction in fuel prices dropping from a high in 2008,” explained David Vine, CEO of GlobalExpense. “Businesses have either made little effort to tighten expenses policies since the start of the recession, or spectacularly failed to implement them.”
GlobalExpense’s research found that 11% of all approved expense claims do not comply with company policy. This figure rises to approximately 20% of all hotel claims and 29% of entertainment claims.
“When you factor in that around 15% of expense-claiming employees
admit to fiddling their expense claims, I estimate that as much as £2.1 billion of the £8.8 billion paid out by UK organisations to reimburse their employees should never have been paid,” David Vine added.
Examples of unusual employee expense claims paid in 2009 include an inflatable sheep, pig organs, lap dancers and pink furry handcuffs (the latter claimed under “stationery”). The most expensive out of policy claims included a phone bill for over £88,000, the hire of a holiday villa at over £15,000 and a first class plane ticket that cost £11,314.
Employees are also ensuring they get back every penny they pay out on company business with employees making claims for as little as 1 penny, to pay for a credit card fee.