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Whether due to manual errors or phishing scams, travel expense fraud is costly for businesses.
During busy work trips, a whirlwind of client lunches and shared taxi rides can lead to honest mistakes. While they may seem minor at first – a duplicate invoice here, an incorrect receipt there – these small errors lead up to big losses over time.
The cost is staggering: By 2028, business travel expense fraud could account for $200 billion in global losses, according to some estimates. It all adds up, particularly for SMEs that operate on tighter margins than larger corporations. With fraud accounting for up to 10% of global business travel spending, your company can’t afford to avoid the issue.
Many fraudulent expenses are caused by weaknesses in a company’s travel expense policy, while inadequate cyber security protocols leave business travellers more susceptible to common online phishing scams.
In this guide, we’ll go over the best ways to identify and prevent travel expense fraud, while providing cyber security travel tips to keep your team safe. By strengthening your approach with tech-driven strategies, you’ll reduce fraud while creating a more transparent and trusting environment.
Most of the time, business travellers submit expense claims for reimbursement without issue. But when these claims don’t match legitimate travel expenses, it becomes travel expense fraud. Here’s what that can look like:
Because the discrepancies and amounts overpaid are so small, they often go unnoticed. Yet over time, expense fraud really adds up. In fact, the ACFE Global Fraud Study found that 5% of an organisation’s annual revenue is lost to fraud.
These examples are often unintentional and due to a genuine misunderstanding of the company travel policy, which is why it’s so important to make approved expenses clear.
Many cases of business travel expense fraud are caused by misunderstandings and human error. But there are other scams to be aware of that can lead to fraudulent travel expense reimbursement. For example, phishing emails and fraudulent booking websites may fool business travellers into paying and submitting receipts for illegitimate expenses.
Here are some of the most common types of business travel fraud to be aware of.
Fraudsters clone the branding of legitimate hotel chains or travel agencies, using these to set up fake booking portals. While business travellers think they’re booking legitimate accommodations, the money instead goes to the fake site, leading to a lack of reservation upon arrival for the traveller and loss of revenue for the business.
Over 90% of successful cyber-attacks start with a phishing email. These are what lead the business traveller to an illegitimate website or payment page. Scammers might send fake confirmation emails using a hotel’s branding, asking for payment through a provided link. And when the traveller provides receipt for this payment to their business, it would then qualify as expense fraud.
Some online scammers target business travellers by claiming to issue visas or passports at a lower price than official channels, or they claim to be an official government source. Then, when you arrive at the airport’s passport control, you’ll find out that your visa isn’t legitimate, which is a costly and stressful scenario.
Data breaches, malware, and card testing with small, low-value purchases are common ways that card details are stolen online. For international business travellers, it’s also important to be mindful of card cloning scams where a skimming device is attached to a point-of-sale terminal or cash machine.
With care taken, many of the travel scams above are easy to avoid. But business expense fraud can be more subtle. Preventing this type of fraud starts with a well-written travel and expense policy and is backed with technology. Here are the steps to take.
Set up team booking guidelines, spending limits and contact information with this simple online tool.
The goal of this policy is to eliminate any ambiguity. When travelling for business, employees should know which expenses are allowable, how to capture and submit receipts, and how they will be reimbursed. Provide detailed info on the specific expenses that aren’t covered, along with the per diem amounts they are eligible for.
Your company’s travel expense policy should be readily available, on demand and in the cloud, for easy reference while employees are travelling for work.
According to the GBTA, nearly 19% of expense reports contain errors. To correct these, it costs $52 and takes 18 minutes of your company’s valuable time. And that’s only for the errors that are caught. Those that are missed slip through the net and contribute to the wider cost of expense fraud.
Manual processes are a major cause of error and inefficiency, while leaving the door open to employee expense fraud. According to BTN Europe, companies that still use manual expense reporting are twice as likely to be impacted by fraud than those who have switched to automated tools. Today’s best spend management solutions are fully automated, tracking expenses and sifting through reports to flag any potential errors as they happen. This makes the travel expense and reimbursement process smoother and more efficient for businesses and their employees.
Reduce the risk of stolen credit cards and payment fraud by issuing corporate cards for travel expenses. This gives greater control and oversight over spending, and you can receive activity reports directly to identify any discrepancies. Companies like Revolut offer virtual corporate cards that let you set controls for specific categories, accounts, and currencies, preventing misuse should the details fall into the wrong hands.
Business travel expense reimbursement relies on receipts. With more companies going paperless, it’s worth using AI-powered image capture technology. These smart receipt scanners are powerful expense fraud detection tools, using optical character recognition (OCR) to convert images of text into a machine-readable format. Then, the imaging technology automatically goes through receipts, line by line, to flag and remove lines that reflect expenses that aren’t allowed.
For example, if your company’s travel expense policy doesn’t include the purchase of alcohol, imaging technology would scan a meal receipt and remove a glass of wine from the line items. At the same time, they collect data which helps with future fraud management and analytics.
While automated tools offer an effective way to spot real-time fraud, it’s also best practice for companies to audit employees’ expenses on a regular basis. It’s especially important to monitor expense reporting of new hires, who may not yet understand the specifics of your company policy.
Business travellers can further strengthen the company-wide approach to fraud management with some basic safety tips. If you’re planning a business trip, this starts with reading your company’s travel policy thoroughly and only using approved platforms to book travel.
Fraud prevention also includes keeping these cyber security travel tips in mind throughout your journey.
With threats constantly evolving, it’s open to keep one step ahead of scammers by following the latest cyber security recommendations for business travellers.
One of the best ways to avoid phishing and payment scams is by only using a trusted, reputable booking platform for business travel. Using multiple websites to book each stage of the journey increases your chances of fraudulent activity.
With Booking.com for Business, you can centralise travel planning in a single, all-in-one platform for secure monitoring. Book and manage business flights, hotels, and hire cars with an overview of spending broken down by month of travel and travel type.
You’ll also be able to better inform your business travel expense policies by selecting approved payment methods. To further support payment security, your business can add up to four credit cards to the dashboard that travellers can choose from when making a booking. While full card details will be hidden for security purposes, users will see enough to make their selection and store preferred cards to their own profiles. This puts you in greater control over payments.
Preventing business expense fraud requires a proactive approach. This starts with comprehensive, crystal-clear travel expense policy for employees to follow, and continues with ongoing cyber security training and automated expense management technology. Whether you’re auditing reports or submitting your own receipts, streamlined expense management systems go a long way towards reducing the chances of fraud.
Regular auditing combined with automated expense management software is the best way to quickly identify fraudulent transactions. Today’s AI tools can sift through vast quantities of traveller data to spot errors.
When it comes to employee expense fraud, the four main types include:
To quickly detect fraudulent payments during business travel, companies can use behavioural analytics and machine learning to identify large, unexpected purchases or high-risk transactions. At the same time, device fingerprinting tracks payments to see if a card’s been used in an unusual location.
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