When it comes to business travel expenses, some still have to be done the manual way and they often rely on employee estimates, particularly for road travel and mileage reimbursements.
SAP Concur says that employees’ personal mileage is one of the biggest spend categories. Personal vehicle costs are also a major expense, and both of these are based on self-reported values.
If employees’ travel and mileage costs are paid without question, companies may lose money, possibly reimbursing staff for fraudulent or inaccurate claims. Managing a large number of employee drivers, and double-checking all their data, can be challenging and time consuming.
To ensure that reimbursements are reasonable, organisations should adopt a digitalised approach that accurately records employee spend and mileage data.
That spend information can also help businesses make more informed financial decisions, SAP Concur says.
The company’s A/NZ managing director Matthew Goss explains: “Managing transportation and mileage expenses effectively is easier than people think and it can save money.”
“Unfortunately, allowing self-reported mileage without any documentation means organisations increase the likelihood of mileage padding, and inaccurate reporting for compliance and tax purposes. Managers must have transparent visibility into all company spend to ensure it’s correct, reasonable, and actively supporting the organisation."
SAP Concur suggest four mileage best practices to ensure more transparent purchase and spend activity:
1. Strengthen mileage policies. Organisations should enact clear and positive company policies governing spend and expense lodgment. This helps keep employees safe and compliant. Helpful mileage policies should include information on when expense claims for mileage should be submitted, when to use a personal car versus a rental, and clear expectations of what won’t be reimbursed. All these conditions can be easily set up in a shared, digital expense tool, where claims, travel data and spend documents can be submitted, consulted, stored and managed by employees and leaders.
2. Set high expectations. Traditional reimbursement practices lack control and data, meaning submitted information rarely includes invoices or receipts for verification. Organisations should update their mileage tracking technologies to ensure they accurately capture and reimburse personal mileage by requiring documentation for distance travelled. Moreover, managers can use the expense data to see and control how much the organisation spends on mileage altogether, as well as to check for travellers that have excessive personal car mileage.
3. Prioritise accuracy. It’s essential for organisations to establish a culture of accuracy for the distances travelled and lodged for reimbursement. Industry experts believe employees overestimate distance significantly, and, whether intentional or accidental, these overestimations can significantly hamper an organisation’s ability to manage expenses effectively. With accessible mileage tools, employees can track mileage against Google Maps, or automate the process entirely with GPS tracking. Knowing that mileage data is accurate also helps managers make important, fact-based decisions about travel destinations and existing business practices, and cut or rework potentially unnecessary costs for road travel deemed too expensive.
4. Make it mobile. Personal mileage processes must be simple, intuitive, and automated to allow for ultimate accessibility across times and places. Making it easy for employees to track mileage while they’re on the road will encourage honest and regular mileage input, and significantly help companies gain control over their finances and reimbursement schemes.
"Digital transformations are helping organisations get on top of their financial processes in a variety of ways,” Goss says.
“When companies can see inside increased avenues of spend, they are far more likely to assess processes, or create new ones, in line with financial trajectories and goals. Introducing digitalised and shared mileage tracking processes eliminates fraudulent and inaccurate reimbursements, saves money, and helps employees submit data faster, so they can get back to work and focus on the road ahead."