Some employees regard fiddling their expenses as a perk of the job, but a few discover it’s a dreadful mistake that leads to getting the sack. Although we expect every colleague to work with integrity and reward our trust, some “bad apples” use expenses regularly to take small amounts of money for themselves. This can quickly add up to a big problem.
Worldwide, it is estimated that 5 per cent of companies’ sales are lost to fraud, with expenses fiddles accounting for 15 per cent of that. The Association of Certified Fraud Examiners in the US (yes, there is one) says that for smaller businesses, that figure is nearer 21 per cent. Whichever way you look at it, the amount of money paid out for false expenses claims is massive.
When Covid hit and all our shops had to close, we faced a cash crisis and forensically questioned every item of expenditure. It was only then that we scrutinised all our colleagues’ expenses claims to see whether they were justified. It became clear that we should have been doing more to control this big cost earlier. Our expenses are now a lot lower than they were pre-Covid.
People justify fiddling expenses for all sorts of reasons: they convince themselves that “everyone else does it”, that “I’m unpaid for some of my work” or that “it’s only fair to claim for fuel used when I work farther from home”. Despite this self-validation, it is basically theft, often based on greed and thinking they will get away with it. And, all too often, they do.
There are countless ways to cook the books, but they are all wrong and should not be tolerated. You may have a policy and a process, but the odd bad apple can always find a way round it.
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Expenses policies should be simple, fair and communicated regularly; clear guidelines make it hard for colleagues to make genuine mistakes. At Timpson, we try to be crystal clear. For example, we never pay for anyone to travel first class, including directors or consultants helping with specific projects. For some, this has led to their first experience of standard-class train travel to Manchester for many years.
We recently added a new section to cover electric cars, including who pays for home charging and what happens when you stay at a friend’s house.
We lost a tribunal a number of years ago when we sacked a colleague for claiming the cost of a wild night entertaining a supplier in a lap-dancing club. We assumed the tab for such a sleazy evening could never be considered a legitimate business expense. But we were wrong.
The critical point, picked up by the tribunal and our former colleague’s lawyer, was that our expenses policy did not specifically state that you couldn’t entertain a supplier in a lap-dancing club. Suffice to say, our expenses policy now covers this area in great detail.
While being wary, it is important to look after the majority of colleagues who are 100 per cent honest. That’s why we pay expenses within five working days, and offer a float to help a new starter or colleague who can’t afford to buy train tickets or lunch on the move.
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Culture is important. Four years ago, I flew to Florida to meet Walmart executives to explain how we developed our UK concession business, and the way we worked with their (now former) Asda colleagues. I was asked to join the team for store visits.
We met for breakfast in a run-down motel next to a private airfield. To save costs, Walmart expects every travelling executive to share a bedroom. These high-flyers, who were paid millions a year, got around the policy by paying a $10 upgrade fee, with their own money, so they could snore in peace in a room of their own. Things got a bit easier for them later that day when they returned to head office in the company Learjet.
The best way to ensure all expenses are correct is to select a colleague’s claim at random each week and put it on the office noticeboard for everyone to see. Last month, I saw that my latest claim was on the wall in our reception. I believe that everything you do should be enough to make your gran proud, and this should include your expenses claim.
I have used this technique with our kids (two at university and one now in work). A few years ago, we gave each of them a credit card that my wife and I paid off each month. It was only for the things we would normally pay for, like travel; we never wanted lack of cash to stop them coming home. To ensure it’s fair, everyone knows what the others are claiming — we take photos of the bank statements each month and put them on the family WhatsApp group. After a few initial glitches (normally a late-night Deliveroo or a few beers), it has become rare for any of them to step out of line. Our family culture seems to work.
James Timpson is chief executive of Timpson Group
