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Mary Schaeffer
Mary Schaeffer

T&E Hanky-Panky

Three real cases. How would you have made the call?

May 5, 2011
by Mary Schaeffer

As those who process reimbursement requests are painfully aware, some employees play games with their travel and entertainment (T&E) expenses. While many treat the organization's policy as gospel, there are a few who view business travel as an opportunity to get a little extra at the company's expense. How organizations treat these transgressions varies greatly, depending largely on corporate culture and occasionally the offending employee. While the latter is certainly appalling, it is an ugly fact of corporate life.

This article contains three real-life stories, with the names of the not-so-innocent protected. After reading each vignette, readers are encouraged to decide how they would have handled the situation. Your choices are:

  1. To do nothing;
  2. To demand restitution;
  3. To fire the employee;
  4. To prosecute; and
  5. To fire and demand restitution.

Real Cases, Real Outcomes

Here are the cases and their real outcomes.

Case #1: The Dinner With Multiple Receipts

Anyone who has gone out to dinner probably has noticed that most restaurants will present you with several receipts. Two women were sent to their first conference and went out to dinner. They realized quickly that they could both submit a receipt and not only have their meal paid for but also make a few dollars on the side. So, that is exactly what they did. For the record, the meal was under $50.

Not being skilled at this type of chicanery, their "crime" was quickly uncovered by their manager. When confronted, they immediately confessed to the deceit. As a manager, how would you have handled this behavior?

Real-life Outcome: Both women were immediately terminated and given no references. If this action seems a bit harsh, let me share with you the comment of the manager when I suggested that the punishment did not fit the crime. He said emphatically, "Mary, they stole from the company." And, alas, he was correct. A growing number of organizations are adopting a zero-tolerance policy when it comes to policy abuse and fraud.

Case #2: The Mileage That Kept on Giving

A savvy accounts payable director figured out that one of the salesmen in her organization was routinely putting in for an extra 100 miles of mileage reimbursement on each of his trips. She pulled expense reports for the prior year and realized he had billed the company $1,800 for mileage for which he was not entitled.

She got her documentation together and called him. He agreed with her assessment but told her he had no intention of reimbursing the company. You can just imagine how infuriated she was at that. But, she did not let the matter drop. She contacted his manager who told him the money must be returned. The boss worked out a repayment plan with the salesman making payments of $100 per month until the amount was completely repaid, although no interest was assessed. He made two payments and then stopped paying. When contacted again by our intrepid AP director, he fell back on his initial stance, refusing to reimburse the company. If you were his manager, what would you have done when the AP director contacted you a second time about his actions? For the record, this occurred in a state in which deducting from paychecks is not an option.

Real-life Outcome: The manager did not want to deal with the matter and told the AP director to drop the matter. But, she would not give up. Eventually the salesman took a long trip and put in for a large reimbursement from which she took out the money owed. While she couldn't take it from his paycheck, she could net it against other travel reimbursements.

Case #3: The Gift Card Debacle

One organization always noticed that its expenditures on office supplies seemed high, but not high enough to warrant a full-fledged investigation. The company began receiving Level 3 data from its card issuer. It discovered that 12 of its salespeople had been purchasing prepaid credit cards and gift cards and submitting those expenditures as office supplies. It was only when the company began receiving detailed information was it able to uncover this deception. The gift cards were not for clients but kept for personal use. How would you handle this unruly bunch?

Real-life Outcome: This outcome was not pretty. Seven of the salespeople were fired and the remainder told "not to do it again!" It probably won't take you long to figure out the difference in the two groups. Those who remained in the company were top-producing salespeople who the company did not want to lose. If you discuss this outcome with your human resources department, they will tell you that this approach is completely unacceptable as it sets up a discriminatory situation.

Conclusion

Being extra cautious and heeding warning signs and red flags can help nip some of these issues in the bud. Start today and avoid unwarranted dents in your bottom line later.

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Mary S. Schaeffer is the author of Controller & CFO's Guide to Accounts Payable and Fraud in Accounts Payable: How to Prevent It. She publishes CFO & Controllers Accounts Payable Management Journal, writes a monthly newsletter, the weekly e-AP News and speaks at webinars and conferences.