Is mileage the financial black hole for European businesses?

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The life of a salesperson on the road is one burnt into our collective consciences; from decades of centuries and movies, the employee hitting the road is a long-established part of business. But just as much as it’s present in fiction, so too is it still a reality for thousands of businesses across Europe.

Each week, salesmen, client managers and various other roles jump in their cars to do business the old-fashioned way – face to face.

But all is not rosy when we look at the statistics behind the work done on mileage and how it is processed through businesses. Recently, research was undertaken into the most common ways that employees in the UK would be comfortable pushing their expense claims a little higher. The most common? 27% of people said that mileage would be their chosen way of gaining a little more money by doctoring the results.

When this kind of finding is combined with the research that we recently undertook across Europe, then the scale of the issue starts to become apparent. From our own records, the average European business traveller drove just under 2,000 miles and around £170m was spent on mileage reimbursement in the UK alone. Sure, it may simply be a case of a few extra miles here or there with individual cases, but added up across Europe and all of its ground travellers? That’s a lot of money that could well make the difference between a flourishing and struggling business.

The gates are open

It’s easy enough to talk about the issues and how employees should steer clear of such practices, but, for finance teams, that’s not where their focus should lie. Instead, there needs to be a better understanding of the processes and checks in place when mileage is submitted in order to protect a business from paying out more than they should. And it’s here that the recent research undertaken shows there is still work to be done.

Across the UK, France, Germany, Finland and Sweden, the research shows that 56% of mileage claims that were submitted were rarely or never queried – giving those susceptible to pushing the distances of their journeys a clear shot to claim back more money from their company than they should. Similarly, only 27% of respondents said that they analysed mileage claims ‘often’, meaning that bigger picture trends and data points would be missed by the vast majority of those entrusted to sign off expenses.

False confidence

Compounding the issue of these unverified and unanalysed mileage receipts is a distinct lack of concern with how accurate they are. Almost a third of respondents were still very confident in the results, with only 17% ‘so-so’ or not very confident. When you think that – across the five countries surveyed – 34% of respondents would see employees they oversee expenses for submitting upwards of 50 mileage claims a week, it’s clear to see how much opportunity there lies for exaggerated claims.

The grind of submission

Looking at the mechanisms of the submission process also gives an indication of why it is both easy to process claims that are exaggerated, alongside why managers are unable to have a closer look at what money they are approving to be reimbursed to employees.

It’s not a new argument by any means, but a great deal of submissions are still carried out through paper processes and spreadsheets. Only a third of respondents across Europe had access to an online or web-based tool; a tool that more often than not comes with checks and balances for mileage expenses, with routes and distances needing to be inputted and ratified against the company’s mileage rates.

These tools also allow those in charge of signing off expenses to have a ‘single-pane’ view of the expenses they are receiving. So, do two account managers frequently visit the same client, but one is averaging an extra 15 miles of mileage claims per trip? Using these tools, that trend of OTT submissions can be quickly identified – especially in comparison to tracking through an Excel document to find out who might be doing something similar.

Duty of care

Another important point which can often be overlooked when it comes to expenses is the issue of duty of care. That’s not surprising, with much of a business geared towards making money, but finance has an inextricable link to the care of business travellers as a great source of evidence.

Duty of care, the need for an employer to make sure that those travelling on its behalf are kept safe, healthy and productive, is something all too often applied only to international travel. Those flying, travelling in different countries and navigating their way through doing business overseas of course need to be protected. But what about the salesperson that travels for four hours in the car, runs an all-day meeting and then, tired, proceeds to drive back home at the end of the day.

It may not seem as eye-catching, but they are in just as much danger when driving a vehicle as that person hailing a taxi in South Africa. Again, a properly analysed and tracked set of mileage expenses can give managers the insight into employees potentially at risk and ensure that next time, they put them on a train.

The devil is in the details

It’s all too often said that businesses – especially SMBs – live or die by those looking at the details. Mileage, at a handful of small change per mile, may seem like an unnecessary burden for those in finance to look at. But it adds up. Not just in a company, but across countries, continents and throughout the passage of time.

The extra pound on each trip may seem insignificant on its own, but over the course of a year, in a company with hundreds of employees on the move? That’s something few businesses can afford to ignore. The next step is ensuring that they have the right tools in place to make the task of analysing mileage a doddle – and for many, that’s as simple as moving away from the spreadsheet and stapled receipt. That’s how the travelling employee can continue to work efficiently and safely into the 21st century.

About Dafydd Llewellyn

Dafydd Llewellyn

MD of SMB for UK & France at SAP Concur 

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30th Aug 2018 10:02

Isn't is the manager's job when authorising the expense claim to check the mileage claimed per journey? It goes on his/her departmental costs after all. Even if the manager does not keep an absolute record, s/he should be aware what the team members are up to and whether travelling is an effective use of time. Travel time is working time, so the manager should realise that the team members can only do so much before their performance starts to drop and both their business and driving skills suffer - potentially with fatal results.
This is not a purely finance matter, it is a corporate responsibility issue and should be taken far more seriously.

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30th Aug 2018 16:26

There is also the question of how you manage your staff, the moment Sales staff get the feeling they are being checked up on and the Accounts staff are seen as "penny pinching" - morale drops and the best people move on. One of my first travelling jobs doing Pegasus software, I used to reset the odometer on the car in the morning and then at night take the reading and did a spreadsheet with the mileage and receipts. The Accountant took it on themselves to check the post codes on the RAC route planner and confront me and other staff, and say things like "well on RAC it says 76 miles, not 79 miles" to which we would reply "But the car says this much, that's how long it took". She would then 'correct' the mileage to what she thought it was and pay us that. Result: 3 of us left within 6 months leaving them with no Senior Consultants.
Also when you do your expenses including mileage, it's either late in the day or you're in the office with loads of much more important things to do than expenses. We don't pay an awful lot of attention to them because we really don't care. Could we make a huge fortune fiddling our expenses ? No. Is it worth a few £'s here and there, yes, but then again I probably forget to claim for a quick trip to a customer or a meal because it's not really important to me -should I then go back and claim for absolutely everything that year so I don't miss out ? The job is important, mileage expenses are a nuisance and timewasting. So if the company you work for is going to start quibbling over expenses especially mileage ,they need to ask themselves, is this the hill they wish to die on ? Yes, there is some leeway in mileage as there is in all expense claims, that's part and parcel of being a rep or a consultant. e.g. if you drive until 11 at night then your manager quietly accepts a few more miles or an extra meal claim because you worked 5 hours extra. If you start clamping down on this, don't be surprised at the response.

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